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Summary

  • On Tuesday, July 1, Duke Energy announced it would be increasing its quarterly dividend by 1.9%.
  • Duke Energy's upcoming earnings could exceed street estimates if the company can demonstrate an increase in both its net income and Latin American revenues.
  • If Duke Energy can successfully execute on its Washington DC Solar Project, the company's long-term revenue growth could reach new heights.

As an income-driven investor with a knack for higher-yielding (4% and above) stocks, dividend-related events are always something I tend to keep an eye on. That said, it is these types of events that have a tendency to influence my decision in terms of which stocks I should keep on my radar and which ones I should not. With that said, and in the wake of its latest dividend increase, I wanted to highlight several reasons why I've chosen to stay bullish on shares of Duke Energy (NYSE:DUK).

Recent Dividend Behavior

On Tuesday, July 1, Duke Energy announced a quarterly dividend increase of $0.015/share, which brings its upcoming dividend payout to $0.795/share. It should be noted that the increase will be paid on September 16 for shareholders on record as of August 15. This boost represents a 1.9% increase from its prior dividend of $0.78/share, which was paid to shareholders on June 16. Comparably speaking, Duke Energy's most recent increase was in-line with its previous increase of $0.015/share that was announced on June 25, 2013.

Based on the company's dividend behavior over the last 12 months, it should come as no surprise that I foresee its next quarterly dividend hike, which I estimate to take place in late June/early July 2015 to be at least $0.015/share but no more than $0.025/share.

Upcoming Earnings Outlook

When it comes to the company's upcoming earnings, there are a number of things potential investors should consider. For example, analysts are currently calling for DUK to earn $0.97/share in terms of EPS for its Q2 earnings that are due out on August 4 (which is $0.20/share lower than what the company had reported during Q1 2014, and $0.010/share higher than the company had reported during the year-ago period).

In order to meet and/or exceed its quarterly EPS estimates, I'd like to see an increase in the company's net income (within the range of at least 2.25%+ on the low side and 3.0% or more on the high side), a fair increase in the company's Latin American growth (within the range of 2.5% on the low side and 4.0% or more on the high side), and lastly, an increase in the revenues generated by the both company's regulated and deregulated electric segments (in this instance, I'm looking for an increase of at least a 2.5% on the low side and a 4.5% or more increase on the high side). If the above mentioned criteria are met and or exceeded, there's a very good chance that current EPS estimates could be surpassed.

An Environmentally Friendly Solar Project Could Drive Revenues Higher

What if I told you, that Duke Energy's latest solar power project was not only environmentally friendly, but is also aimed at driving the company's revenues higher over the next two decades? In short, the company's latest solar powered project does just that.

This project, which is the largest of kind, east of the Mississippi River, will not only provide electricity to three sites (American University, George Washington University, and George Washington University Hospital) within the Washington, DC area, it will also help those sites meet their carbon-reduction goals over the next several decades.

From a revenue generating perspective, each of the above mentioned entities has agreed to what Duke Energy is calling an "attractive" pricing plan for at least the next two decades and their impact on the company's long-term revenue growth could be quite substantial.

Conclusion

For those of you who may be considering a position in Duke Energy, I strongly recommend keeping a close eye on the company's recent dividend behavior which has demonstrated a solid uptrend over the last year and its ability to continue to make key strides with regard to its latest solar power project in eastern North Carolina.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in DUK over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Duke Energy: Staying Bullish As The Company Raises Its Dividend