3 Reasons Duke Energy Corp's Stock Could Rise

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Source: Duke Energy Corp 

Duke Energy Corp is best known as a dividend stock -- but that doesn't mean its stock price is set in stone. With a solid foundation and some strategic opportunities ahead, here are three reasons why Duke Energy Corp's stock could rise.

1. Still thinking big
There's a double standard in the investing world. For growth stocks like Tesla Motors or tech stocks like Apple , we expect Elon Musk and Tim Cook to wow us with the unexpected quarter after quarter.

But if Duke Energy is any example, slow-and-steady energy companies can think big too. Although not as sexy as a new iPhone model, Duke literally thought big when it merged with Progress Energy in 2012. More recently, Duke has been hard at work reimagining America's energy infrastructure.

Along with three other companies, Duke Energy Corp proposed an $8 billion renewable energy plan for Los Angeles last month. Duke Energy proposes building a massive 2,100 megawatt wind farm in Wyoming, a 1,200 megawatt energy storage system in Utah, and a 525-mile transmission line to move that clean energy from Point A to Point B.

If the project somehow gets the thumbs up, it would come online in 2023 at the earliest. But that's beside the point. Investors should recognize that Duke Energy Corp isn't getting cornered into a niche market, and that it's always on the lookout for interesting innovations.

Source: Pathfinder Wyoming Wind Project

2. Pipelines in the pipeline
If there's one thing income investors love even more than regulated electricity sales, it's pipelines. Even though Duke Energy Corp is guaranteed a return on equity for electricity sales, usage rates could still take a turn for the worse as energy efficiency efforts pick up nationwide.

Pipelines take a step back from the power grid, instead relying on more predictable industrial and commercial customers to keep pipes pumping to their fullest potential. This lucrative "toll booth" revenue is an excellent income source for any utility, and Duke Energy Corp is ramping up its own investments.

Earlier this month, the company announced plans to construct a 550-mile Atlantic Coast pipeline spanning from West Virginia to North Carolina. Partnered up with Dominion Resources and a couple others, the $5 billion undertaking is no small expenditure. Duke will front $2 billion, but the 90% subscription for North Carolina's current pipeline has made CEO Lynn Good confident in her decision.

Source: Duke Energy Corp; Barclays CEO Energy-Power Conference 

3. Dividends with no end
Dividends are a dilemma. For investors, they're a welcome way to earn some cash today while keeping their investments for the long-term. For companies, it's one the simplest and most direct ways to reward investors when there's nothing better to do with money burning a hole in the CFO's pocket.

Duke Energy Corp has a long history of paying dividends -- and it doesn't look to be stopping anytime soon. At a recent investors' conference, Good said she will be targeting 4%-6% long-term annual earnings growth, and is tagging dividend growth to that same metric. That should allow the company to maintain a strong balance sheet, while also making good on investors' dividend expectations.

Source: Duke Energy Corp; Barclays CEO Energy-Power Conference 

Dig into Duke?
Duke Energy Corp has a promising plan set out for itself - but a plan is just a plan, and things could still go wrong. While these growth opportunities create several success scenarios, investors shouldn't put all their faith in a single dividend or growth stock.

The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

The article 3 Reasons Duke Energy Corp's Stock Could Rise originally appeared on Fool.com.

Justin Loiseau owns shares of Apple and Tesla Motors. The Motley Fool recommends Apple, Dominion Resources, and Tesla Motors. The Motley Fool owns shares of Apple and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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