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Should Income Investors Buy Dominion Energy Inc (NYSE:D) Before Its Ex-Dividend?

If you are interested in cashing in on Dominion Energy Inc’s (NYSE:D) upcoming dividend of US$0.83 per share, you only have 2 days left to buy the shares before its ex-dividend date, 06 September 2018, in time for dividends payable on the 20 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Dominion Energy’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for Dominion Energy

What Is A Dividend Rock Star?

It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:

  • It is paying an annual yield above 75% of dividend payers

  • It has paid dividend every year without dramatically reducing payout in the past

  • Its has increased its dividend per share amount over the past

  • It is able to pay the current rate of dividends from its earnings

  • It is able to continue to payout at the current rate in the future

High Yield And Dependable

Dominion Energy currently yields 4.7%, which is high for Integrated Utilities stocks. But the real reason Dominion Energy stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.

NYSE:D Historical Dividend Yield September 3rd 18
NYSE:D Historical Dividend Yield September 3rd 18

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. D has increased its DPS from $1.58 to $3.34 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes D a true dividend rockstar.

The company currently pays out 70.7% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect D’s payout to increase to 87.3% of its earnings, which leads to a dividend yield of around 5.2%. However, EPS is forecasted to fall to $4.14 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

Next Steps:

There aren’t many other stocks out there with the same track record as Dominion Energy, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for D’s future growth? Take a look at our free research report of analyst consensus for D’s outlook.

  2. Valuation: What is D worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether D is currently mispriced by the market.

  3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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