Headquartered in Charlotte, North Carolina, Duke Energy (DUK) is one of the largest electric power companies in the United States. Operating in a highly regulated business, Duke consistently generates earnings at a rate which provides the investor with a generous return on their investment.
Duke CEO Jim Rogers has been likened to John Wayne as a no-nonsense leader. Most recently, Rogers has propelled Duke into the forefront of the global warming and greenhouse emissions discussion. Under Roger’s guidance, Duke is poised to be a major player in the alternative energy business, having made a significant investment in wind power through the acquisition of Vermont-based Catamount Energy and venturing into solar with the installation of 850 solar panels in North Carolina.
Rogers has stated at several venues that the company is committed to the reduction of carbon emissions in an effort to reduce adverse human impact on the climate.
In staking out this position and urging his contemporaries to do the same, Rogers is anticipating that the Obama administration will be rewarding companies showing leadership in this area.
Duke earnings have been consistently at or above the industry average. The stock price, however, has consistently been at higher multiples of sales and earnings than has been the case for other power companies. The current price of just under $15.40 per share is close to the middle point of the 52-week high and low for the stock. The stock reached its high of $19.42 in late April and dropped to its low point of the year at $13.50 in early October.
At the current level the stock is trading at a price to earnings ratio of 16.60, which is at the high end of trading levels for others in the industry.
With a current dividend of $0.92 per share, DUK is delivering a yield of 6.07%, which is an attractive rate for the investor. Many analysts foresee inflationary pressure which could reduce the dividends being paid by Duke, as rate adjustments requiring regulatory approval often lag the increased costs of operation by a significant amount of time.
DUK, however, remains an attractive investment for the cautious investor.
This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.
