Duke Energy: Solid Buy for Dividends

02/03/2014 7:00 am EST


Vita Nelson

Founding Publisher and Editor, Moneypaper

The calendar may have changed, but trading has followed a familiar script; every time stocks advance, a bout of profit-taking sets in, as pundits and traders speculate that the lofty level of stocks might represent a 'top' that could precede the next bear market, observes Vita Nelson, editor of Moneypaper.

That 'leadership' often infects otherwise long-term investors, who are bombarded with what amounts to noise from the financial media, triggering excess trading and an erosion of their resolve.

So, now is a good time to remind ourselves that solid corporations are continuing to experience growth in their earnings and dividends—which support their stock prices over time.

Such is the case with our latest featured dividend reinvestment idea, North Carolina-based Duke Energy (DUK).

Founded in 1916, and headquartered in Charlotte, Duke Energy has grown from a local electric utility into an international energy provider, generating 50,000 megawatts of electricity in the Midwest and the Southeastern United States, and another 4,000 megawatts in Latin America.

It serves 7.2 million electric, and 500,000 gas customers in Florida, Ohio, Indiana, Kentucky, and North and South Carolina, and operates 150,900 miles of distribution lines.

Duke doubled its size by acquiring Ohio-based Cinergy in 2006, spun-off its midstream gas operations as Spectra Energy at the start of 2007, and, most recently, acquired Progress Energy in 2010.

Consensus estimates call for it to have earned about $4.32 per share in 2013 and to net about $4.57 this year. The dividend has been increased for nine straight years and provides a yield of 4.5%.

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