Dominion Energy(US:D) Forbesยท2024-12-18 14:33Core Viewpoint - The article discusses the potential investment opportunities in utility stocks, particularly Dominion Energy, amidst a prevailing narrative of higher inflation and interest rates following the recent election [2][3][4]. Group 1: Dominion Energy Overview - Dominion Energy, based in Virginia, is positioned to benefit from the data-center boom supporting AI growth, with a projected doubling of power demand by 2039 [7]. - The company serves 4.5 million electricity and gas customers across 13 states, making it a significant player in the utility sector [7]. - The stock currently offers a yield of 4.9%, which is more than four times the typical S&P 500 stock yield of 1.2% [8]. Group 2: Stock Performance and Dividend Insights - The stock has experienced a selloff, which is viewed as overdone, especially as it has lagged behind payout growth [9]. - The dividend cut in 2020 was attributed to excessive debt from an acquisition spree, which negatively impacted investor sentiment [9][10]. - The current yield of 4.9% is above its five-year average of 4.5%, presenting a favorable entry point for investors [11]. Group 3: Investment Strategy and CEFs - The article suggests that utility stocks, including Dominion, are attractive as "bond proxies" in the current market environment [5]. - Closed-end funds (CEFs) are highlighted as a way to gain exposure to utility stocks, with average yields around 8% [12]. - Two specific utility CEFs, Cohen & Steers Infrastructure Fund (UTF) yielding 7.5% and Reaves Utility Income Fund (UTG) yielding 6.9%, are recommended for the watch list [13][14]. Group 4: Market Positioning - Both Dominion and the mentioned CEFs have seen recent declines, but the current discounts and premiums suggest a strategic buying opportunity when market conditions improve [15].