Duke Energy Pays Royal Dividends

For those of you looking to add an energy utility company to your portfolio, Duke Energy has declared a quarterly cash dividend on its common stock of $0.22 per share, an increase of $0.01 over the previous level. The dividend is payable on Sept. 17, 2007, to shareholders of record on the close of business Aug. 17,2007.

With a juicy yield of about 4.60% and a consistent record of paying a dividend, Duke Energy is worth some additional diligence.

“According to our Charter, one of Duke Energy’s benchmarks for success is to provide a superior return to investors,” said James E. Rogers, chairman, president and CEO. “We are committed to having a 70- to 75-percent payout ratio, and we expect to grow our dividends with earnings over time. The board’s action increases our dividend by nearly 5 percent and affirms we are fulfilling that commitment.”

This is the 81st consecutive year that Duke Energy has paid quarterly cash dividends on its common stock. However, we must look a little closer at this figure as we like to see a track record of growing dividends and Duke Energy has had a recent cut in its dividend.  That doesn’t completely exclude it from the buy list, but it definitely doesn’t help.

Digging Deeper

As you can see Duke Energy has a higher dividend payout ratio (70-75%) than I typically like to see. Duke’s payout ratio is also greater than its peers such as Constellation Energy who typically hold their dividend payout ratio in the 20-30% range.

Also note that revenue has decreased over the past three years, while the cost of revenue has increased over the past year.

Company Information

Duke Energy Corp., one of the largest electric power companies in the United States, supplies and delivers energy to approximately 3.9 million U.S. customers. The company has nearly 37,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky.

I think that I will continue my search in an attempt to find an energy stock that has increasing divdends, revenues and profits.

Disclosure: I do not own shares of Duke Energy.

Comments

[ElliotMiller]

In continuing your search you might look at Crescent Point Energy Trust (CPG.UN) traded on the TSX. It's mostly light sweet oil, much of it from the Bakken play of the Williston Basin in Canada. It has a three year very advantageous hedging program and it yields over 12%.

[old trader]

Another utility you might consider is the Southern Companies. I think it fits your criteria more closely. I used to have it in my portfolio, but got out at a nice price, after holding it for a couple of years. Along with other utilities, its taken something of a hit recently, is looking more attractive again

[wouldbeguru]

The comment that Duke has reduced it's dividend has to be adjusted for the spinoff of Spectra, which has paid
$.22 in each quarter of it's existence.

[Mmarrkk]

Thanks Robert for that add. Guess that little fact was missed by the original author. Kind of casts doubt on his capability as a researcher, doesn't it? If you research a company, you shouldn't just pull figures out of tables without looking at the fundamentals behind them. Of course, analysts are all about the numbers and very little about the underlying business. I hope in his continued search, the author finds a bit of knowledge on how to do proper research. Until then, I'll avoid his picks and his website.