It was bugging me that I don’t own anything from the Utilities sector for a while now. I kept adding companies from this sector to my watchlists but never initiated a position. Well, that has changed last week when I purchased some stocks of Dominion Energy (D).
Shortly about the business:
Dominion Energy, Inc., commonly referred to as Dominion, is an American power and energy company headquartered in Richmond, Virginia that supplies electricity in parts of Virginia, North Carolina, and South Carolina and supplies natural gas to parts of West Virginia, Ohio, Pennsylvania, North Carolina, South Carolina, and Georgia. Dominion also has generation facilities in Indiana, Illinois, Connecticut, and Rhode Island.
The company acquired Questar gas in the Western United States, including parts of Utah and Wyoming, in September 2016. In January 2019, Dominion Energy completed its acquisition of SCANA Corporation.
There are quite a few things to like about the company. Their dividend yield is impressive at close to 5%. Company recently completed acquisition of SCANA that should improve their revenue stream. In 2018, Company generated 50% of energy production from non-carbon-emitting sources.
On the other hand, company has quite a lot of debt due to the acquisition of SCANA. But I noticed that most of the companies in Utility sector have high debt leverage. The business is stable so it shouldn’t be a big problem, hopefully.
Company fundamentals at the purchase price:
- P/E (TTM): 52.16
- Forward P/E: 18.29
- Dividend Yield: 4.89%
- Payout Ratio: 162.3%
- Debt/Equity: 1.57
- Debt/EBITDA: 8.2
P/E (TTM), Payout ratio and Debt/EBITDA ratios are looking really high but that’s mainly due to the recent costs of SCANA acquisition. They should be much lower going forward.
Purchase Summary
On the 24th of July, I purchased 15 shares of D for $75.10/share for a total of $1126.50 (including commissions).
This purchase adds $46.79 to my forward annual dividend income. It gets me closer to the goal to receive $480 from passive income this year. It also pushes my stocks portfolio through the €17k mark which was my goal for the year and I wasn’t expecting to hit it so quickly. I am not sure if it will stay there long, though. Portfolio sank a little in the last few days due to Mr. Trump’s rhetorics and other factors in the markets. Well, the main thing is to keep building that dividend income, so price fluctuations are not that important.
What do you think about my purchase? Do you have Dominion in your portfolio? What companies are on your watchlist at the moment. As always, I would love to read your comments!
Nice buy. This is a company i will probably purchase in my own portfolio sometime in the future. Love the safety with utilities. Seeing as i want to buy them myself i ofcourse hope the price drops, but that will only give a great opportunity to buy more 🙂
I recently bought GEO for that very high dividend since their valuation was crazy low. Risky stock, but they make great money backed by us goverment. Prisons will not go away anytime soon. Have a great weekend 😁
Thanks for the comment Norwegian! There was a small drop in Utilities last week, so I took the opportunity. I am sure there will be more moments, although the price is looking very flat compared to other sectors 🙂
I am not familiar with GEO but saw a tweet from Mr Free At 33 that he also bought them last week. I only noticed that their div yield was 12% and thought to myself that it cannot be sustainable but will need to look more into it 🙂
Nice purchase! D is one of the stocks that has been on my watchlist for some time as well. But I keep investing in other companies. MO is currently at the top.
SD
Thanks for the comment SD! MO is in a lot of portfolios. It’s not liked by many investors due to their industry but the company really serves dividend growth investors well. I am still hesitant with them, though 🙂