Exploring the Sustainability and Growth Prospects of Dominion Energy Inc's Dividends
Dominion Energy Inc (D, Financial) recently announced a dividend of $0.67 per share, payable on 2024-06-20, with the ex-dividend date set for 2024-05-31. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Dominion Energy Inc's dividend performance and assess its sustainability.
What Does Dominion Energy Inc Do?
Based in Richmond, Virginia, Dominion Energy is an integrated energy company with over 30 gigawatts of electric generation capacity and more than 90,000 miles of electric transmission and distribution lines. Dominion is constructing a rate-regulated 5.2 GW wind farm off the Virginia Beach coast.
A Glimpse at Dominion Energy Inc's Dividend History
Dominion Energy Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Dominion Energy Inc's Dividend Yield and Growth
As of today, Dominion Energy Inc currently has a 12-month trailing dividend yield of 5.02% and a 12-month forward dividend yield of 5.02%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Dominion Energy Inc's annual dividend growth rate was -8.20%. Extended to a five-year horizon, this rate increased to -6.60% per year. And over the past decade, Dominion Energy Inc's annual dividends per share growth rate stands at 1.70%.
Based on Dominion Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Dominion Energy Inc stock as of today is approximately 3.57%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Dominion Energy Inc's dividend payout ratio is 1.07, which may suggest that the company's dividend may not be sustainable. Dominion Energy Inc's profitability rank of 7 out of 10 as of 2024-03-31, suggests good profitability prospects. The company has reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Dominion Energy Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Dominion Energy Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Dominion Energy Inc's revenue has increased by approximately 0.30% per year on average, a rate that underperforms than approximately 84.41% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Dominion Energy Inc's earnings increased by approximately -12.80% per year on average, a rate that underperforms than approximately 79.91% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -1.10%, which underperforms than approximately 69.6% of global competitors.
Conclusion
While Dominion Energy Inc offers a robust dividend yield, the sustainability of its dividends is under scrutiny due to declining growth rates and a high payout ratio. However, the company's strong profitability and established market position may provide some buffer against these challenges. Investors should closely monitor growth metrics and payout ratios in future quarters to better gauge the long-term viability of Dominion Energy Inc's dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
