Dominion Resources, Inc. (D), Duke Energy Corp (DUK): Does This Utility Have the Best Position in the Business?

Page 1 of 2

Investing in a utility should be simple: Just look at what company you pay to keep the lights on and buy its stock. Unfortunately, that is not the case, especially in our more environmentally conscious society. Now you need to find a utility that’s going green so that it keeps your portfolio flowing with green.

Here’s the rub: In order for that utility to generate the kind of returns you expect, it needs to generate its electricity from the cleaner sources that actually help boost the bottom line. Given the return differentials among the generating options, natural gas is the clean source offering the most bang for your utility’s buck at the moment.

Dominion Resources, Inc. (D)With its prime position to profit from natural gas, Dominion Resources, Inc. (NYSE:D) is, in my opinion, one of the best-positioned utilities. Not only does the company generate a lot of energy from natural gas, it also generates a lot of profit from transporting it. That’s right, Dominion has strategically positioned a growing midstream business inside its sleepy utility segments.

Its this midstream business embedded within Dominion Resources, Inc. (NYSE:D)’s energy subsidiary that has some very intriguing pieces being laid as the foundation for the company’s growth. While the segment houses two gas utilities located in Ohio and West Virginia that serve more than a million customers, there is much more here than I think investors realize.

Among the jewels are over 10,000 miles of gathering and transmission pipeline, a massive natural gas storage business and a good amount of processing capacity. Also, in what could be a real hidden gem, Dominion’s Cove Point LNG facility in Maryland has the potential to be used to export natural gas. What’s more, all of these assets are located in the heart of the natural-gas-rich Marcellus and Utica shales.

What else is nice about Dominion Resources, Inc. (NYSE:D) is that there is more to the company outside of natural gas. Its electricity generation fleet is pretty balanced between coal at 31%, natural gas at 28%, nuclear at 21%, and oil, renewables, and others representing the remaining capacity.

While renewables are a smaller portion, that’s not to say that Dominion Resources, Inc. (NYSE:D) isn’t planning to expand its portfolio, as it just announced its first foray into solar energy last week. The company also boasts of hydro, wind, and biomass among its generating assets. So, while it doesn’t have as clean a fleet as its wind-powered peer NextEra Energy, Inc. (NYSE:NEE) , that’s only because its attention is elsewhere at the moment.

Having a diversified generation portfolio is important — many in the industry have shifted their generation mixes toward cleaner sources. Duke Energy Corp (NYSE:DUK) for example has gone from 55% coal and 5% natural gas generation in 2005 to a planned mix of 38% coal and 24% natural gas by 2015.

That’s still nowhere near as clean as NextEra, which already has a mix of 56% natural gas, 13% wind, and just 6% coal. For arguably the cleanest portfolio in the business, investors can turn to Atlantic Power Corp (NYSE:AT) , which offers a portfolio that’s 96% clean and a dividend yield near 7%. No matter where you look, the industry is working hard to clean up its generating capabilities.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 9 Most Dangerous Countries for Tourists to Visit

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!