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Stock Strategist

Infrastructure Investments Widen Dominion's Moat

Management has done a good job allocating capital.

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 Dominion’s (D) investments in energy infrastructure projects in the Eastern United States in the next five years should result in wide-moat businesses generating about 50% of earnings by 2021, up from about 40% in 2013. The remaining earnings are primarily from narrow-moat regulated gas and electric utilities in states with long histories of constructive regulatory frameworks, industry-leading sales growth, and high-return investment opportunities.

Dominion’s wide-moat businesses include natural gas transmission and storage in the Marcellus and Utica shale regions, a liquefied natural gas export facility in Maryland, and interstate electric transmission regulated by the Federal Energy Regulatory Commission. The Questar acquisition, which closed in late 2016, added a 2,700-mile pipeline network in Utah, Wyoming, and Colorado that we believe will offer wide-moat investment opportunities into the next decade.

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