This High-Yield Utility Just Raised $2 Billion
Dominion Energy (NYSE: D) is one of the largest utilities in the United States. It also has one of the highest dividend yields in the sector at around 4.4%. That isn't a market oddity -- investors have looked at the utility's balance sheet and correctly surmised that Dominion has a leverage problem. That said, the U.S. utility giant is working hard to fix that. Here's the lowdown on what's going on, including a recent deal that will result in a $2 billion cash inflow.
There's no way to sugarcoat Dominion's current financial state. Its financial debt to equity ratio isn't out of line with those of its closest peers at around 0.65 times. However, its financial debt to EBITDA ratio of more than 6.5 times is well above those of similarly sized utilities. Meanwhile, as you might expect, its ability to pay its interest expenses is among the weakest of its peers, with the company sporting a times interest earned ratio of less than two. And, to add to the list of problems, its payout ratio in 2019 is expected to be close to 90%, compared to an average of around 70% for peers.
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Source Fool.com
