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Duke Energy DUK has announced that the board of directors has approved a quarterly cash dividend on its common stock of 98.5 cents, marking an increase of 2.1%. The revised quarterly dividend is payable Sep 16, 2021 to shareholders of record at the close of business on Aug 13.
The company’s new annualized dividend rate is $3.94 per share, resulting in a dividend yield of 3.9%, which is better than the industry average of 3.21%.
Can Duke Energy Continue Dividend Hikes?
Past performance of companies does not necessarily ensure the payment of future dividend. Duke Energy’s dividend payment history indicates that the company has been performing steadily and generating enough cash flow to distribute dividend to shareholders.
Duke Energy plans to invest $59 billion between 2021 and 2025 to expand scale of operations and implement modern technologies at its facilities to serve its customers efficiently. The company aims to reach its target of net-zero carbon emissions from electric generation by 2050 by adding clean energy assets in its generation portfolio.
The company’s complementary businesses have strong growth opportunities, and improving economic conditions will continue to boost demand for its services. The above investment will assist the company to achieve long-term earnings growth of 5-7% through 2025. The lower risk regulated investment will help Duke Energy to generate enough cash flow over the long term that will encourage management to continue with shareholder-friendly initiatives.
Utilities’ Dividend Legacy
Utilities generally engage in low-risk, domestic and highly regulated operations, and distribute a large amount of their earnings to shareholders in the form of dividends. A long dividend payment history suggests stability and reliability. Duke Energy has been paying dividend for 95 consecutive years.
It is not the only company in the utility space having a long dividend payment history. Utilities like National Fuel Gas NFG, Consolidated Edison, Inc. ED and Edison International EIX, among others, have a track record of more than 100 years of consistent dividend payments.
Price Movement and Zacks Rank
In the past six months, Duke Energy’s shares have gained 10.3% compared with the industry’s growth of 0.7%. It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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