Dominion's Dividend: A Risky Gamble or a Safe Bet for Investors?
Alright, let's talk about Dominion Energy's dividend. Another freakin' dividend article. Seriously, are people still falling for this stuff?
The Illusion of Stability
So, Dominion Energy's gonna pay out $0.6675 on December 20th. Big deal. They're patting themselves on the back because the yield is "fairly typical" for the industry at 4.5%. Okay, but let's be real: "typical" doesn't mean "good." Typical just means... average. And in this economy, average is basically a slow-motion train wreck.
The article boasts about "solid earnings coverage." But then it immediately throws a bucket of ice water on that claim, admitting Dominion is paying out a "fairly large proportion of earnings" and isn't generating positive free cash flow. Hello? Red flag much? That's like saying, "Yeah, the car's running great, except the engine's on fire and the wheels are falling off."
They're relying on a projected 31.2% EPS growth next year to magically fix everything. Seriously? Projections are just educated guesses. What if that growth doesn't materialize? What if the economy tanks? Then what?
And get this: "Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 66% which brings it into quite a comfortable range." What kind of garbage is that? "Assuming"? "Estimates"? Gimme a break.
Volatility: The Unspoken Truth
Here's the kicker: Dominion's dividend history is "marked by instability, with at least one cut in the last 10 years." Oh, so they're admitting it now? It's like a magician saying, "Ta-da! I sawed this lady in half... and accidentally killed her!" You can read more about the upcoming dividend payment in "Dominion Energy (NYSE:D) Is Due To Pay A Dividend Of $0.6675".
They try to downplay it by saying the dividend has grown "modestly" at 1.1% per year since 2015. But who cares about a measly 1.1% when they've already chopped the damn thing once? It's like getting a participation trophy after losing the championship game.
"It is hard to live on a dividend income if the company's earnings are not consistent." You think? That's the understatement of the century. It's like trying to build a house on quicksand.
Offcourse, the article attempts to spin this by saying Dominion has seen EPS rising for the last five years at 12% per annum. But they immediately follow that up with: "with the payout ratio on the higher end we don't think the dividend has many prospects for growth." Translation: "We're screwed."
This whole thing feels like a carefully constructed house of cards, ready to collapse with the slightest breeze. They tell you it's a great investment, but then they bury the lede with all the reasons why it's a terrible one.
The "Unreliable" Verdict
The article concludes that the dividend "could prove to be unreliable." No freakin' kidding! That's like saying water is wet.
They try to soften the blow by saying they "wouldn't rule it out as becoming a good dividend payer in the future." But that's just corporate speak for "we have no freakin' clue."
They even have the audacity to say, "We don't think Dominion Energy is a great stock to add to your portfolio if income is your focus." Well, duh! If income isn't your focus, why the hell are you even talking about the dividend in the first place?
This whole thing is a masterclass in saying absolutely nothing while pretending to say something important.
Another Load of Corporate Bullshit
So, what's the real story? The real story is that Dominion's dividend is a gamble, plain and simple. It might pay off, but it's just as likely to blow up in your face. And honestly, I'm tired of these companies trying to sell us this crap.
