On the night of November 18, I made Duke Energy (DUK) my second pick in my Special Report: “Dividend Stocks that are beating the Risky Rockets” on my JubakAM.com subscription site. On November 19, I added these shares to my Dividend Portfolio. Duke Energy embodies many of the trends currently driving utility stocks higher. There’s that 4.06% yield–which looks especially attractive now because the company’s plan to cut $400 million to $450 million in costs offsets lower revenue and earnings growth due to the coronavirus pandemic. For its most recent quarter Duke reported that it had already achieved $350 million in cost savings. And there’s the attractiveness of Duke as an acquisition candidate. The company’s service areas of higher-growth North Carolina and Florida attracted interest from NextEra Energy (NEE) this year and although that effort ultimately went nowhere, I think it put Duke on the acquisition map for utilities looking to add adjacent service areas. And finally there’s Duke’s plan to invest a huge $58 billion in capital expenditures over the next five years. (The way that revenue growth works for regulated utilities is that they invest money in new generating plants and other infrastructure and regulators, who have approved those expenditures, allow the company a regulated return based on its investments. An era of cheap money sure helps that dynamic. As does doing business in Florida, home of one of the most receptive state regulatory agencies.) That investment is focused on achieving net-zero carbon emissions by 2050 and net-zero methane emissions by 2030. The company’s long-term spending plans support a 7% annual increase in the rate base from 2024-2029. Shares of Duke Energy gained 16.83% over the last three months and 3.90% in the last month. The year-to-date gain is 8.35% as of the close on November 17. The yield is the highest among my five utility dividend picks at 4.06%.
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