Dominion Energy and Xcel Energy, two prominent utility companies, are currently being evaluated for their overall business performance. This analysis contrasts the two based on key metrics, including dividends, analyst ratings, profitability, institutional ownership, and valuation.
Profitability and Valuation Insights
Both companies present distinct financial profiles. According to recent data, Dominion Energy reported higher revenue and earnings than its counterpart, Xcel Energy. Specifically, Dominion Energy has an annual dividend of $2.67 per share, yielding 4.4%, while Xcel Energy pays an annual dividend of $2.28 per share with a yield of 2.9%.
A critical aspect of comparison lies in their earnings payout ratios. Dominion Energy distributes approximately 90.8% of its earnings as dividends, which raises concerns about its ability to sustain future payments. In contrast, Xcel Energy maintains a lower payout ratio of 69.5%, having successfully increased its dividend for 22 consecutive years.
In terms of valuation, Dominion Energy currently trades at a lower price-to-earnings ratio compared to Xcel Energy, indicating it may be the more affordable option for investors at this time.
Market Position and Institutional Ownership
Institutional ownership plays a significant role in assessing the confidence of large investors in these companies. As of late 2023, 73.0% of Dominion Energy shares are held by institutional investors, while 78.4% of Xcel Energy shares fall into the same category. This level of institutional backing suggests that both companies are viewed positively by major investors.
The ownership stakes of company insiders are also noteworthy. Both companies show a minimal insider ownership of 0.1%, indicating that executives and board members hold a limited portion of shares. This factor can influence perceptions of alignment between management and shareholder interests.
Volatility and Risk Assessment
When assessing market risk, the beta values of these companies provide insight into their stock price volatility. Dominion Energy has a beta of 0.7, indicating its stock is approximately 30% less volatile than the S&P 500. In comparison, Xcel Energy holds a beta of 0.45, suggesting that its stock price is about 55% less volatile than the broader market.
This lower volatility may appeal to conservative investors seeking stable returns amid market fluctuations.
In summary, while both utility giants exhibit strengths, Xcel Energy outperforms Dominion Energy across 11 of the 18 factors analyzed. Investors will need to weigh these aspects carefully when considering their next moves in the utility sector.
Company Profiles
Dominion Energy, Inc., headquartered in Richmond, Virginia, operates through three segments: Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy. The Virginia segment serves approximately 2.8 million customers, while the South Carolina segment caters to around 0.8 million customers. As of December 31, 2023, the company boasts a significant portfolio, including around 29.5 gigawatts of electric generating capacity.
Founded in 1983, Dominion Energy has evolved from its origins as Dominion Resources, Inc. to become a key player in energy production and distribution.
On the other hand, Xcel Energy Inc., established in 1909 and based in Minneapolis, Minnesota, provides a diverse range of energy solutions, including wind, nuclear, and solar power. The company operates through various segments, including Regulated Electric Utility and Regulated Natural Gas Utility, serving a wide customer base across several states.
The ongoing analysis of these two companies highlights the importance of understanding financial metrics and market dynamics when making investment decisions in the utilities sector.
