Exelon Corporation (EXC), Dominion Resources, Inc. (D): Is There Any ‘Juice’ Left in Utilities?

A unique aspect of Dominion Resources, Inc. (NYSE:D)’s business comes from its energy segment. Dominion Energy is involved in natural-gas distribution and storage operations, natural-gas gathering and by-products extraction activities, natural-gas trading and marketing activities. The company operates 21,800 miles of gas-distribution pipeline as well as underground natural-gas storage systems with 947 bcf of storage capacity.

You see the natural-gas industry has been in a tremendous state of expansion since the introduction of hydraulic fracturing (commonly know as “fracking”). The ability to extract natural gas trapped within shale rock formations has significantly shifted natural gas exploration back onshore. All of this gas needs to be transported and stored and Dominion appears to be positioned well to capitalize on this expansion.

Wrap up

The theme when it comes to utility companies seems to be fairly straight forward. These companies have had a tremendous run and this recent pullback could present a nice entry opportunity. I personally do not feel that all utilities companies are overvalued.

I would be focus on the iShares Dow Jones Utility ETF right now as I feel in an industry like this, the ETF presents you with much-needed diversification. There is one thing we know for sure about utility companies: they pay great dividends. Stick with the ETF. Avoid the pitfalls of some of the potentially overvalued companies in this space, stay diversified, and let those dividends compound for years to come.

Daniel Paterson has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources and Exelon.

The article Is There Any ‘Juice’ Left in Utilities? originally appeared on Fool.com and is written by Daniel Paterson.

Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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