Duke Energy Offers 4.2% Dividend Boost (DUK)
By: Ned Piplovic,
The company has been distributing dividends since 2000 and has consistently increased its annual dividend payout every year since 2007. Duke Energy’s current yield outperforms average industry yields of the company’s peers by double-digit percentage margins.
While the company’s share price experiences moderate volatility from time to time and even saw some significant drops, the share price has always recovered, and the overall trend has been heading higher for several decades. The share price has encountered one of those drops between November 2017 and June 2018 again.
However, this share price dip might be an opportunity for some investors to take a long position at discounted prices on the chance that the share price will rebound again like it did every time in the past so far. The share price’s most recent such rebound occurred between late November 2016 and mid-November 2017, when the share price rose more than 25% over that 11-month period.
Investors convinced that the share price is in a rebound mode and will continue its uptrend that it has been following for the past month, should do their research and act before the next ex-dividend date on August 16, 2018, to ensure shareholder of record status in time for the next round of dividend distributions on the September 17, 2018, pay date.
Duke Energy Corporation (NYSE:DUK)
Headquartered in Charlotte, North Carolina, the Duke Energy Corporation, operates as an energy company through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The Electric Utilities and Infrastructure segment uses coal, hydroelectric, natural gas, oil, renewable resources and nuclear power to generate electricity and distributes the electricity in the Carolinas, Florida and the U.S. Midwest. This segment owns approximately 50,000 megawatts (MW) of generation capacity and serves around 7.5 million retail electric customers in six states. The Gas Utilities and Infrastructure segment owns various pipeline transmission and natural gas storage facilities for distribution of natural gas to nearly 1.5 million of its customers in the U.S. Southeast. Finally, the Commercial Renewables segment builds, develops and operates wind and solar renewable generation projects. This segment has 21 wind farms and 63 commercial solar farms with a capacity of 2,900 MW across 14 states. Formerly known as Duke Energy Holding Corp., the company changed its name to Duke Energy Corporation in April 2005.
The company raised its upcoming quarterly dividend amount 4.2% from the last period’s $0.89 quarterly dividend payout to the current $0.9275 quarterly dividend distribution. This new quarterly dividend amount is equivalent to a $3.71 annualized payout and a 4.5% yield, which is 8.2% above the company’s 4.2% average yield over the past five years.
Compared to the 2.6% average yield of the entire Utilities sector, Duke’s current yield is nearly 75% higher. The 2.53% simple average yield of the Electric Utilities industry segment is just slightly lower than the sector average and the company’s current 4.5% yield is almost 80% ahead of that average. Even compared to the current 3.92% average yield of only dividend-paying companies in the Electric Utilities segment, Duke Energy’s current 4.5% yield still outperforms by nearly 16%.
The company rewarded its shareholders with an annual dividend boost every year over the past dozen years and advanced its total annual dividend payout more than 330% over that period. That level of growth corresponds to an average growth rate 13% per year.
The share price began the trailing 12 months with a run-up of almost 10% towards its 52-week high of $91.09 on November 14, 2017. However, the share price gave back all those gains by the beginning of January 20118 and continued to decline toward its 52-week low of $72.12 in June 11, 2018. After bottoming out in early June 2018, the share price reversed trend once more and has advanced more than 13% above the June low to close on July 6, 2018 at $81.62. This closing price still had approximately 10% to go before it reached the November 2017 peak levels. However, the July 6 closing price was almost even with its level from one year earlier and 15% higher than it was five years ago.
The share price decline between November 2017 and June 2018 limited the one-year total return to slightly below 3.5%. However, over longer time horizons of the past three and five years the shareholders enjoyed significantly better total returns of 27.4% and 47.4%, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.