Is Dominion Energy’s (D, $76.73) to lose its tag of ‘dividend growth machine’?
Known for its generous dividend yield, one of the largest utility company in the United States – Dominion Energy, is all set to lose its tag of ‘dividend growth machine’ as the company plans to slow down its dividend growth to ensure it remains a great income stock.
Sitting at the top end of the spectrum in terms of dividend yield compared to its peers, the company has an impeccable record of increasing its dividend annually for 16 consecutive years. Further, dividend growth of the company over the past decade has averaged just under 8% a year, but recently it has again gone back to around 10%.
Amidst such a scenario, the company has been recently seen projecting a massive slowdown in the dividend growth rate and expects the same to hover around 2.5% in 2020, and remain at that level for at least the next few years.
So, why the sudden brake in the dividend growth?
The reason behind such a move is basically the company creating some financial breathing space for itself, as it changes gear in terms of the business model. The company has been recently seen moving its business more and more toward assets with regulated businesses or fee-based structures. Off late, the company has undertaken a number of acquisitions like buying of smaller and financially troubled utility SCANA and acquiring its controlled midstream partnership to further widen its portfolio.
But all these acquisitions, despite a number of asset sales, has resulted in relatively high leverage for the company compared to peers. With a debt to EBITDA of ~6.4 times at the end of the Q1, Dominion easily sits at the top end of the industry.
Owing to the pressure of such high leverage, the company is likely to opt for a dividend cut as it seeks to maintain its investment-grade credit rating and to ensure a steady income flow for its investors.
D's RSI Oscillator climbs out of oversold territory
The RSI Oscillator for D moved out of oversold territory on December 20, 2024. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 32 similar instances when the indicator left oversold territory. In of the 32 cases the stock moved higher. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 63 cases where D's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where D advanced for three days, in of 313 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on December 03, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on D as a result. In of 89 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for D turned negative on December 04, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 50 similar instances when the indicator turned negative. In of the 50 cases the stock turned lower in the days that followed. This puts the odds of success at .
D moved below its 50-day moving average on December 02, 2024 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for D crossed bearishly below the 50-day moving average on December 06, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where D declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
D broke above its upper Bollinger Band on November 27, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.599) is normal, around the industry mean (1.714). P/E Ratio (19.823) is within average values for comparable stocks, (23.466). D's Projected Growth (PEG Ratio) (4.500) is slightly higher than the industry average of (2.620). Dividend Yield (0.054) settles around the average of (0.074) among similar stocks. P/S Ratio (2.857) is also within normal values, averaging (3.109).
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. D’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating slightly better than average sales and a considerably profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. D’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 65, placing this stock worse than average.
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a producer of electricity, natural gas and related services
Industry ElectricUtilities