Travis Miller: The Obama administration's landmark environmental policy, the Clean Power Plan, starts its way through the courts yet again. The D.C. Circuit Court will decide whether coal plant owners will have to cut carbon dioxide emissions in the U.S. by a substantial amount over the next decade. But this might not actually be a bad thing for coal plant owners in the U.S.
Two of the largest utilities that own coal plants, Southern Co. and Duke Energy, might actually have a growth opportunity with the investments that they will have to make in their fleet to meet the Clean Power Plan. We think both are going to grow earnings more than 5%, and both yield around 4% right now and offer good returns for investors.
A third name that we like, Dominion Resources, should benefit from the Clean Power Plan and emissions reductions by investing in their gas system and gas power generation. We expect natural gas to become a key energy source, both within the generation and in the heating system across the U.S. if carbon dioxide emissions are restricted under the Clean Power Plan. Dominion yields just under 4%, but we think it can grow earnings and the dividend above 6%, again making a good total return opportunity for investors.