Andy Pusateri, Analyst with Edward Jones, says Dominion Resources, Inc. (D) is one of his favorite utility stocks for 2015. He says the stock is trading near all-time highs and at a peak multiple, but that it is also poised for above-average earnings growth based a couple of factors.
“One is regulated utility investments. So utilities are allowed to earn regulated returns on the investment that they are making on the equity component of that investment,” Pusateri explains. “Dominion has a lot of opportunity to make investment, and generation, electric transformation and gas distribution, so I think that’s good, regulated, safe, visible growth that investors like.”
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Secondly, Dominion recently formed a master limited partnership, Dominion Midstream Partners (DM). Pusateri says the biggest earnings for the MLP will come from Cove Point and its liquefied natural gas facility.
“I think ultimately though, earnings starting in 2017 will really start to help increase cash flow to Dominion and help them grow their dividend at a higher rate,” Pusateri says. “So that’s what I like about Dominion.”
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