Duke Energy Offers 12 Years of Dividend Hikes and 4.6% Yield (DUK)

The Duke Energy Corporation has been distributing dividends for more than 90 years and has rewarded its shareholders with a dozen consecutive annual dividend boosts.

The share price pulled back somewhat since peaking in November 2017 because of lawsuits filed over contaminated water near the company’s coal mining operation in North Carolina. However, the stock price reduction drove the forward yield from 3.9% at the share price peak in November 2017 to the current 4.6%. This share price dip might be an opportunity for some investors to take a long position in the stock on the chance that the share price rebounds on a positive lawsuit outcome for the company and returns to the growth trend prior to the drop, such as when the share price rose more than 25% between late November 2016 and mid-November 2017.

Duke Energy will pay the next dividend on March 16, 2018, to all its shareholders of record before the next ex-dividend date, which occurs just a little over a month before the pay date, on February 15, 2018.

Duke Energy Corporation (NYSE:DUK)

Currently 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 currently distributes a quarterly dividend payout of $0.89, which is 4.1% higher than its was in the same period the previous year. This new payout converts to a $3.56 annualized amount and the company currently yields 4.6%, which exceeds the company’s own 2.3% dividend yield over the past five years.

The current forward yield is approximately 94% above the 2.37% average yield of the entire Utilities sector and the 2.38% average yield of the Electric Utilities subsegment. Even compared to the current 3.57% average yield of only dividend-paying companies in the Electric Utilities segment, Duke Energy’s current 4.6% yield is still 29% higher.

Over the past twelve consecutive years, the company more than quadrupled its annual dividend payout by enhancing its annual distribution amount at an average growth rate of 12.6% per year. While the annual dividend growth is slightly lower over the past 25 years at 8.5%, the company still managed to multiply its annual dividend amount more than sevenfold since 1993.

As already indicated, the share price struggled a little over the past two months on the account of the aforementioned lawsuit and a call by the utility customer advocate of North Carolina for state regulators to cut electricity rates by 6.4% instead of approving Duke Energy’s 13.3% rate hike request.

Prior to these issues, the share price rose 18.6% from its $76.78 high on February 15, 2017, to its $91.90 all-time high reached on November 14, 2017. Since the November peak, the share price first dropped 15.7% and fell to $77.82 — which was just $0.04 above the 52-week low from February 2017 — and then rose slightly over the subsequent 10 days to close on January 29, 2018, at $77.29. This closing price was just 0.02% above the price from one year earlier, and approximately 15% below the November price peak.

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