Wednesday October 19, 2011
by Roger Conrad, editor The Utility ForecasterHurricane Irene wreaked havoc this summer. But
Dominion Resources (
D) got the lights back within a week-- and maintained its 2011 earnings guidance of $3 to $3.30 per share.
That’s extraordinary reliability and testament to the company’s formula for low-risk growth, centered on $13.4 billion in capital spending between now and 2016.
That outlay will be divided between meeting a projected 20 percent increase in power demand in northern Virginia over the next decade, and building pipelines to bring Marcellus Shale gas to Middle Atlantic markets, and possibly to Europe and Asia as liquefied natural gas (LNG).
Last month CEO Thomas Farrell noted every project in the last four years has been “on time and on budget.” That bodes well for its current spending plans, as does strong support of Virginia regulators.
Performance at the New England power plant fleet should improve by 2012, thanks to tighter market conditions.
And there’s upside from a new nuclear plant, once the Nuclear Regulatory Commission settles on earthquake regulations.
Management anticipates a 7.5 percent dividend increase for 2012 and annual earnings growth of at least 5 to 6 percent through 2016.
That adds up to solid and reliable total returns come what may in the markets. Buy Dominion Resources up to my new target of 50.
Learn more about this financial newsletter at Roger Conrad's The Utility Forecaster.
