Dominion Energy Inc (NYSE: D) Is Set to Grow despite the SCANA Acquisition
Dominion Energy Inc (NYSE: D) is one of the largest American utilities and it is considered a great dividend stock due to its 4% dividend yield. The utility company recently announced plans to acquire SCANA Corporation (NYSE: SCG) a move that has led to a decline in the company’s stock price.
Dominion Energy recently announced plans to acquire SCANA Corporation.
The company is on a stable growth trajectory even without the SCANA acquisition.
The company’s capital expenditures are bound to bear fruit in future.
However, our assessment indicates that Dominion has significant growth potential even if the acquisition of SCANA does not materialize. The company estimates that this acquisition will be accretive over the next few years as it is likely to boost Dominion’s earnings growth up by 2%. However, the success of the deal hinges on Dominion getting regulatory approval without additional conditions that would make the deal uneconomical.
An in-depth analysis of Dominion’s current projects indicates that the utility company is on a steady growth path and does not need SCANA in order to maintain its current growth trajectory. Dominion continues to invest heavily in capital expenditures such as the $1.3 billion natural gas power plant in Greensville County Virginia. The project is both on-budget and on-time and is set to be one of the largest power stations in the US upon completion.
Dominion is also set to spend about $4 billion in extending the life span of two of its nuclear reactors. The company also plans to spend $2 billion on upgrading its energy transmission systems and another $2 billion on installing new energy storage assets. The company is also expanding its natural gas capacity by constructing the Cove Point LNG plant, which allows it to sell US liquefied natural gas globally, and is already up and running.
The company is also a major shareholder in the Atlantic Coast Pipeline, which is a natural gas pipeline that serves an area experiencing growing demand. The company also controls Dominion Energy Midstream Partners LP (NYSE: DM), which it could monetize to generate more income for the company in future.
The capital investments made by Dominion Energy make the utility company an attractive income investment given its stable growth trajectory supported by its current operations and future projects.
Finally, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.
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