The Duke of Dividends

03/09/2016 8:00 am EST


David Fish

Executive Editor, Moneypaper

The current stock market environment is making a lot of people nervous; but investing when prices are depressed is the surest road to profits, asserts dividend expert David Fish, editor of Direct Investing.

Of course, none of us can predict a bottom. That's where techniques like dollar-cost averaging and dividend reinvesting can help.

Compounding increasing dividends on more shares will be enhanced while shares are on sale and, best of all, much of this can be automated, making it easier to take emotions out of the equation.

Founded in 1916 and headquartered in North Carolina, Duke Energy (DUK) has grown from a local utility into an international energy provider.

The company serves 7.3 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 and acquired Progress Energy in 2010. Now Duke is acquiring Piedmont Natural Gas, which serves customers in North and South Carolina and Tennessee.

There are two primary reasons to like Duke Energy as a utility investment.

First, it operates in the vibrant Southeastern United States, where population growth continues to exceed national averages and commerce follows suit.

Second, the company has shown a willingness to not only grow through major acquisitions, but to also restructure its business units to achieve maximum efficiency.

Its home territory is fertile ground for developing additional generating capacity through solar and wind installations, as well as being conveniently located for natural gas pipelines.

The company's other major venues -- Ohio and Latin America -- offer excellent potential for continued expansion.

The consensus of 24 analysts is that Duke will earn about $4.67 per share in this year, up from $4.57 in 2015. The dividend has been increased for 11 straight years and provides a yield of 4.3%.

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