This Week in Utilities: 3 Dividend Stocks You Need to Watch
Utilities stayed busy this week with nuclear scandals, solar sales, and everything in between. Here's what you need to know to stay on top of your dividend stocks' latest moves.
A former Entergy employee's actions once again highlighted the high stakes of nuclear energy and human error. Daniel Wilson, a former chemistry manager at Entergy's Indian Point energy center, was arrested on Tuesday on federal charges of falsifying documents. The utility released a statement outlining its actions, along with a promise to cooperate fully with authorities. U.S. Attorney Preet Bharara put in his own two cents, highlighting the gravity of the situation:
Any alleged deliberate misconduct at a facility like Indian Point is a matter of grave concern to this Office. One need look no further than recent natural disasters to know that at important facilities, backup generators and other systems must be maintained in working order because in an emergency they may be critical .
Duke Energy received some bad news from regulators this week, when it agreed to take a nearly 50% cut in its rate request increase for its Duke Carolinas subsidiary. For individual customers, the revised rate represents a 7-percentage-point decrease from the utility's requested 15.1% increase. For the utility, the decision pushes retail revenue increases down from $220 million to $119 million.
For Duke Energy overall, the new rate is equivalent to 0.6% of fiscal 2012 sales, or 6.7% of net profit. As part of the agreement, the utility will also hold off on additional rate requests until September 2015.
Say hello to solar
Dominion announced this week that it is acquiring three new Indiana solar farms, shedding more light on its recent renewable-energy ramp-up. Total capacity clocks in at 28.6 MW, and the company is already lined up with 15-year power purchase agreements with utility Indianapolis Power and Light.
"Dominion has been adding renewable energy to its diversified generation mix and is very pleased to acquire these three solar projects," said Dominion Generation CEO David Christian. "These projects are consistent with Dominion's promotion of a portfolio of efficient conventional, nuclear, and renewable resources."
Tiny solar acquisitions like this will never be market movers like the glory days of a new multibillion-dollar coal or nuclear power plant announcement, but Dominion's foray into alternative energies is continually (a) increasing its energy diversity and (b) providing small profits that ultimately add up.
Florida gets its gas fill
NextEra Energy announced this week that it is investing around $3 billion with Spectra Energy to bring Florida its third major natural gas pipeline. According to NextEra, Florida's current pipelines are near capacity, making its new project crucial to Florida -- and profitable for NextEra.
Stretching from Alabama through Georgia to Florida, the pipeline will connect natural gas reserves to the Sunshine State, where more natural gas is used to generate electricity than any other state besides Texas.
NextEra Energy is probably most known for its status as the nation's largest producer of renewable energy. With more than 10,000 net MW of wind capacity, the title is well deserved. But this latest project once again highlights that the utility isn't putting all its eggs in one basket. While it's far from renewable, natural gas avoids costly environmental regulations and remains at a competitive cost compared with other energy sources. NextEra also noted in its announcement that it will contract pipeline capacity to other operations, adding a lucrative "tollbooth" business model to its operations.
There's a reason investors look to utilities for long-term gains. Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article This Week in Utilities: 3 Dividend Stocks You Need to Watch originally appeared on Fool.com.Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Dominion Resources and Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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