Is Dominion Energy a Great Dividend Stock?
One of the largest utilities in the United States, Dominion Energy (NYSE: D) is currently offering investors a very attractive 4.6% dividend yield. That's 1.8 percentage points higher than the average utility, as measured by Vanguard Utilities Index ETF, and about 2.6 percentage points higher than an S&P 500 Index fund. But a high yield isn't enough to make Dominion a great dividend stock. Here's a deeper look at Dominion to help you figure out if it belongs in your dividend portfolio.
As a utility, Dominion is underpinned by a government-regulated monopoly. Essentially, it provides lots of customers with things -- electricity and natural gas -- that they can't really live without. The government gets to control the rates it can charge, but there is always a solid underlying demand, and the rates it has been allowed to charge have, historically, been fair. The rest of its business is largely tied to utility assets, too. They include things like midstream pipelines (which are meant to serve utilities) and renewable power assets (in which the power gets sold under long-term, fee-based contracts to utilities). In total, roughly 95% of its operating income is highly reliable.
Image source: Getty Images.
Source Fool.com
