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Dominion Resources: A Reasonably Priced Utility

We like this producer and transporter of energy for its free cash flow and dividend growth prospects.

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Charles Fishman: Due in large part to investor demand for yield, utilities in 2016 have been one of the top-performing sectors--up roughly 15% year to date. And, since they have done so well, most are expensive relative to our fair value estimates. However, one utility that is reasonably priced in our opinion is Morningstar best idea Dominion Resources. 

Three reasons we like Dominion: First, we expect the company to begin generating strong free cash flow in 2018 when Cove Point begins commercial operation. It will be the only LNG export facility on the East Coast. Cove Point is already fully contracted with long-term take-or-pay contracts.

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Charles Fishman does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.