Duke Energy: A Royal Utility?

12/10/2019 5:00 am EST


Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

One of the best positioned companies in the power utility space is Duke Energy (DUK), a $65 billion behemoth headquartered in Charlotte, North Carolina, explains Bryan Perry, editor of Cash Machine.

The electric utilities and infrastructure segment generates, transmits, distributes and sells electricity in the Carolinas, Florida and the Midwest and uses coal, hydroelectric, natural gas, oil, renewable sources and nuclear fuel to generate electricity.

It also engages in the wholesale of electricity to municipalities, electric cooperative utilities and other load-serving entities. This segment serves approximately 7.7 million retail electric customers in six states in the Southeast and Midwest regions.

The gas utilities and infrastructure segment distributes natural gas to residential, commercial, industrial, and power generation natural gas customers and owns, operates and invests in various pipeline transmission and natural gas storage facilities.

It has approximately 1.6 million customers, including 1.1 million customers located in North Carolina, South Carolina and Tennessee, as well as 531,000 customers located in Southwestern Ohio and Northern Kentucky.

The Commercial Renewables segment acquires, owns, builds, develops and operates wind and solar renewable generation projects, including non-regulated renewable energy and energy storage services to utilities, electric cooperatives, municipalities and commercial and industrial customers.

This segment has 21 wind and 100 solar facilities and one battery storage facility with a capacity of 2,991 MW across 19 states. Migration of people and businesses to the southeastern states bodes well for the future demand for power and growth prospects for Duke Energy.

Third-quarter earnings and revenues beat estimates by 5.92% and 1.83% respectively and the company raised the low end of its 2019 earnings per share (EPS) outlook to $4.95 from $4.80. If the economy re-accelerates in 2020, the revenues and earnings of utility stocks will expand as well.

The stock traded to a new all-time high of $97.37 in early October and has sold off to where it currently trades at $88.65. The annual dividend of $3.78 per share represents a current dividend yield of 4.27% with a payout ratio of 77.82%, raising its dividend payout by 18.8% in past four years.

Let’s get long in this tried and true Carolina blue power company by adding it to our Safe Haven Portfolio at a nice discount.

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