re D. "because of the anticipated 10% Dividend increases for the next several years."
I don't see why 10% is anticipated. Sure, they increase dividend every year, but I don't see where in past ten years it's ever been increased as much as 10% in a year.
Maybe because they bought Scana they can squeeze money from that loser for more D dividends? Or maybe(?) because they'll be getting big reduction in their taxes with lower tax rate. (They're already, per Morningstar, reporting 23-25%, so the decline to the new corp rate (is it 22%?) may not be so much, but may mean lot of dollars. But if D has a large regulated component, maybe the regulators will be reluctant to let D increase rates in future if D's income taxes are reduced. If I look at Morningstar's numbers for D's payout ratio, it was 83% last year and ttm is 87%, so it does not look to me like D can so easily have sustainable (i.e. for "next several" years) large (10%) dividend increase from its earnings, unless those earnings increase substantially. Revenue's increased past two years, but still below 2014 and earlier.
Pundit says stock is about 10% undervalued. Seems possible and maybe is so. Dividend yield is 4%. I'm staying away because I can't determine what game I'm playing here. If it's partially for growth, then D being a safe ute, I guess it will be pulled up to fair value if the market continues higher. I'd rather be in some other parts of the market though if the market continues up. If it's for the safe dividend yield, 4% and growing, that's too low for me given what else is available (and the risk that D stock will decline if the market falters). If it's for the sock drawer, and sleep-at-night, that should be ok, perhaps. It just seems that there should be others that are much better for this for a large position (balancing safety and yield) than D.
Jmo though, and I've been wrong many, many times. |
