Toward the end of the lightning round during the October 2 episode of Mad Money, when a caller asked about Duke Energy Corporation (NYSE:DUK), Jim Cramer remarked:
I think it’s down enough that you can buy it. I’d like to get in at 4% yield. Right now, it’s a little bit lower than that. Because I do think that the best piece of paper out there right now is the 5-year Treasury, which gives 5%. That’s going to give Duke a run for the money, which is why the stock’s been going down.
Cramer’s comments on Duke Energy’s decline come during a notable development for the stock and Treasury yields.
Dividend Income Accompanies Earnings Growth
Duke Energy Corporation declared a quarterly dividend of $1.085 per share on October 1. At the time of writing, while trading at $114.7, annualizing that payment produces $4.34 per share, equivalent to approximately 3.78%. Assuming the dividend remains unchanged, Cramer’s preferred 4% yield would correspond to a share price of approximately $108.50.
The company’s earnings are also growing. Second-quarter adjusted EPS increased to $1.43 from $1.25, helped by recovery of infrastructure investments through utility rates. It reaffirmed its 2026 adjusted EPS guidance of $6.55 to $6.80 and its long-term annual growth target of 5% to 7% through 2030, measured from the 2025 guidance midpoint. The valuation offers a modest discount to other large utilities. Duke trades at approximately 16.9x forward earnings, compared with 17.94x for Southern Company and 18.1x for American Electric Power. That is a favorable comparison, although the difference is relatively small. Beyond the valuation gap, Southern Company’s data-center deal from September adds an angle to Southern’s investment case.
Financing Costs Complicate the Growth Plan
Infrastructure investment brings costs as well as opportunities. Duke Energy Corporation reported that higher interest expense and depreciation partly offset the benefits of investment recovery in its latest quarter. Regulatory settlements also produced charges excluded from adjusted earnings, illustrating how regulatory outcomes can affect shareholder returns.
Cramer’s Treasury comparison highlights another consideration for income investors. A utility dividend can grow, but it comes with share-price risk and depends on the company’s financial performance and board decisions. A yield approaching 4% needs to be assessed along with Duke’s earnings prospects and financing requirements, rather than treated as sufficient reason to buy. Cramer also discussed another one of Duke’s competitors in a September episode.
Hedge Fund Ownership Edges Lower
Insider Monkey recorded 51 hedge funds holding Duke Energy Corporation in Q2, down from 55 in Q1. Despite reducing its stake by 17% in Q2, GQG Partners remained the top hedge fund holder of the stock with 6.5 million shares. The firm has been the largest holder for 6 quarters in a row. Short interest stood at 2.71% of the public float. Fund participation declined slightly, while reported short exposure remained relatively modest.
Duke is close to the yield Cramer wants, and its earnings outlook offers the possibility of income growth over time. The discount to peers adds some appeal. Still, shareholders need that growth to come through. A dividend provides income while they wait, but it cannot by itself protect the share price from higher rates.
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