When it Comes to Dividend Stocks, Duke Energy Still Looks Like a King

Duke Energy (NYSE:DUK) continues to charge higher on higher volume after a split result on its earnings report. The utility giant delivered earnings that beat analysts’ expectations. The $1.26 EPS beat estimates for $1.24 and was a 10% year-over-year (YOY) gain. This was particularly significant since the company reported a four cents per share loss in their commercial renewables business due to the severe winter storms in Texas in February.  

However in what is becoming a bit of a too-familiar story, the company missed its consensus revenue target. The $6.15 billion was just 0.9% lower than estimates. And although this makes it four straight quarters that Duke has come in below revenue expectations, the income was 3% higher YOY.  

Investing in utility stocks is practical, but it’s not always very exciting. You’re getting defensive stocks that tend to perform well even when the economy is struggling. And in this case, when the economy is growing, utility stocks rise as well.  

This is a situation that investors can see playing out with Duke Energy which continues to earn its placee as a leader among utility stocks. DUK stock is up 25% in the last 12 months; it’s up 14% in 2021; and the stock is up 49% since the onset of the Covid-19 pandemic. 

Forward Guidance Remains On Track 

As the economy begins to strengthen, analysts are paying attention to a company’s forward guidance. If that’s the case with DUK stock, then investors have to like what they heard. The company reaffirmed its yearly estimate of between $5 and $5.30 adjusted EPS with a growth rate through 2025 of 5% to 7%. 

An ESG Investment You Can Bank On 

By now, you’re familiar with environmental, social and governance (ESG) investing. The phrase involves companies taking an active role in doing good things for the world around them. If you focus on the first word “environmental” then you can understand why DUK stock is so appealing. The company has plans to triple its renewable energy portfolio by 2030. And the company will be accomplishing that while delivering a 50% to 70% reduction in active coal units by 2030.  

Location, Location, Location 

One differentiating factor for Duke Energy at the moment is location. There were many skeptics that doubted the flight of Americans from select U.S. states. But the recent information from the U.S. Census has left no doubt. Population is shifting and Duke primarily operates in the Midwest and eastern states, including Florida and the Carolinas.  

These areas have gained during the pandemic. However, they have also been the target of upwardly mobile millennials prior to the pandemic. That’s a demographic that’s started to buy homes, which will be another catalyst for a utility stock.  

And Then There’s That Dividend 

Another reason to buy utility stocks is for the dividend. And Duke Energy offers one that’s among the best of the bunch. Although dividend investors know they shouldn’t assign too much importance to a dividend yield, Duke does offer an impressive 3.76% yield. However, more importantly, the company has increased its dividend for the last 14 consecutive years. Plus, over the last three years, Duke has increased its dividend by an average of 9.46%.  

Duke Energy Remains a Buy 

Over the next decade, Duke is well-positioned to be part of the country’s transition to renewable energy. And it stands to benefit from a renewed investment in the nation’s energy grid.  

Even with the company’s stock brushing up against the high end of analysts’ 12-month price target, DUK stock remains a solid performer. I expect to see improved price targets that will support a higher stock price. And investors will still have the opportunity to collect the company’s dividend.