Why Dominion Energy Cutting Its Dividend Is Actually Good for Investors
In early July, giant U.S. utility Dominion Energy (NYSE: D) announced that it was making a big change: By the end of the year, it plans to cut its dividend by 28%. That's a significant reduction, and dividend-focused investors have a right to be displeased. But before dumping the stock or putting it on the verboten list, step back and examine why the cut is being made. The truth is, this decision might actually be good for long-term investors.
Dominion Energy is one the largest utilities in the United States. However, what it looks like today is vastly different from what it looked like just a decade or so ago. Over that span, it has been shifting away from more volatile businesses so it can focus more on regulated utility assets. The biggest move was the sale of its oil exploration and production business. However, it has also been acquiring utilities, most recently SCANA, to build up its regulated utility operations.
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