Report
Charles Fishman
EUR 850.00 For Business Accounts Only

Morningstar | D Updated Forecasts and Estimates from 12 Mar 2019

Dominion Energy changed its name from Dominion Resources in 2017. More importantly for investors, however, the company has also made a strategic pivot. Since 2010, it has focused on the development of new wide-moat projects with conservative strategies, exited the exploration and production business, sold or retired no-moat merchant energy plants, and made significant investments in moaty utility infrastructure.The $4 billion Cove Point Liquefied Natural Gas export facility loaded its first tanker in 2018 and the Atlantic Coast Pipeline, now expected to cost close to $8 billion, should be completed in 2021. Both wide-moat infrastructure projects illustrate Dominion's conservative strategy pivot. We expect wide-moat businesses to generate half of Dominion's operating earnings by 2023. The balance of earnings will come from regulated gas and electric utilities with some of the most constructive regulation and attractive growth potential in the country.The January 2019 acquisition of narrow-moat Scana modestly dilutes Dominion's wide moat, but the political theater of Scana's failed nuclear project should fade and result in an accretive transaction.Although annual dividend increases have averaged 9% the past five years, we believe the currently attractive yield, elevated payout ratio, and an estimated 178 million more common shares outstanding (28% increase) by 2019 year-end versus 2017, will likely result in the board reducing dividend growth to low-single digits. Although we are now less bullish on dividend increases, we still think the dividend yield and earnings growth could deliver low-double-digit returns through the next decade.
Underlying
Dominion Energy Inc

Dominion Energy is a holding company. Through its subsidiaries , the company is engaged in producing and transporting energy. The company's operations are conducted through its subsidiaries: Virginia Electric and Power Company, which is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina; and Dominion Energy Gas Holdings, LLC, which serves as the intermediate parent company for the company's Federal Energy Regulatory Commission-regulated interstate natural gas transmission pipeline and underground storage systems in the eastern and Rocky Mountain regions, as well as for the liquefied natural gas import/export and storage facility.

Provider
Morningstar
Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.

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Analysts
Charles Fishman

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