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699000.0
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2020-11-04 00:00:00 UTC
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Pre-Market Earnings Report for November 5, 2020 : BABA, BMY, AZN, LIN, ZTS, DUK, D, BDX, CI, REGN, GM, GOLD
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https://www.nasdaq.com/articles/pre-market-earnings-report-for-november-5-2020-%3A-baba-bmy-azn-lin-zts-duk-d-bdx-ci-regn-gm
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The following companies are expected to report earnings prior to market open on 11/05/2020. Visit our Earnings Calendar for a full list of expected earnings releases.
Alibaba Group Holding Limited (BABA) is reporting for the quarter ending September 30, 2020. The internet company's consensus earnings per share forecast from the 5 analysts that follow the stock is $1.68. This value represents a 12.75% increase compared to the same quarter last year. In the past year BABA has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 10.39%. Zacks Investment Research reports that the 2021 Price to Earnings ratio for BABA is 37.48 vs. an industry ratio of 72.20.
Bristol-Myers Squibb Company (BMY) is reporting for the quarter ending September 30, 2020. The biomedical (gene) company's consensus earnings per share forecast from the 6 analysts that follow the stock is $1.49. This value represents a 27.35% increase compared to the same quarter last year. In the past year BMY has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 11.64%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for BMY is 9.80 vs. an industry ratio of -21.90, implying that they will have a higher earnings growth than their competitors in the same industry.
Astrazeneca PLC (AZN) is reporting for the quarter ending September 30, 2020. The large cap pharmaceutical company's consensus earnings per share forecast from the 3 analysts that follow the stock is $0.49. This value represents a 2.00% decrease compared to the same quarter last year. AZN missed the consensus earnings per share in the 4th calendar quarter of 2019 by -15.09%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for AZN is 25.59 vs. an industry ratio of 13.70, implying that they will have a higher earnings growth than their competitors in the same industry.
Linde plc (LIN) is reporting for the quarter ending September 30, 2020. The oil (field services) company's consensus earnings per share forecast from the 6 analysts that follow the stock is $1.97. This value represents a 1.55% increase compared to the same quarter last year. In the past year LIN has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 15.15%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for LIN is 29.97 vs. an industry ratio of 6.50, implying that they will have a higher earnings growth than their competitors in the same industry.
Zoetis Inc. (ZTS) is reporting for the quarter ending September 30, 2020. The drug company's consensus earnings per share forecast from the 9 analysts that follow the stock is $0.89. This value represents a 5.32% decrease compared to the same quarter last year. In the past year ZTS has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 34.85%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for ZTS is 44.94 vs. an industry ratio of -8.50, implying that they will have a higher earnings growth than their competitors in the same industry.
Duke Energy Corporation (DUK) is reporting for the quarter ending September 30, 2020. The electric power utilities company's consensus earnings per share forecast from the 5 analysts that follow the stock is $1.79. This value represents a no change for the same quarter last year. DUK missed the consensus earnings per share in the 1st calendar quarter of 2020 by -5.79%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for DUK is 18.84 vs. an industry ratio of 18.40, implying that they will have a higher earnings growth than their competitors in the same industry.
Dominion Energy, Inc. (D) is reporting for the quarter ending September 30, 2020. The electric power utilities company's consensus earnings per share forecast from the 4 analysts that follow the stock is $1.00. This value represents a 15.25% decrease compared to the same quarter last year. D missed the consensus earnings per share in the 1st calendar quarter of 2020 by -0.91%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for D is 22.78 vs. an industry ratio of 18.40, implying that they will have a higher earnings growth than their competitors in the same industry.
Becton, Dickinson and Company (BDX) is reporting for the quarter ending September 30, 2020. The medical/dental supplies company's consensus earnings per share forecast from the 11 analysts that follow the stock is $2.50. This value represents a 24.47% decrease compared to the same quarter last year. In the past year BDX has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 7.32%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for BDX is 24.01 vs. an industry ratio of 48.90.
Cigna Corporation (CI) is reporting for the quarter ending September 30, 2020. The insurance company's consensus earnings per share forecast from the 11 analysts that follow the stock is $4.25. This value represents a 6.39% decrease compared to the same quarter last year. In the past year CI has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 15.05%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for CI is 9.93 vs. an industry ratio of 11.00.
Regeneron Pharmaceuticals, Inc. (REGN) is reporting for the quarter ending September 30, 2020. The biomedical (gene) company's consensus earnings per share forecast from the 1 analyst that follows the stock is $9.52. This value represents a 63.01% increase compared to the same quarter last year. In the past year REGN has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 12.52%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for REGN is 19.79 vs. an industry ratio of -21.90, implying that they will have a higher earnings growth than their competitors in the same industry.
General Motors Company (GM) is reporting for the quarter ending September 30, 2020. The auto (domestic) company's consensus earnings per share forecast from the 4 analysts that follow the stock is $1.47. This value represents a 14.53% decrease compared to the same quarter last year. In the past year GM has beat the expectations every quarter. The highest one was in the 2nd calendar quarter where they beat the consensus by 70.93%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for GM is 13.39 vs. an industry ratio of 44.60.
Barrick Gold Corporation (GOLD) is reporting for the quarter ending September 30, 2020. The gold mining company's consensus earnings per share forecast from the 6 analysts that follow the stock is $0.32. This value represents a 113.33% increase compared to the same quarter last year. In the past year GOLD has met analyst expectations once and beat the expectations the other three quarters. Zacks Investment Research reports that the 2020 Price to Earnings ratio for GOLD is 27.24 vs. an industry ratio of -1.20, implying that they will have a higher earnings growth than their competitors in the same industry.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The oil (field services) company's consensus earnings per share forecast from the 6 analysts that follow the stock is $1.97. The following companies are expected to report earnings prior to market open on 11/05/2020. Visit our Earnings Calendar for a full list of expected earnings releases.
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Zacks Investment Research reports that the 2020 Price to Earnings ratio for BMY is 9.80 vs. an industry ratio of -21.90, implying that they will have a higher earnings growth than their competitors in the same industry. The following companies are expected to report earnings prior to market open on 11/05/2020. Visit our Earnings Calendar for a full list of expected earnings releases.
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Zacks Investment Research reports that the 2020 Price to Earnings ratio for LIN is 29.97 vs. an industry ratio of 6.50, implying that they will have a higher earnings growth than their competitors in the same industry. Zacks Investment Research reports that the 2020 Price to Earnings ratio for ZTS is 44.94 vs. an industry ratio of -8.50, implying that they will have a higher earnings growth than their competitors in the same industry. Zacks Investment Research reports that the 2020 Price to Earnings ratio for GOLD is 27.24 vs. an industry ratio of -1.20, implying that they will have a higher earnings growth than their competitors in the same industry.
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AZN missed the consensus earnings per share in the 4th calendar quarter of 2019 by -15.09%. DUK missed the consensus earnings per share in the 1st calendar quarter of 2020 by -5.79%. D missed the consensus earnings per share in the 1st calendar quarter of 2020 by -0.91%.
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699001.0
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2020-11-04 00:00:00 UTC
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Dominion Energy Cuts Its Dividend by 33%
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https://www.nasdaq.com/articles/dominion-energy-cuts-its-dividend-by-33-2020-11-04
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Dominion Energy (NYSE: D) has sliced its quarterly dividend. On Wednesday, the big regional gas and electricity provider declared that its next payout will be $0.63 per share, to be paid on Dec. 20 to investors of record as of Dec. 4.
That represents a reduction of 33% from Dominion's previous dividend of $0.94, which was handed out in mid-September. The dividend cut naturally means a decline in its yield, which at the current share price is 3%.
Meanwhile, it should be remembered that Dominion remains a very steady and reliable dividend payer. In the press release announcing the modified payout, the company took pains to mention that this will be the 371st consecutive dividend paid by it and its predecessor company.
Image source: Getty Images.
Also, the cut was entirely expected. In July, management announced that it would take such action by the end of the year, although at the time it said the cut would only be 28%. The move comes as the company is in transition from a sprawling and multifaceted energy business to one more focused on its traditional utilities core.
The company provided a stark illustration of its transformation when it announced, also in July, a divestment deal valued at $9.7 billion with Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). In the deal, Dominion sold considerable natural gas transmission and storage assets to Berkshire, in addition to a 25% holding in a liquefied natural gas facility.
All things considered, Dominion investors are taking the latest news well. The company's shares were slightly up in midafternoon trading on Wednesday, although they were trailing the gains of the S&P 500 index.
10 stocks we like better than Dominion Energy, Inc
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Dominion Energy, Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of October 20, 2020
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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On Wednesday, the big regional gas and electricity provider declared that its next payout will be $0.63 per share, to be paid on Dec. 20 to investors of record as of Dec. 4. The move comes as the company is in transition from a sprawling and multifaceted energy business to one more focused on its traditional utilities core. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Dominion Energy, Inc wasn't one of them!
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The company provided a stark illustration of its transformation when it announced, also in July, a divestment deal valued at $9.7 billion with Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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10 stocks we like better than Dominion Energy, Inc When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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Dominion Energy (NYSE: D) has sliced its quarterly dividend. The company provided a stark illustration of its transformation when it announced, also in July, a divestment deal valued at $9.7 billion with Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares).
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699002.0
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2020-11-02 00:00:00 UTC
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Buffett's Berkshire Hathaway Announces Partial Closing of Dominion Energy Deal
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https://www.nasdaq.com/articles/buffetts-berkshire-hathaway-announces-partial-closing-of-dominion-energy-deal-2020-11-02
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Berkshire Hathaway Energy, a subsidiary of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), today announced it has closed on the first phase of its previously announced deal with Dominion Energy (NYSE: D). The $8 billion purchase consisted of approximately $2.7 billion in cash and the assumption of $5.3 billion in debt.
The energy subsidiary also said it completed a coinciding issuance of $1.2 billion in senior notes with the proceeds going to pay down Dominion Energy debt as it matures in future months. The closing transaction does not yet include Dominion's Questar Pipeline Group, which is expected to receive regulatory approval in early 2021.
Image source: Getty Images.
Berkshire and Dominion announced a $9.7 billion deal in July 2020. The second, and final, phase of the deal for the Questar Pipeline Group will be for another $1.3 billion in cash and the assumption of approximately $430 million in long-term debt. Questar operates 1,888 miles of natural gas pipeline and provides transportation and underground storage services in Utah, Wyoming, and Colorado.
Today's completed deal includes a 25% stake in Cove Point LNG -- an LNG export, import, and storage facility in Maryland that will now be operated by Berkshire Hathaway Energy.
In a statement on today's closing, Greg Abel, Berkshire Hathaway's vice chairman, noninsurance operations, and Berkshire Hathaway Energy chairman, said, "With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities."
10 stocks we like better than Berkshire Hathaway (A shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of October 20, 2020
Howard Smith owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The second, and final, phase of the deal for the Questar Pipeline Group will be for another $1.3 billion in cash and the assumption of approximately $430 million in long-term debt. Questar operates 1,888 miles of natural gas pipeline and provides transportation and underground storage services in Utah, Wyoming, and Colorado. In a statement on today's closing, Greg Abel, Berkshire Hathaway's vice chairman, noninsurance operations, and Berkshire Hathaway Energy chairman, said, "With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities."
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Berkshire Hathaway Energy, a subsidiary of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), today announced it has closed on the first phase of its previously announced deal with Dominion Energy (NYSE: D). In a statement on today's closing, Greg Abel, Berkshire Hathaway's vice chairman, noninsurance operations, and Berkshire Hathaway Energy chairman, said, "With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities." The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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Berkshire Hathaway Energy, a subsidiary of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), today announced it has closed on the first phase of its previously announced deal with Dominion Energy (NYSE: D). In a statement on today's closing, Greg Abel, Berkshire Hathaway's vice chairman, noninsurance operations, and Berkshire Hathaway Energy chairman, said, "With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities." The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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The second, and final, phase of the deal for the Questar Pipeline Group will be for another $1.3 billion in cash and the assumption of approximately $430 million in long-term debt. See the 10 stocks *Stock Advisor returns as of October 20, 2020 Howard Smith owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares).
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699003.0
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2020-10-27 00:00:00 UTC
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Berkshire Hathaway Energy returns to fund Dominion Energy debt
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https://www.nasdaq.com/articles/berkshire-hathaway-energy-returns-to-fund-dominion-energy-debt-2020-10-27
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Berkshire Hathaway Energy returns to fund Dominion Energy debt
By William Hoffman
NEW YORK , October 27 - Berkshire Hathaway Energy Co is in the US high-grade primary Monday with a three-part deal to help fund debt assumed from its acquisition of Dominion Energy.
The energy company, a subsidiary of celebrity investor Warren Buffet's Berkshire Hathaway, announced the M&A deal back in July for a total enterprise value of US$9.7bn, which includes US$5.7bn of Dominion Energy's outstanding debt.
The funds from Tuesday's debt raise are slated to repay a portion of Dominion energy's outstanding debt, of which US$1.2bn is maturing this year and next, according to Refinitiv data.
Remaining proceeds will be used to fund commitments under certain tax equity investments in third party sponsored renewable energy projects, according to the filing.
Berkshire Hathaway Energy is offering a three-part deal that contains five, 10 and 30-year senior notes at initial price thoughts in the area of Treasuries plus 65bp, 115bp and 150bp, respectively.
The company last priced a US$2bn two-part bond back in March shortly after the Federal Reserve stepped in to backstop bond markets.
At the time, Berkshire Hathaway Energy priced a US$1.1bn 10-year and a US$900m 30-year each at 285bp over Treasuries, but those 3.7% 2030s and 4.25% 2050s have since rallied massively to a G spread of 96.6bp and 130bp over, respectively.
Bookrunners Barclays, Citigroup, JP Morgan and Wells Fargo seek to price the new notes close to those outstanding levels later today.
(Reporting by William Hoffman; Editing by Paul Kilby)
((william.hoffman@refinitiv.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Remaining proceeds will be used to fund commitments under certain tax equity investments in third party sponsored renewable energy projects, according to the filing. Berkshire Hathaway Energy is offering a three-part deal that contains five, 10 and 30-year senior notes at initial price thoughts in the area of Treasuries plus 65bp, 115bp and 150bp, respectively. Bookrunners Barclays, Citigroup, JP Morgan and Wells Fargo seek to price the new notes close to those outstanding levels later today.
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Berkshire Hathaway Energy returns to fund Dominion Energy debt By William Hoffman NEW YORK , October 27 - Berkshire Hathaway Energy Co is in the US high-grade primary Monday with a three-part deal to help fund debt assumed from its acquisition of Dominion Energy. The energy company, a subsidiary of celebrity investor Warren Buffet's Berkshire Hathaway, announced the M&A deal back in July for a total enterprise value of US$9.7bn, which includes US$5.7bn of Dominion Energy's outstanding debt. The funds from Tuesday's debt raise are slated to repay a portion of Dominion energy's outstanding debt, of which US$1.2bn is maturing this year and next, according to Refinitiv data.
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Berkshire Hathaway Energy returns to fund Dominion Energy debt By William Hoffman NEW YORK , October 27 - Berkshire Hathaway Energy Co is in the US high-grade primary Monday with a three-part deal to help fund debt assumed from its acquisition of Dominion Energy. The energy company, a subsidiary of celebrity investor Warren Buffet's Berkshire Hathaway, announced the M&A deal back in July for a total enterprise value of US$9.7bn, which includes US$5.7bn of Dominion Energy's outstanding debt. Berkshire Hathaway Energy is offering a three-part deal that contains five, 10 and 30-year senior notes at initial price thoughts in the area of Treasuries plus 65bp, 115bp and 150bp, respectively.
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Berkshire Hathaway Energy returns to fund Dominion Energy debt By William Hoffman NEW YORK , October 27 - Berkshire Hathaway Energy Co is in the US high-grade primary Monday with a three-part deal to help fund debt assumed from its acquisition of Dominion Energy. Remaining proceeds will be used to fund commitments under certain tax equity investments in third party sponsored renewable energy projects, according to the filing. Berkshire Hathaway Energy is offering a three-part deal that contains five, 10 and 30-year senior notes at initial price thoughts in the area of Treasuries plus 65bp, 115bp and 150bp, respectively.
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699004.0
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2020-10-22 00:00:00 UTC
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5 Value Stocks To Buy Now Beating The S&P 500 In 2020
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https://www.nasdaq.com/articles/5-value-stocks-to-buy-now-beating-the-sp-500-in-2020-2020-10-22
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Stockmarket newsand analysis is dominated by coverage of the S&P 500 Index. That index is dominated by technology, with sector stocks making up 28.10% of the weighting of the index. And much has been made of the index now returning 8.46% for the year to date — astonishing given the wider market plunge earlier this year and the continued decimating effects of the COVID-19 pandemic.
But the S&P 500 alone can’t tell the full story of the U.S. stock market. If we consider an equal weighted S&P 500 Index, return is actually down, for negative 1.51% for the year to date.
Source: S&P 500 & Unweighted S&P 500 Indexes Total Return – Source: Bloomberg
And while the focus on technology as resilient to the impacts of COVID19 is a compelling story, it is not without some road bumps in the stock market. Take September’s big drop, when the S&P 500 dropped by 9.60% and the S&P Technology Index by 12.84%.
I argue that while technology companies have a lot going for them, their stocks have gotten very, very expensive.
Elevated Valuations Look Precarious
The S&P 500 Index’s price to earnings ratio has soared to 26.63, which is exceedingly high.
Source: S&P 500 Index Price to Earnings Ratio – Source: Bloomberg
And the S&P Information Technology Index’s price to earnings ratio is even higher up in the stratosphere, at 33.47.
Now, stock markets are forward looking. Bloomberg compiled expectations for tech stocks in 2021 show 10.45% growth and 13.52% growth year over year for Q1 and Q2 respectively. So there is some cover for the argument to buy. But even with these expectations, stocks are still at very expensive levels.
But there is a market sector inside the S&P 500 that is still a value buy — and has been quietly outperforming both the S&P 500 Index overall and more impressively, the technology sector since September 2.
Utility Players
Utilities are some of the least exciting stocks when it comes to the news. But these are the companies that keep power flowing for all of the electronics, electric cars, data centers, cloud computing operations and other companies one would consider media darlings.
Source: S&P Utilities, S&P 500 & S&P Information Technology Indexes Total Return – Source: Bloomberg
Bloomberg
Utility stocks inside the S&P have returned 6.88% from September 2 to date, compared to the price drop in the S&P 500 by 3.63% and Information Technology Index by 6.03% over the same timeframe.
And utility stocks are a lot less pricey at a price to earnings ratio of 17.72, which is elevated year to date, but not by much. And it is still very much at a discount compared to prices back in the fall of 2019.
Source: S&P Utilities Price to Earnings Ratio – Source: Bloomberg
On a price to sales basis, utilities look way cheaper, at just 2.87 times. And things get even better on a price to book basis, at only 2.25 times.
Moreover, when looking at market price volatility of utilities against the S&P 500 — the dependable value stocks are currently running at only 16.04% on a trailing 30 day basis compared to the S&P 500 running at 19.02% and 26.22% for the Information Technology Index.
So, cheaper values, less volatility in a highly charged and unsettled general stock market make utilities all the more attractive.
And that’s before I get to the dividend yield advantage that utilities have over both the S&P 500 and the S&P Information Technology stocks.
The S&P 500 has a trailing yield of 1.74% and the S&P Information Technology has a yield of 1.10%. But the S&P Utilities Index has a yield of 3.21%. And there are many utilities that beat that yield that are inside the model portfolio of Profitable Investing.
5 Stocks That Beat the S&P 500: NextEra Energy (NEE)
And it’s not that you sacrifice great longer-term returns by having utilities inside your own portfolio. Take NextEra Energy (NYSE:NEE) — it has returned 676.27% since being added to the model portfolio many years ago. This is leagues ahead of the return of the S&P 500 Index for the same time period.
Source: NextEra Energy (NEE) Total Return – Source: Bloomberg
NextEra has the regulated base operations of power for Florida — but has expanded to the rest of the nation as the largest capacity company for wind and solar power.
Dominion Energy (D)
Dominion Energy (NYSE:D) has returned 338.99% since being added to the model portfolio. This again successfully rivals the S&P 500 Index.
Source: Dominion Energy (D) Total Return – Source: Bloomberg
Dominion is a major provider of power and other essential services to core states in the Mid-Atlantic and Southern US states. And it continues to ramp up ESG-friendly green energy including the largest off-shore wind turbines in Virginia waters.
Public Service Enterprise Group (PEG)
Public Service Enterprise Group (NYSE:PEG) has returned 191.37% since it was added to the model portfolio, once again proving that utility companies can be high return stocks.
Source: Public Service Enterprise Group (PEG) Total Return – Source: Bloomberg
Public Service Enterprise Group has its core operations in power and natural gas services to the Northeastern and Mid-Atlantic markets of the US. And like the other high-performing utilities, Public Service has reliable core regulated businesses with the addition of higher-growth unregulated power generation operations.
Excel Energy (XEL)
Even more recent additions to the portfolio are doing exceedingly well. Excel Energy (NYSE:XEL) has returned 51.22% since late 2018 which is way ahead of the S&P 500’s return of 33.65%.
Source: Excel Energy (XEL) Total Return – Source: Bloomberg
Excel Energy is comprised of four core regulated power and natural gas businesses in the Northern Central, Western and Southwestern U.S. states. And like for NextEra, it has the playbook of rolling out a big expansion of ESG green power capabilities making for a junior version of the Florida-based company that’s also a bit on the cheap in value in its stock.
Eversource Energy (ES)
Last up is Eversource Energy (NYSE:ES), which was added at the same time to the model portfolio as Excel and has returned 52.30%. since then, also beating the general stock market.
Source: Eversource Energy (ES) Total Return – Source: Bloomberg
Eversource Energy is right in the heart of New England and through the hot summers and bitter cold winters, the company is there to provide and sell plenty of power and natural gas. And it also has a nice water company that generates a nice return to shareholders as well.
Value doesn’t mean lack of performance. It just means that you can buy and own now cheaper stocks in the market with more dependability — especially as we head through the U.S. elections, year-end turbulence and — oh yeah, the ongoing pandemic.
On the date of publication, Neil George did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
As the editor of Profitable Investing, Neil George helps longer-term investors achieve their growth & income goals with less risk. With 30+ years of experience in the financial markets, Neil recommends undiscovered and underappreciated companies that offer subscribers double-digit yields now and triple-digit returns over time.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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And like the other high-performing utilities, Public Service has reliable core regulated businesses with the addition of higher-growth unregulated power generation operations. And like for NextEra, it has the playbook of rolling out a big expansion of ESG green power capabilities making for a junior version of the Florida-based company that’s also a bit on the cheap in value in its stock. With 30+ years of experience in the financial markets, Neil recommends undiscovered and underappreciated companies that offer subscribers double-digit yields now and triple-digit returns over time.
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Source: S&P Utilities, S&P 500 & S&P Information Technology Indexes Total Return – Source: Bloomberg Bloomberg Utility stocks inside the S&P have returned 6.88% from September 2 to date, compared to the price drop in the S&P 500 by 3.63% and Information Technology Index by 6.03% over the same timeframe. Public Service Enterprise Group (PEG) Public Service Enterprise Group (NYSE:PEG) has returned 191.37% since it was added to the model portfolio, once again proving that utility companies can be high return stocks. Source: Public Service Enterprise Group (PEG) Total Return – Source: Bloomberg Public Service Enterprise Group has its core operations in power and natural gas services to the Northeastern and Mid-Atlantic markets of the US.
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Source: S&P 500 Index Price to Earnings Ratio – Source: Bloomberg And the S&P Information Technology Index’s price to earnings ratio is even higher up in the stratosphere, at 33.47. Source: S&P Utilities, S&P 500 & S&P Information Technology Indexes Total Return – Source: Bloomberg Bloomberg Utility stocks inside the S&P have returned 6.88% from September 2 to date, compared to the price drop in the S&P 500 by 3.63% and Information Technology Index by 6.03% over the same timeframe. Public Service Enterprise Group (PEG) Public Service Enterprise Group (NYSE:PEG) has returned 191.37% since it was added to the model portfolio, once again proving that utility companies can be high return stocks.
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Source: S&P Utilities, S&P 500 & S&P Information Technology Indexes Total Return – Source: Bloomberg Bloomberg Utility stocks inside the S&P have returned 6.88% from September 2 to date, compared to the price drop in the S&P 500 by 3.63% and Information Technology Index by 6.03% over the same timeframe. Source: NextEra Energy (NEE) Total Return – Source: Bloomberg NextEra has the regulated base operations of power for Florida — but has expanded to the rest of the nation as the largest capacity company for wind and solar power. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Stockmarket newsand analysis is dominated by coverage of the S&P 500 Index.
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2020-10-13 00:00:00 UTC
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3 Energy Stocks to Buy Right Now
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The energy sector has been the worst-performing sector of the stock market so far this year, down 49%. Given that global demand for oil and refined products has fallen and oil and gas prices have plunged, some of this decline is justified. However, there's reason to believe that some energy stocks have sold off too hard: especially those whose businesses are less susceptible to swings in commodity prices.
Three industry leaders -- Dominion Energy (NYSE: D), Kinder Morgan (NYSE: KMI), and Phillips 66 (NYSE: PSX) -- that pay attractive dividends could be worthwhile additions to your portfolio right now.
Image source: Getty Images.
The utility
Dominion Energy is one of the largest utilities in the U.S. Its state-regulated utility operations comprise the majority of its business, mostly in the form of generating, distributing, and transmitting electricity from nuclear and natural gas.
Fairly steady earnings and dividend growth have made Dominion an attractive stock to own for income investors. However, the company's plans to shift further toward renewables will cause a bit of a shakeup in the short term. Most notably, this involves selling $9.7 billion of natural gas transmission and storage assets to Warren Buffett-led Berkshire Hathaway and decreasing the company's quarterly dividend by one-third starting in the fourth quarter of this year.
In the long term, Dominion expects it will be able to grow its dividend and earnings per share 6% and 6.5% annually, respectively. This forecast is based on growing the company's renewable energy generation capacity at a 15.4% compound annual growth rate over the next 15 years.
Dominion currently has the third-largest solar capacity among American utilities, and was able to hit its 3 GW "target for renewable generation in service or under-development in the State of Virginia, a year and a half ahead of schedule."
Even with the dividend cut, Dominion would yield around 3% at today's prices. Investors who are willing to sacrifice a little income in the short term for potentially higher gains over the long term are likely to agree with the company's decision. As for its financial health, Dominion's leverage -- as represented by financial debt to equity and debt to capital -- is now near five-year lows, a good sign that its balance sheet is improving.
Dominion Energy Financial Debt to Equity (Quarterly), data by YCharts.
The pipeline giant
Kinder Morgan is one of the largest natural gas pipeline and terminal infrastructure companies in the United States. The stock, which is down 40% this year, now yields 8.2%.
Like Dominion, Kinder Morgan is in a better financial position now than it was five years ago.
Kinder Morgan Debt To Capital (Quarterly), data by YCharts.
The company's predictable take-or-pay and fee-based cash flow provides the backbone for consistent results despite short-term market challenges. However, a gradual shift away from natural gas and toward renewables could impact demand for Kinder Morgan's services, leading to potentially less favorable contracts in the future.
In its second quarter conference call, Kinder Morgan updated its full-year 2020 guidance, estimating a mere 9% decrease in earnings before interest, taxes, depreciation, and amortization (EBITDA). Considering the earnings collapse that many other energy stocks are facing, a slightly less profitable year for Kinder Morgan is a pretty good result.
In terms of sustaining the dividend, the company estimates its distributable cash flow will be below budget by 11% this year, down to about $1.99 per share. Even at this reduced level, Kinder Morgan would be generating plenty of cash to fund its annualized dividend of $1.05 per share.
The refiner
Lower oil prices tend to reduce input costs for large refiners like Phillips 66. But an economic slowdown has resulted in lower demand for refined products. As a result, Phillips 66 has been running its refineries less, leading to a weak performance so far in 2020.
The good news is that refinery utilization rates are improving as demand picks up and Phillips 66 gradually reduces its product inventories, which had been rising as supply outpaced demand. Phillips 66 has seen significant improvements outside of the U.S., citing nearly fully recovered demand for gasoline and distillates in Germany and Austria.
Unlike the drilling and production side of oil and gas, a downstream leader like Phillips 66 doesn't need oil prices to rise: It simply needs the demand for its products to pick up. Management cited jet fuel as the hardest-hit product, with demand down about 50% from pre-pandemic levels.
Phillips 66 is arguably the riskiest energy stock on this list, but investors can buy the stock for over half off its price at the beginning of the year. Even with rising debt, Phillips 66 retains a strong balance sheet capable of handling a prolonged slowdown. For now, the company has suspended dividend increases, but the sell-off has boosted the yield to 6.8% at the time of this writing.
A safer way to approach a volatile sector
The energy sector is full of risky investments, particularly in the upstream side of oil and gas. Industry leaders like Dominion Energy, Kinder Morgan, and Phillips 66 offer a different way to approach this volatile sector. Dominion's state-regulated assets, success with renewables, and projected earnings growth are good signs that the utility is well-positioned for the next 15 years. Kinder Morgan's minor decrease in earnings in what has been a challenging year for the energy sector is proof that its predictable cash flow is sustainable and can comfortably cover its dividend.
As for Phillips 66, the stock appears to have sold off too strongly given that refinery utilization rates are improving. In the meantime, investors will collect a 6.7% dividend as they wait for the stock to recover.
10 stocks we like better than Phillips 66
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Phillips 66 wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of September 24, 2020
Daniel Foelber owns shares of Kinder Morgan and Phillips 66. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Kinder Morgan. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dominion currently has the third-largest solar capacity among American utilities, and was able to hit its 3 GW "target for renewable generation in service or under-development in the State of Virginia, a year and a half ahead of schedule." In its second quarter conference call, Kinder Morgan updated its full-year 2020 guidance, estimating a mere 9% decrease in earnings before interest, taxes, depreciation, and amortization (EBITDA). Kinder Morgan's minor decrease in earnings in what has been a challenging year for the energy sector is proof that its predictable cash flow is sustainable and can comfortably cover its dividend.
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Three industry leaders -- Dominion Energy (NYSE: D), Kinder Morgan (NYSE: KMI), and Phillips 66 (NYSE: PSX) -- that pay attractive dividends could be worthwhile additions to your portfolio right now. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Kinder Morgan. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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See the 10 stocks *Stock Advisor returns as of September 24, 2020 Daniel Foelber owns shares of Kinder Morgan and Phillips 66. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The energy sector has been the worst-performing sector of the stock market so far this year, down 49%.
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The stock, which is down 40% this year, now yields 8.2%. Kinder Morgan's minor decrease in earnings in what has been a challenging year for the energy sector is proof that its predictable cash flow is sustainable and can comfortably cover its dividend. The energy sector has been the worst-performing sector of the stock market so far this year, down 49%.
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2020-10-10 00:00:00 UTC
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Forget Big Oil, These 3 Stocks Are Better Energy Investments
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Big oil has seen better days. Shares of giant oil companies like ExxonMobil, BP, and Shell have lost more than 50% of their value over the last decade on average. Conditions have gotten so bad in the oil patch that BP plans to pivot away from the sector toward renewable energy. Because of that, big oil doesn't hold the investment appeal that it once did.
That's why investors should to start looking elsewhere if they want exposure to the energy sector. Three much better alternatives these days are pipeline giant Enterprise Products Partners (NYSE: EPD), and utilities Dominion Energy (NYSE: D) and NextEra Energy (NYSE: NEE). Here's why we think they have a much brighter future than big oil.
Image source: Getty Images.
How about a big pipeline?
Reuben Gregg Brewer (Enterprise Products Partners): The biggest problem with big oil is that top- and bottom-line performance is tied to the volatile price of oil. But there's a way to sidestep that and still take advantage of the out-of-favor nature of the energy industry: Focus on the midstream sector. Midstream companies own and operate the pipelines, storage facilities, processing plants, and transportation assets that move oil around the world. The key, however, is that most players in the space get paid fees for the use of the assets. That means demand is more important than energy prices.
One of the biggest and most diversified midstream players in North America is Enterprise Products Partners. Roughly 85% (or more) of its gross margin is fee based. While the master limited partnership was impacted by the energy downturn, it is still covering the cost of its huge 11% distribution yield by a generous 1.6 times. The partnership has pulled back on its growth plans, but with such a large yield most of the return is going to come from the distribution anyway.
EPD Dividend Yield data by YCharts
That said, it's important to note that Enterprise still sees a strong future for energy demand. This is hardly an investment in a dead industry, given that population growth will most likely mean a need for all types of energy. Yes, clean energy will be fast-growing, but counting oil out is probably premature at this point. Enterprise is a way to play in the energy patch while mostly sidestepping volatile oil prices.
Move over big oil, say hello to big utility
Matt DiLallo (NextEra Energy): Big oil is a fraction of its former size. For example, at its peak in 2007, oil giant Exxon had a market capitalization of more than $500 billion. However, falling oil prices and a chilling long-term outlook for the oil market has slowly eroded its value. As a result, the oil giant's market cap was recently down to $137.9 billion.
One of the reasons the oil market has been under such pressure is that it's losing ground to renewable energy. That shift has benefited NextEra, which has been one of the leaders in the energy transition. Its renewable energy investment strategy has paid big dividends as the utility has generated a more than 500% total shareholder return over the last decade, more than double that of the S&P 500. That steady growth has pushed its market cap above Exxon's as it recently hit $138.6 billion.
Meanwhile, NextEra sees lots more growth ahead, powered by renewable energy. It recently increased its 2021 earnings forecast by $0.20 per share, which is on top of the 6% to 8% growth it initially expected and a $0.20 per share boost from a prior acquisition. It also extended its outlook by another year, anticipating that its earnings will expand by 6% to 8% per year through 2023 off that higher expected 2021 baseline level. That increases the probability that NextEra will deliver on its plan to expand its dividend by about 10% per year through 2022. Contrast that outlook with most big oil companies, which have reduced their dividends this year because of all the oil market turmoil. Because of that, investors should forget about big oil and consider this utility giant instead.
A step in the right direction
Daniel Foelber (Dominion Energy): Utility giant Dominion Energy made headlines in July when it announced the planned sale of its gas transmission and storage assets to Berkshire Hathaway. With the sale came the end of Dominion's involvement in the Atlantic Coast Pipeline, a project that proved too costly and uncertain for Dominion to develop.
Dominion has been increasing its share of state-regulated assets, which provide stable cash flow so that it can grow its dividend. The company spent the last 15 years transitioning away from coal toward natural gas and plans to spend the next 15 years moving further away from coal, reducing natural gas, and slightly reducing nuclear, to make way for a portfolio that is one-third renewable. To do that, the company will need to grow its renewable generation capacity at a compound annual growth rate (CAGR) of 15.4%.
Dominion's new direction will come at a cost to shareholders. Starting in the fourth quarter of this year, Dominion will pay a $0.63 per share dividend instead of $0.94. At Dominion's current share price of $81, the new yield would be around 3.1%, which is respectable. After rebasing its dividend, Dominion plans to increase dividends per share at 6% per year, and earnings per share at 6.5% per year from estimated 2021 levels.
Dominion's push toward more state-regulated assets, many of which will be in the form of renewables, seems to be the best way to ensure long-term profitability and earnings growth. Considering Dominion's dividend comprised over 80% of its earnings, the dividend cut seems to be the best way for the company to still provide an attractive income investment while also retaining more earnings to fund its growth plan. Compared to big oil stocks that rely on volatile commodity prices, Dominion's stable business model and new direction could be a better long-term energy investment.
10 stocks we like better than Enterprise Products Partners
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Enterprise Products Partners wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of September 24, 2020
Daniel Foelber owns shares of BP and Royal Dutch Shell (A Shares). Matthew DiLallo owns shares of Enterprise Products Partners and NextEra Energy. Reuben Gregg Brewer owns shares of Dominion Energy, Inc. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and NextEra Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Midstream companies own and operate the pipelines, storage facilities, processing plants, and transportation assets that move oil around the world. Its renewable energy investment strategy has paid big dividends as the utility has generated a more than 500% total shareholder return over the last decade, more than double that of the S&P 500. Compared to big oil stocks that rely on volatile commodity prices, Dominion's stable business model and new direction could be a better long-term energy investment.
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Three much better alternatives these days are pipeline giant Enterprise Products Partners (NYSE: EPD), and utilities Dominion Energy (NYSE: D) and NextEra Energy (NYSE: NEE). A step in the right direction Daniel Foelber (Dominion Energy): Utility giant Dominion Energy made headlines in July when it announced the planned sale of its gas transmission and storage assets to Berkshire Hathaway. See the 10 stocks *Stock Advisor returns as of September 24, 2020 Daniel Foelber owns shares of BP and Royal Dutch Shell (A Shares).
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Three much better alternatives these days are pipeline giant Enterprise Products Partners (NYSE: EPD), and utilities Dominion Energy (NYSE: D) and NextEra Energy (NYSE: NEE). Move over big oil, say hello to big utility Matt DiLallo (NextEra Energy): Big oil is a fraction of its former size. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and NextEra Energy.
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Contrast that outlook with most big oil companies, which have reduced their dividends this year because of all the oil market turmoil. Because of that, investors should forget about big oil and consider this utility giant instead. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and NextEra Energy.
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2020-10-08 00:00:00 UTC
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5 Solar Stocks to Buy for Their ‘Tesla Potential’
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Green energy has quickly become one of the hottest topics for investors in recent years. After all, millennials increasingly want to buy products that are eco-friendly. This has granted companies like Tesla (NASDAQ:TSLA) an extra “cool factor” that has helped power its stock higher. Likewise, in an effort to combat the growing carbon footprint, many investors are now putting their money behind solar stocks. It’s not quite the same as the electric vehicle (EV) movement that has primarily propelled TSLA stock, but it’s still a movement worth paying attention to.
Solar power is a renewable energy source that uses sunlight to convert its rays into electric power. The electricity is then used to power homes, businesses and factories, thus eliminating the need for traditional fossil fuels.
The solar energy sector is still in its nascent phase and only accounts for 3.4% of the energy produced in the U.S today. However, the industry is valued at $52.5 billion and experts believe that this number could increase to $223.33 billion by 2026. Thanks to greater awareness on the effects of climate change, the need for clean energy is greater than ever.
7 High-Growth Value Stocks for a Post-Pandemic Future
The transition to a solar-powered world is years away, but the industry shows strong growth potential. This makes solar stocks a worthy investment for long-term investors. Here are our top picks in this sector:
First Solar (NASDAQ:FSLR)
Dominion Resources (NYSE:D)
NextEra Energy (NYSE:NEE)
Duke Energy (NYSE:DUK)
Brookfield Renewable (NYSE:BEP)
Solar Stocks to Buy: First Solar (FSLR)
FSLR) logo on smartphone in front of computer screen with graphs" width="300" height="169">Source: IgorGolovniov / Shutterstock.com
First Solar is a renewable energy company that designs and develops solar power modules and provides related operational services. While there are numerous solar energy companies that do this, First Solar stands out from the crowd for its proprietary technology.
The company created a thin-film solar module that can operate in less than ideal weather conditions at a lower cost per watt. This makes the technology a viable option for large scale businesses or factories. The novel technology is a major profit generator for the company resulting in billions of dollars in revenue.
First Solar’s baseline fundamentals are also very strong. The company recorded sales of $642.4 million this past quarter. This was up from the $585 million last year due to an increase in projected sales. The company also reported a net income of $36.9 million and earnings per share (EPS) of 35 cents per share. Moreover, the renewable energy giant is also sitting on a mountain of cash worth $1.64 billion in marketable securities.
This solar stock is a strong buy for any investor looking to make some long-term gains in renewable energy.
Dominion Energy (D)
Source: ying / Shutterstock.com
Utility giant Dominion Energy is one of the top companies in the U.S with a market capitalization of $68.24 billion. The company currently serves nearly 7 million customers spread across the east coast. Dominion is a key player in the energy transmission business but hopes to generate its future revenue from renewable energy production.
In an effort to reach this goal, the company plans to invest $55 million over 15 years in technologies that decrease emissions. Dominion also estimates that it will have 16.1 GW generated by solar and wind energy by 2036. Although an investment in renewable energy will affect the short-term earnings, its efforts are expected to pay off in the next 15 years.
10 Small-Cap Stocks to Buy From Some of America's Best ETFs
Long-term investors will find D stock to be a great investment. The company’s stock is up 4% this year and has also managed to sustain a dividend yield of 4.7%.
NextEra Energy (NEE)
Source: Shutterstock
NextEra Energy is the star of the energy sector this year with its stock up by almost 30% to date. Despite the novel coronavirus pandemic, the company claims that its long-term growth prospects are seeming unaffected by the crisis. The energy giant also operates one of the largest utility plants in Florida and has benefitted from the state’s growing population. This segment could be a huge cash cow for the company in the next few years.
In addition to its thriving utility business, NextEra is the largest wind and solar energy provider in the world. This segment has also seen increased demand in recent years as more businesses make the shift to green energy. NextEra Energy has 14 gigawatts of renewable energy projects, which will help boost its bottom line.
If investors needed any more reason to see NEE stock as one of the stronger solar stocks out there, it also boats a steady dividend yield of 1.99%.
Duke Energy (DUK)
Source: jadimages / Shutterstock.com
Another solar stock that is on investors’ radar is Duke Energy. The company serves nearly 7.8 million customers across the U.S and has three lines of business. The first two are its utilities and natural gas segments, which operate in four U.S. states. The third segment is the production of wind and solar energy, which is distributed under long-term contracts.
The company made the transition to renewable energy when it realized that coal was a resource that was no longer in demand. The renewable business is still smaller than the natural gas and electricity segments but shows a lot of upside potential.
7 Innovative Stocks Pushing Our World Ahead
DUK stock is down 8% this year, but a dividend yield of 4.7% makes it an attractive investment. Investors who are in it for the long-haul should place their bets on this solar stock.
Brookfield Renewable (BEP)
BEP) logo is displayed on a smartphone screen in front of a digital American flag background." width="300" height="169">Source: IgorGolovniov / Shutterstock.com
The shift to green energy is great news for Brookfield Renewable that made some big gains on the production of hydropower. With the company’s gradual shift towards solar energy, this growth is expected to continue.
In its five-year plan, Brookfield outlined an optimistic increase in earnings and a consistent dividend growth through 2025. This confidence stems from the growth potential of the renewable energy market over the next 10 years. As reported by The Motley Fool the industry will grow at a rate of 15% each year with over $5-10 trillion in investments over the next decade.
Keeping in line with this outlook, Brookfield plans to spend between $800 million to $1 billion on renewable energy production each year. This is expected to improve its bottom line by 3-5% as well and increase profit per share by 10-16%. The company’s current dividend yield of 4% isn’t too shabby either.
All of that means BEP stock is one of the best solar stocks to invest in if you believe in the future of renewable energy.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.
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The post 5 Solar Stocks to Buy for Their ‘Tesla Potential’ appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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7 High-Growth Value Stocks for a Post-Pandemic Future The transition to a solar-powered world is years away, but the industry shows strong growth potential. width="300" height="169">Source: IgorGolovniov / Shutterstock.com The shift to green energy is great news for Brookfield Renewable that made some big gains on the production of hydropower. Keeping in line with this outlook, Brookfield plans to spend between $800 million to $1 billion on renewable energy production each year.
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Here are our top picks in this sector: First Solar (NASDAQ:FSLR) Dominion Resources (NYSE:D) NextEra Energy (NYSE:NEE) Duke Energy (NYSE:DUK) Brookfield Renewable (NYSE:BEP) Solar Stocks to Buy: First Solar (FSLR) FSLR) logo on smartphone in front of computer screen with graphs" width="300" height="169">Source: IgorGolovniov / Shutterstock.com First Solar is a renewable energy company that designs and develops solar power modules and provides related operational services. width="300" height="169">Source: IgorGolovniov / Shutterstock.com The shift to green energy is great news for Brookfield Renewable that made some big gains on the production of hydropower. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Green energy has quickly become one of the hottest topics for investors in recent years.
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Here are our top picks in this sector: First Solar (NASDAQ:FSLR) Dominion Resources (NYSE:D) NextEra Energy (NYSE:NEE) Duke Energy (NYSE:DUK) Brookfield Renewable (NYSE:BEP) Solar Stocks to Buy: First Solar (FSLR) FSLR) logo on smartphone in front of computer screen with graphs" width="300" height="169">Source: IgorGolovniov / Shutterstock.com First Solar is a renewable energy company that designs and develops solar power modules and provides related operational services. NextEra Energy (NEE) Source: Shutterstock NextEra Energy is the star of the energy sector this year with its stock up by almost 30% to date. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Green energy has quickly become one of the hottest topics for investors in recent years.
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This segment has also seen increased demand in recent years as more businesses make the shift to green energy. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Green energy has quickly become one of the hottest topics for investors in recent years. After all, millennials increasingly want to buy products that are eco-friendly.
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2020-10-08 00:00:00 UTC
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The Largest U.S. Offshore Wind Farm Has Its First 2 Windmills
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U.S. utility giant Dominion Energy (NYSE: D) is shifting its profile, looking to get cleaner and greener. That's nothing unique; many peers are heading in the same direction. However, it recently embarked on a huge offshore wind project that investors need to watch. Here's what is going on.
A long-term shift
Dominion Energy recently made headlines for canceling a massive pipeline project called Atlantic Coast. At the same time, it agreed to sell most of its existing pipeline business to Berkshire Hathaway. That move will materially shrink Dominion's business and result in a dividend cut. This is a big move in some ways, but not really a change in the trend for Dominion.
Image source: Getty Images.
For more than a decade, Dominion has been shifting toward more regulated and conservative businesses. The first material step in this process was exiting the oil drilling business. The pipeline business was still desirable at that point because it was predictable and there were expansion opportunities. However, a change in tax law in 2018 shifted the funding math on building new pipelines, and legal, regulatory, and environmental headwinds to projects have continued to increase. Since pipelines are no longer as predictable, Dominion is selling most of its midstream business to focus on its utility operations.
Once it has slimmed down, the utility expects that its growth rate will increase and that it can quickly resume dividend increases. To put some numbers on that, Dominion is projecting that growth after the business reset will be in the 6.5% range, with dividend growth (backed by a modest 65% payout ratio) coming in just slightly below that at 6% or so annually. Both are solid numbers for a utility of Dominion's size. The reason for all that growth will be that there's shifting and changing taking place in the utility space. That includes general upkeep of existing assets and spending to improve grid reliability. However, there's another piece of the spending story that's going to be a big long-term benefit as well -- clean energy.
It's getting windy
Companies like Dominion are quickly building solar and onshore wind facilities in the United States. Regulators are generally happy to see such spending and, thus, are more likely to approve rate requests. That said, the big clean energy project to watch at Dominion is happening in the waters off Virginia. In fact, the utility recently completed the construction of a two-turbine, 12-megawatt project roughly 27 miles off the Virginia Beach coast. That's enough juice to power 3,000 homes.
It's understandable if you aren't exactly impressed. The truth is that, at around $300 million or so, this is a tiny project -- for now. The goal is for Dominion to learn by doing. That includes figuring out how the construction process plays out and what it's like to operate the turbines on an ongoing basis. Those learnings will be put to good use as Dominion builds out the full project, which is 2.6 gigawatts in size and can power 650,000 homes.
DOMINION ENERGY VIRGINIA OFFSHORE WIND PROJECT
Electric capacity
2.6 gigawatts
Cost
Roughly $8 billion
Total stages
Four -- a pilot test followed by three 800-megawatt construction phases
Current status
Pilot project construction completed
Final in service dates
Between 2024 and 2026
Information source: Dominion Energy.
At this point, Dominion expects the offshore wind project to cost around $8 billion and take until 2026 to fully complete. This is not a small investment or one that will wrap up quickly. But Dominion isn't trying to do it all at once, as the two-turbine pilot test shows. Indeed, once it is happy with this test, the real investment begins, but it will be spread over three phases. Each phase will provide roughly 800 megawatts worth of power.
Like the pilot, the goal is to learn from each of the stages so that the next phase of development can be handled more easily. It also allows the company to stop at multiple points along the way if things aren't going as smoothly as hoped. That said, these are still the very early days of the project, which won't really start in earnest until around 2023. But long-term investors need to start watching now for the updates on this big dig. In fact, at this point in time, Dominion's wind farm is the largest offshore wind project in the Americas, so this project is important for Dominion, but also for the entire U.S. utility sector.
Listen for the updates
Now that Dominion has completed the construction of the two pilot turbines, the best place for investors to get updates will likely be in quarterly conference calls. At this early stage, the updates are likely to be pretty vague and sparse, but as long as the company remains upbeat on the results it's achieving, the next big step to look for is the green light on the first of the three major construction stages. While that stage won't really start in earnest until 2022 or 2023, the go/no go decision will likely happen much sooner.
10 stocks we like better than Dominion Energy, Inc
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Reuben Gregg Brewer owns shares of Dominion Energy, Inc. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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A long-term shift Dominion Energy recently made headlines for canceling a massive pipeline project called Atlantic Coast. However, a change in tax law in 2018 shifted the funding math on building new pipelines, and legal, regulatory, and environmental headwinds to projects have continued to increase. In fact, the utility recently completed the construction of a two-turbine, 12-megawatt project roughly 27 miles off the Virginia Beach coast.
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Electric capacity 2.6 gigawatts Cost Roughly $8 billion Total stages Four -- a pilot test followed by three 800-megawatt construction phases Current status Pilot project construction completed Final in service dates Between 2024 and 2026 Information source: Dominion Energy. At this point, Dominion expects the offshore wind project to cost around $8 billion and take until 2026 to fully complete. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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Electric capacity 2.6 gigawatts Cost Roughly $8 billion Total stages Four -- a pilot test followed by three 800-megawatt construction phases Current status Pilot project construction completed Final in service dates Between 2024 and 2026 Information source: Dominion Energy. In fact, at this point in time, Dominion's wind farm is the largest offshore wind project in the Americas, so this project is important for Dominion, but also for the entire U.S. utility sector. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).
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At the same time, it agreed to sell most of its existing pipeline business to Berkshire Hathaway. In fact, the utility recently completed the construction of a two-turbine, 12-megawatt project roughly 27 miles off the Virginia Beach coast. But long-term investors need to start watching now for the updates on this big dig.
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699009.0
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2020-09-30 00:00:00 UTC
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Dominion Energy Expects Transaction With Berkshire Hathaway Energy To Close Around November 1
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https://www.nasdaq.com/articles/dominion-energy-expects-transaction-with-berkshire-hathaway-energy-to-close-around
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(RTTNews) - Dominion Energy, Inc. (D) on Wednesday provided updates related to the pending sale of its gas transmission and storage assets to an affiliate of Berkshire Hathaway Inc. (BRK-A, BRK-B).
Dominion Energy expects its transaction with Berkshire Hathaway Energy, exclusive of Questar Pipelines, to close around November 1, 2020.
As consideration for that transaction, Dominion Energy will receive about $2.7 billion in cash and transfer $5.3 billion of existing Dominion Energy Gas Holdings-related indebtedness to the buyer at closing.
Subsequently, Dominion Energy expects to complete the sale of Questar Pipelines to Berkshire Hathaway Energy in early 2021. As consideration for that transaction, Dominion Energy will receive approximately $1.3 billion in cash and also transfer around $430 million of existing Questar Pipelines indebtedness to the buyer.
The company noted that the aggregate cash consideration and assumption of debt across the two anticipated closings is exactly equivalent to the original transaction terms announced on July 5, 2020.
Due to the phased closing, Questar Pipelines and its associated debt will be removed from Dominion Energy Gas Holdings before the transfer of DEGH to Berkshire.
Dominion noted that Berkshire Hathaway Energy has indicated it plans to support the existing credit profile of DEGH by foregoing the refinancing of some $1.2 billion of scheduled maturities over the next twelve months, as well as consideration of other credit-enhancing measures including additional deleveraging past 2021, as needed.
Further, Dominion Energy said it has completed over $500 million of open market repurchases to date and executed a $1.5 billion accelerated share repurchase program that will conclude in December. On completion in early 2021, the company continues to expect its total share repurchases to be at least $3 billion.
For fiscal 2020, Dominion Energy now expects operating earnings per share, normalized for weather, to be in the top half of its outlook range of $3.37 to $3.60 per share. In addition, the company affirmed all other earnings and dividend guidance.
The company noted that dual-phase closing will not change its prior guidance with regard to treatment of assets being divested as discontinued operations and excluded from operating earnings.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Dominion Energy, Inc. (D) on Wednesday provided updates related to the pending sale of its gas transmission and storage assets to an affiliate of Berkshire Hathaway Inc. (BRK-A, BRK-B). As consideration for that transaction, Dominion Energy will receive approximately $1.3 billion in cash and also transfer around $430 million of existing Questar Pipelines indebtedness to the buyer. Dominion noted that Berkshire Hathaway Energy has indicated it plans to support the existing credit profile of DEGH by foregoing the refinancing of some $1.2 billion of scheduled maturities over the next twelve months, as well as consideration of other credit-enhancing measures including additional deleveraging past 2021, as needed.
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As consideration for that transaction, Dominion Energy will receive about $2.7 billion in cash and transfer $5.3 billion of existing Dominion Energy Gas Holdings-related indebtedness to the buyer at closing. Subsequently, Dominion Energy expects to complete the sale of Questar Pipelines to Berkshire Hathaway Energy in early 2021. As consideration for that transaction, Dominion Energy will receive approximately $1.3 billion in cash and also transfer around $430 million of existing Questar Pipelines indebtedness to the buyer.
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Dominion Energy expects its transaction with Berkshire Hathaway Energy, exclusive of Questar Pipelines, to close around November 1, 2020. As consideration for that transaction, Dominion Energy will receive about $2.7 billion in cash and transfer $5.3 billion of existing Dominion Energy Gas Holdings-related indebtedness to the buyer at closing. Subsequently, Dominion Energy expects to complete the sale of Questar Pipelines to Berkshire Hathaway Energy in early 2021.
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As consideration for that transaction, Dominion Energy will receive about $2.7 billion in cash and transfer $5.3 billion of existing Dominion Energy Gas Holdings-related indebtedness to the buyer at closing. Subsequently, Dominion Energy expects to complete the sale of Questar Pipelines to Berkshire Hathaway Energy in early 2021. As consideration for that transaction, Dominion Energy will receive approximately $1.3 billion in cash and also transfer around $430 million of existing Questar Pipelines indebtedness to the buyer.
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699010.0
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2020-09-26 00:00:00 UTC
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Market Turmoil: Buy These 5 Stocks to Protect Your Retirement
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https://www.nasdaq.com/articles/market-turmoil%3A-buy-these-5-stocks-to-protect-your-retirement-2020-09-26
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The S&P 500's more than 9% decline in September from its recent peak can't quite be categorized as a market crash, but it's a big enough dent to remind investors they can take nothing for granted. And for those investors near or in retirement, sharp sell-offs like this can be even more worrisome. For some, the September swoon may have forced a rethinking of retirement budgets.
With that as the backdrop, here's a rundown of five safer stocks you can use to protect your retirement account from more market turmoil.
Image source: Getty Images
1. Waste Management
The old cliche about death and taxes is true but incomplete. As long as people populate the Earth, they'll be creating new trash to dispose of.
Enter Waste Management (NYSE: WM), the world's biggest trash collection company. It operates 244 landfills serving 20 million customers, as well as a whole slew of recycling and gas-to-energy facilities. This portfolio positions it well for a future in which legislation is likely to eventually mandate such things.
That's not the coolest thing about Waste Management for current and soon-to-be retirees, though. The company notes that more than 75% of its top line has "annuity-like characteristics." Translation: A huge chunk of its business is recurring revenue, which has helped it boost its dividend annually for 17 consecutive years. The current yield of 1.9% isn't stellar, but the payout grows regularly for sustainable reasons.
2. Procter & Gamble
Procter & Gamble (NYSE: PG) is, of course, the well-known consumer goods giant behind brands like Pampers diapers, Gillette shaving supplies, Tide laundry detergent, and Bounty paper towels (just to name a few of its numerous brands). These are products that people not only buy over and over again, but brands that foster customer loyalty.
Investors who have been following this company probably know P&G wasn't at its best just a few years ago, perhaps in part due to its sheer size or having the wrong corporate culture for the early part of the 21st century.
However, P&G has largely completed the long process of shrugging off what was holding it back. In 2014, now-former CEO Art Lafley began the divestiture of more than 100 brands that were more distractions than profit centers. Current CEO David Taylor, who took over, in 2015, continued that work and also began an overhaul of how the consumer staples giant markets products and hires employees. Among other changes, Procter & Gamble is now leveraging digital consumer data and hiring more outside talent to bring new know-how in-house.
The impacts of these changes have been slow to reveal themselves, and they've recently been obscured by the impact of the COVID-19 pandemic. But, once the coronavirus crisis is in the rear-view mirror, investors will be better able to recognize that Procter & Gamble is a completely different company than it was just a few years ago.
3. Realty Income
All real estate investment trusts (REITs) feel a bit risky in the current environment, but especially ones like Realty Income (NYSE: O) that specialize in retail tenants. The retail industry was already on its heels before the coronavirus appeared, but the pandemic has forced many more chains and small businesses into bankruptcy.
Realty Income's tenant list isn't made up of many consumer-facing companies fighting for their lives, though. Its biggest tenants include Walgreens, 7-Eleven, Dollar General (NYSE: DG), FedEx, and Family Dollar -- part of the Dollar Tree organization -- just to name a few. Walmart (NYSE: WMT), Circle K, CVS, and Kroger are also major tenants. Most of those chains are holding up well in this strained economic environment -- and some of them are even thriving in it.
That's not to suggest all of Realty Income's renters are on top of the world right now. Movie theater chains AMC Entertainment and Cineworld's Regal Cinemas are both among its top 10 tenants, and the theater industry is in real trouble.
Even so, Realty Income recently announced that it collected 93.5% of the rent it was due in August, a major improvement from its 87.8% collection rate in June when the economic impact of coronavirus shutdowns was at its worst. The REIT's historically solid dividend, currently yielding 4.6%, isn't in any real danger.
4. Dollar General
Not only is Dollar General a reliable Realty Income tenant, it's also a solid investment in its own right.
That may sound hard to believe, given today's conditions -- but this retailer may not be the company you think it is. It has spent the last several years deliberately doing some things differently than Walmart while doing other things exactly like Walmart does. Namely, it has established smaller stores in neighborhoods where Walmart's aren't nearby, and it added a robust selection of groceries to those stores, including (in some cases) fresh produce and chilled goods. End result? Around three-fourths of people in the U.S. live within five miles of a Dollar General store, and the company says the average shopper can be in and out of a store in less than 10 minutes and get most everything they need.
The clincher for retirees: While Dollar General's strategies are driving strong sales growth, the company is also boosting its dividend. As my fellow Fool Jon Quast pointed out a few days ago, the stock's current dividend yield of around 1% isn't much to write home about, but the retailer has been raising its payout at a double-digit-percentage pace for the past few years.
Income, growth, and stability? That's an ideal retirement holding.
5. Dominion Energy
Finally, add utility name Dominion Energy (NYSE: D) to the list of stocks that can protect your retirement portfolio.
The case here is fairly obvious: Consumers under financial stress might skip a vacation or postpone the purchase of an automobile, but they're not going to go without electricity. Dominion delivers it to 7 million customers in 20 states and passes along a generous portion of its earnings to shareholders in the form of dividends.
Sure, the company recently cut its payout by about one-fourth, but investors should look at the bigger picture. As CEO Thomas Farrell explained in conjunction with July's dividend reduction announcement, "Our rebased dividend policy better reflects our revised operating and financial strengths, aligns with our best-in-class industry peers and allows us to grow our dividend much more rapidly than before."
Those operating revisions include the shedding of riskier, more volatile businesses, and a greater focus on more sustainable, predictable ones. Dominion is now out of the energy exploration and transportation industries, but it has beefed up its exposure to the renewable market. Most of all, it has sought out and acquired its way into markets where well-regulated rates allow for stable revenue and earnings. Â
In other words, while the recent payout cut was in one sense a step back, current dividends aren't everything. The reconfigured company and its dividend will be much better for shareholders in the long run.
10 stocks we like better than Waste Management
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Waste Management wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
Â
*Stock Advisor returns as of August 1, 2020
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James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends FedEx. The Motley Fool recommends CVS Health, Dominion Energy, Inc, and Waste Management. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The S&P 500's more than 9% decline in September from its recent peak can't quite be categorized as a market crash, but it's a big enough dent to remind investors they can take nothing for granted. As my fellow Fool Jon Quast pointed out a few days ago, the stock's current dividend yield of around 1% isn't much to write home about, but the retailer has been raising its payout at a double-digit-percentage pace for the past few years. Most of all, it has sought out and acquired its way into markets where well-regulated rates allow for stable revenue and earnings.  In other words, while the recent payout cut was in one sense a step back, current dividends aren't everything.
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Enter Waste Management (NYSE: WM), the world's biggest trash collection company. Its biggest tenants include Walgreens, 7-Eleven, Dollar General (NYSE: DG), FedEx, and Family Dollar -- part of the Dollar Tree organization -- just to name a few. The Motley Fool recommends CVS Health, Dominion Energy, Inc, and Waste Management.
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As my fellow Fool Jon Quast pointed out a few days ago, the stock's current dividend yield of around 1% isn't much to write home about, but the retailer has been raising its payout at a double-digit-percentage pace for the past few years. As CEO Thomas Farrell explained in conjunction with July's dividend reduction announcement, "Our rebased dividend policy better reflects our revised operating and financial strengths, aligns with our best-in-class industry peers and allows us to grow our dividend much more rapidly than before." The S&P 500's more than 9% decline in September from its recent peak can't quite be categorized as a market crash, but it's a big enough dent to remind investors they can take nothing for granted.
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That's not to suggest all of Realty Income's renters are on top of the world right now. The clincher for retirees: While Dollar General's strategies are driving strong sales growth, the company is also boosting its dividend. The Motley Fool recommends CVS Health, Dominion Energy, Inc, and Waste Management.
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699011.0
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2020-09-23 00:00:00 UTC
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Is Southern Company Stock a Buy?
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https://www.nasdaq.com/articles/is-southern-company-stock-a-buy-2020-09-23
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Utilities like Southern Company (NYSE: SO) don't offer the high-powered growth potential of other stocks. Instead, the company's main appeal is to income-focused investors like retirees, given its above-average dividend yield of 4.8%.
Here's a look at the sustainability of that payout and whether that makes it an appealing buy for dividend-focused investors.
Image source: Getty Images.
Digging into Southern Company's dividend
Southern Company has an excellent dividend track record. Overall, the utility has paid its shareholder like clockwork, sending them at least as much as the prior payout level every quarter since 1948. Even better, the company has increased its dividend for the last 19 consecutive years.
Unfortunately, the payout isn't on the firmest of foundations these days. After increasing it by $0.08 earlier this year, Southern Company is on track to pay out $2.56 per share. However, because of some headwinds from COVID-19 and other issues, the utility only expects to generate $3.10 to $3.22 per share of adjusted earnings. The midpoint of that range puts its dividend payout ratio at 81%, well above the 65% average of its peer group.
On a more positive note, the company has a solid investment-grade balance sheet with credit ratings in the mid-to-high BBB/Baa range. However, rating agencies have a negative view of the company, primarily due to the risks facing its Georgia Power subsidiary as it builds two new nuclear power units.
A look at what the future seems to hold for Southern Company and its dividend
These days, Southern Company's main focus is finishing the Vogtle 3 and 4 units by their regulatory-approved in-service dates of November 2021 and 2022, respectively. The company is aggressively working to meet that goal, despite the impact of COVID-19, which caused some delays and cost overruns. The pandemic's effect alone increased the company's share of those projects by $150 million. Meanwhile, it's already several years behind schedule and many billions of dollars above the initial budget.
If the company can finish the project without running into any more delays or cost overruns, Southern should be in good shape. However, if costs keep spiraling out of control, Southern might need to reduce its dividend so that it doesn't put too much more pressure on its balance sheet.
Meanwhile, a longer-term concern with Southern Company is its plans to transition its power portfolio to meet its ambitious goal of net-zero emissions by 2050. While the company currently gets 18% of its energy from emissions-free nuclear -- which will rise after it finishes Vogtle -- and another 18% from renewables, coal still produces 18% of its power, and natural gas makes up the majority at 51%. Given that fossil fuel-focused power mix, Southern will need to invest an increasing amount of money into renewables in the coming years. That will be tough to do given its elevated dividend payout ratio and weaker credit profile compared to peers like NextEra Energy (NYSE: NEE), which has a 60% payout ratio and A-rated credit.
Those issues recently forced fellow utility Dominion (NYSE: D) to sell its gas infrastructure assets and reset its dividend to align its payout ratio to the peer group average of 65%. Southern might need to make similar moves so that it has the financial flexibility to transition from fossil fuels to emissions-free sources over the next few decades.
Verdict: Not appealing enough to buy
While Southern Company has been a great dividend stock for the past 19 years, its dividend growth engine seems to be running low on power, so its dividend growth days might be in the rearview mirror. Meanwhile, its high payout ratio and deteriorating credit quality could eventually force it to reverse course on the dividend so that it has the flexibility needed to finance its net-zero pledge. Given that risk, Southern's stock isn't all that appealing when rivals like NextEra offer more visible growth prospects backed by a top-tier financial profile.
10 stocks we like better than Southern Company
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*Stock Advisor returns as of August 1, 2020
Matthew DiLallo owns shares of NextEra Energy. The Motley Fool recommends Dominion Energy, Inc and NextEra Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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While the company currently gets 18% of its energy from emissions-free nuclear -- which will rise after it finishes Vogtle -- and another 18% from renewables, coal still produces 18% of its power, and natural gas makes up the majority at 51%. Those issues recently forced fellow utility Dominion (NYSE: D) to sell its gas infrastructure assets and reset its dividend to align its payout ratio to the peer group average of 65%. Given that risk, Southern's stock isn't all that appealing when rivals like NextEra offer more visible growth prospects backed by a top-tier financial profile.
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Digging into Southern Company's dividend Southern Company has an excellent dividend track record. A look at what the future seems to hold for Southern Company and its dividend These days, Southern Company's main focus is finishing the Vogtle 3 and 4 units by their regulatory-approved in-service dates of November 2021 and 2022, respectively. That will be tough to do given its elevated dividend payout ratio and weaker credit profile compared to peers like NextEra Energy (NYSE: NEE), which has a 60% payout ratio and A-rated credit.
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Digging into Southern Company's dividend Southern Company has an excellent dividend track record. A look at what the future seems to hold for Southern Company and its dividend These days, Southern Company's main focus is finishing the Vogtle 3 and 4 units by their regulatory-approved in-service dates of November 2021 and 2022, respectively. Verdict: Not appealing enough to buy While Southern Company has been a great dividend stock for the past 19 years, its dividend growth engine seems to be running low on power, so its dividend growth days might be in the rearview mirror.
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Even better, the company has increased its dividend for the last 19 consecutive years. Those issues recently forced fellow utility Dominion (NYSE: D) to sell its gas infrastructure assets and reset its dividend to align its payout ratio to the peer group average of 65%. Verdict: Not appealing enough to buy While Southern Company has been a great dividend stock for the past 19 years, its dividend growth engine seems to be running low on power, so its dividend growth days might be in the rearview mirror.
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699012.0
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2020-09-15 00:00:00 UTC
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1 Question Berkshire Hathaway Has to Answer
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https://www.nasdaq.com/articles/1-question-berkshire-hathaway-has-to-answer-2020-09-15
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Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has a cash problem. For years, Berkshire's operating businesses have been generating billions of dollars, but CEO Warren Buffett and his team haven't been able to find many attractive opportunities to put that money to work. The cash has built up, reaching nearly $147 billion on the balance sheet at the end of the second quarter.
The past couple of months have provided a glimmer of hope. So far, the third quarter has been Berkshire's most active period of investment in years. This begs the question: In the minds of Warren Buffett and Berkshire's other investment managers, is it finally time to invest again?
Image source: The Motley Fool.
Berkshire's recent moves
After being a net seller of stocks in both the first and second quarters of 2020 -- much to the disappointment of many investors -- Warren Buffett and the rest of Berkshire's team have made some big moves in the past few months.
Just a few days after the second quarter ended, Berkshire announced it was acquiring Dominion Energy's (NYSE: D) natural gas assets in a deal worth approximately $10 billion, including the assumption of debt. Berkshire's actual cash outlay was $4 billion, but it was still Berkshire's first notable investment (stock or acquisition) in some time.
Shortly after the Dominion deal was announced, Berkshire added to its Bank of America (NYSE: BAC) stock investment. And then it added some more. And some more. In all, Berkshire spent more than $2 billion increasing its already large stake in the megabank to nearly 12% of outstanding shares, worth more than $26 billion at current market values.
In late August, Berkshire announced that it had acquired stakes of more than 5% in five large Japanese companies, a total investment of roughly $6.5 billion built over a 12-month period.
Most recently, it was revealed through a regulatory filing that Berkshire has agreed to invest over $500 million in cloud data company Snowflake's upcoming IPO. This investment was most likely initiated by one or both of Buffett's two stock-picking lieutenants, Ted Weschler and Todd Combs. Both are much more comfortable with the technology sector than Buffett.
In all, these investments represent total capital of about $13 billion. This is still a small fraction of the $147 billion in cash Berkshire had on its balance sheet at the end of the second quarter, but it's the most aggressive Berkshire has been with its cash in a long time.
Is Berkshire finally comfortable with investing again?
There may be more investment activity going on right now than we know. We're only aware of the Bank of America investment because Berkshire owns more than 10% of the bank and is thus subject to disclosure rules. We won't know what else is going on in Berkshire's stock portfolio until the company releases its 13F filing for the period, which won't happen until mid-November. Not to mention that there are still three weeks left in September; given the recent volume of Berkshire headlines, I don't think anyone would be surprised to see another investment announced.
Here's the takeaway. The recent moves by Berkshire suggest that Warren Buffett and his team are finally ready to put money to work, which could signal that the worst of the pandemic's effects on the market are over. Buffett loves investing when stocks are cheap, but not necessarily when they're volatile like they were in the second quarter. The activity might signal that Buffett believes things have calmed down and are likely to stay that way.
The big unanswered question is whether Buffett feels comfortable enough to keep deploying capital, and hopefully "fire his elephant gun" (that is, make a big acquisition). After all, even after the relatively aggressive investment activity lately, Berkshire still has more than $130 billion left to play with.
10 stocks we like better than Berkshire Hathaway
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of August 1, 2020
Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short January 2021 $23 puts on Bank of America. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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For years, Berkshire's operating businesses have been generating billions of dollars, but CEO Warren Buffett and his team haven't been able to find many attractive opportunities to put that money to work. Just a few days after the second quarter ended, Berkshire announced it was acquiring Dominion Energy's (NYSE: D) natural gas assets in a deal worth approximately $10 billion, including the assumption of debt. The recent moves by Berkshire suggest that Warren Buffett and his team are finally ready to put money to work, which could signal that the worst of the pandemic's effects on the market are over.
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Just a few days after the second quarter ended, Berkshire announced it was acquiring Dominion Energy's (NYSE: D) natural gas assets in a deal worth approximately $10 billion, including the assumption of debt. Shortly after the Dominion deal was announced, Berkshire added to its Bank of America (NYSE: BAC) stock investment. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Berkshire's recent moves After being a net seller of stocks in both the first and second quarters of 2020 -- much to the disappointment of many investors -- Warren Buffett and the rest of Berkshire's team have made some big moves in the past few months. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). For years, Berkshire's operating businesses have been generating billions of dollars, but CEO Warren Buffett and his team haven't been able to find many attractive opportunities to put that money to work.
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So far, the third quarter has been Berkshire's most active period of investment in years. Shortly after the Dominion deal was announced, Berkshire added to its Bank of America (NYSE: BAC) stock investment. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares).
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699013.0
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2020-09-10 00:00:00 UTC
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How to Find Companies With Quality Shareholders
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In this episode of Industry Focus: Wildcard, Nick Sciple is joined by Motley Fool analyst Buck Hartzell, and they interview Professor Lawrence Cunningham about his book Quality Shareholders: How the Best Managers Attract and Keep Them. He also provides his insights on Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and talks about some changes going on there. In addition, they discuss environmental, social, and corporate governance investing, and much more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on September 2, 2020.
Nick Sciple: Welcome to Industry Focus. I'm Nick Sciple, joining me today is Motley Fool analyst Buck Hartzell, our special guest is Lawrence Cunningham. Professor Cunningham is the author of two dozen books with his latest book being Quality Shareholders: How the Best Managers Attract and Keep Them. In addition to his writing, he serves as a faculty member at the George Washington University School of Law, as well as consulting on corporate governance and serving on the Boards of Directors of numerous public and private companies, including Constellation Software, where he currently serves as Vice Chairman. Lawrence Cunningham, welcome to Industry Focus.
Lawrence Cunningham: Wonderful to be here.
Buck Hartzell: Thanks for joining us, Larry, we appreciate you taking the time.
Cunningham: Always a pleasure to be with you, Buck, and The Motley Fool crowd.
Hartzell: Yeah.
Sciple: Larry, we mentioned your writing, you've been writing about Warren Buffett and compiling his letters for a number of years, he just turned 90 over the weekend, you know him personally. Just kind of a fun question off-the-bat, what birthday present do you buy for a guy like Warren Buffett, a guy who has everything?
Cunningham: An A. share. [laughs] I'm just kidding, he's trying to get rid of his A. shares. But you know, I think he appreciates substance, so I sent him a book, and I think just a little note about the legacy of intelligent investing that he's handing down, you know, which is widely followed; probably still not by enough people. But I think that's probably -- the thing that's been most important to him is that he's provided education for people. I think that's the thing that's nearest and dearest to his heart. I mean, other people think he's a great investor, a great manager, a great philanthropist. I think all those things are true, but I think he's probably most proud, really, of having been an educator. And so, I'd give him a book and just remind him of the legacy he's created.
Hartzell: That sounds like a great idea. I might get him a PowerPoint person to help him out with the next annual meeting. [laughs] It was clear he's somebody to put those PowerPoints together by himself.
Cunningham: Those slides were great. My favorite one was, I think it was an estimate of the national debt in 1812 or something like that, that said, estimate W. Buffett, [laughs] as the source.
Hartzell: Had to get the source in there, pretty sure. Oh, that's great. So, let's talk a little bit about, there's been some great things that are going on at Berkshire Hathaway and some changes that are going on. I guess, the most recent one is, around his 90th birthday he announced the deal, he is investing in Japan. So, he's got, kind of, a basket approach going into a bunch of these Keiretsus in Japan. Any thoughts on that investment? We know he said in his release that he borrowed some money in Japanese currency there, about 1%. If you're looking across those stocks, they're yielding about 5% or so, 4% to 6%; what do you think, what got him interested, and is this classic Buffett looking in an out-of-favor sector or is there something else we should read into this with inflation?
Cunningham: That, and the thing that jumped out at me is, Berkshire historically has focused almost exclusively on the United States, some exceptions in Germany in the insurance sector, exception for Israeli manufacturing business. They bought a small German motorcycle supply business five or seven years ago, and obviously the subsidiaries tend to operate globally, but this is really the first significant investment that Omaha has, that is, Warren's portfolio has been done outside of the United States. That's what struck me as most significant about it. And Warren has always attributed that domestic bias to his circle of competence, saying, look, I don't know enough about the economic context of European or Asian businesses or the governance systems. And so, I thought it was a remarkable pivot or signal that he's become comfortable, he's learned about a different business culture.
And I have to say, you know, the Japanese business culture is radically different from the North American culture. As you said, the five companies are all members of Keiretsus, these complex conglomerates with interlocking ownership. The culture of business in Japan itself, it's a very inward-looking, very domestic kind of culture. So, he's obviously saying, you know, he's not violating his circle of competence, he's signaling that he's learned a lot about that economy, that culture, the set of businesses. And so, I think that's quite important about it, but obviously your points about there being value here and being able to even leverage a little bit is interesting.
And I get the feeling these are Warren's moves. You know, many of his recent moves have been attributed to Todd Combs to Ted Weschler, especially the Apple position. But it sounded to me -- and they're not always entirely clear about who's making what decisions, but it sounded, in this release, that this is something that he has been involved with and thought about. So, I think that's -- you know, and there's much more to say about that aspect of it, that you know, Berkshire goes abroad, goes to Asia; that's bold, I think.
Hartzell: It is something that I don't think most of us that follow Berkshire would have suspected. If you had us write down five or six stocks that Warren Buffett was buying after COVID or even before and during, we probably wouldn't have picked Japanese companies. So, that's great, 90 years old, he's still surprising us. And I'm sure it will turn out to be a pretty good value. He knows a thing or two about investing in financial companies. So, yeah, it should turn out OK.
Let me ask you quickly. Bill Ackman is a guy who's a well-known investor, kind of a swing for the fences guy. He had a big stake in Berkshire Hathaway, but only briefly, and he sold out of it pretty quickly. You wrote an essay about that, and maybe it ties in well with the book that you're coming out this Fall. But what are your thoughts on Bill Ackman selling out of his Berkshire Hathaway stake? And was Warren really crying at home when he heard that Bill Ackman had left the fold? [laughs]
Cunningham: Well, I should first say that I know Bill and like him, I've known him for a long time. He was present at the symposium that I did with Warren on his letters 25 years ago. So, I admire him and I think he and his brand of investing can play a useful role in promoting managerial accountability, and so on. So, my comments on his position in Berkshire are not personal at all.
But I do think that as a style, it's not the Berkshire style of investing, either the kind of shareholders Berkshire wants to attract or the kind of shareholder Berkshire wants to be. Berkshire wants to attract and wants to be a long-term committed shareholder, that is, one that loads up, that doesn't diversify widely but focuses on individual companies. I mean, Berkshire has gotten pretty diverse in its portfolio just because of the amount of money it has, but it's still pretty concentrated in, you know, its huge bets on six or seven companies. That kind of conviction is something Warren has always practiced and always wanted in his shareholder basically. [laughs] And he brags a lot about how concentrated his largest Berkshire shareholders are, that is, the Berkshire holdings are their largest position by far compared to the second and the third. And very many of those shareholders have owned Berkshire for 10, 20 or 30 years.
So, that's the kind of shareholder he wants, that's the kind of Berkshire Buffett wants, that's the kind of shareholder he's always been. And you're right, I call that the quality shareholder is distinguished, both, from the indexers who may be long-term but are totally diversified on the one hand, and the short-termers who may load-up but never stick around.
And Bill, in this case, will very often be that latter category. Now he's doing something else, he's usually trying to act on his position, trying to nudge or push management to a new direction. So, he's adding a different kind of value. But I knew Bill was a Berkshire shareholder, I've seen him in meetings and everything, but Bill is not the typical, quintessential Berkshire shareholder. So, the fact that he sells out, again, no offense to Bill, but I think that increased the average quality of the shareholder base rather than decreased it. So, I considered it [laughs] positive for Berkshire.
Hartzell: Okay. Yeah, and one thing, you mentioned, kind of, long-term shareholders, and there's certainly people that have owned Berkshire for decades; three, four decades or more. But the people that are kind of relatively new, I'm saying in the last decade or so, Berkshire hasn't performed that well, certainly relative to the S&P 500. And I think for those of us who follow pretty closely, you know, the S&P 500 has been on a tear, technology stocks have done unbelievably well. You mentioned Apple, probably the single biggest investment gain on one stock, I think probably in the history [laughs] of the world. I mean, he's probably up $85 billion $90 billion on one stock position. Pretty good for an 89-year-old, I guess at the time, or 88 when he made the deal.
But what are your thoughts on those long-term shareholders that haven't been there for 40 years, but they've been the last decade, and have seen relative underperformance, do you think that changes going over the next 5 years or 10 years, how do you think about that?
Cunningham: Well, flash has never really been Berkshire's strong suit, you know, Buffett is a very folksy, conservative guy, very little leverage, very little shuffling of assets. You know just a permanent quality-oriented guy looking for well-run businesses. You know, he's never looked for the stratospheric returns, he's always wanted a modest return. And you're right, earlier decades were the best for Berkshire and have just steadily gone to average or close. And part of that's a matter of size, it's just much more difficult when you're investing hundreds of billions of dollars to outperform. Nevertheless, it's been a solid run. [laughs] You know I think you sleep well at night that decade, you certainly earned the S&P a little better without much risk. And so, it remains, I think, rewarding for that cohort.
As for the next 5 or 10 years, we can be almost certain that the company will change significantly, because Warren will almost certainly leave the scene, whether because he'll step back or worse. And so, you'll have a succession and will get to witness the effectiveness of the succession plan, which is a really elaborate plan, I think it's the best possible plan they could have. You'll have Greg Abel probably take over as CEO, who's overseeing all the other CEOs in the operating companies. Todd and Ted taking over as CIO, managing a portfolio and making equity investments. Howard Buffett will become Chairman of the Board, as a steward of the traditional cultural features of Berkshire, like, permanence, autonomy, and trust.
And then in the shareholder piece, you'll see a gradual sale of Warren's holdings over a period of about 12 years, where his estate will transfer about 5% of his shares to the Bill & Melinda Gates Foundation, which will then be required to liquidate it and make gifts, so over a 12-year period you'll see the company go from having a controlling shareholder to not having a control shareholder.
So, all of that, by design, gives that team -- Greg, Todd, Ted, and Howard and everybody else -- a little bit of a runway, a little bit of time to prove that they can manage Berkshire to those values and with at least the solid returns, the reasonable returns that have been achieved in the last 10 years. And maybe they'll do better.
Greg is a savvy investor, a savvy manager. He's done a very good job investing capital at the energy companies for 20 years. You know, one of Berkshire's biggest acquisitions in the past several years was the recent one at Dominion, that's Greg's baby. He's trained excellent successors at the energy companies, some of whom have moved around within Berkshire. The CEO of See's Candies appointed a year or two ago as a former Greg prodigy. So, I have a lot of confidence in Greg. But that's where the proof will be, can Greg -- and obviously, Ted and Todd have to help deliver too, but that leadership, I think, is mostly going to become of Greg, can he do it? I have confidence he will.
And I think that structure will give him the time. If he has a bad first year, I think he'll get the benefit of the doubt, but he will have to deliver over five or seven or else you'll start to see some of those quality shareholders drift away, and some of the activists, maybe even Bill, start creeping in. So, I'm bullish, I'm optimistic on Greg and on Berkshire, on the value of this special culture Warren has built up, but obviously I need a crystal ball [laughs] that none of us have.
Hartzell: Yeah, I think those must fall long and I'm glad Greg was involved in this year's annual meeting. And both him and [...] in the previous ones a little bit, you know, those guys being promoted to Vice Chairman and giving them some facetime with shareholders, I think, is really important at this level. I was happy to see it.
I think one of the headlines that's out there a lot is, Buffett is holding so much cash with whatever, $128 billion, $130 billion or whatever else. When you look at it historically though, as a percentage of assets and in some other ways, it's not really out of line with the amount of cash that Berkshire has held, it's just the business has grown in size. I doubt, though, the successors will get that pass. I think there's probably going to be a little bit more pressure on them.
Do you see Berkshire ever paying a dividend while Buffett is in charge or do you even see them doing it after he's gone?
Cunningham: Almost certainly not while Warren is in charge. And that's been part of the cultural motif of the company, partly because shareholders are almost all taxpaying shareholders. So, there is not a strong appetite among quality shareholder base for a dividend. In fact, Warren told the shareholders twice, once in the mid-90s, I think it was, once in around 2012 or so, saying, I don't think we ought to distribute cash dividends, but what do you think? And he got overwhelming support for opposing a dividend. So, I don't think there's a strong appetite. There may be, there are obviously some people or some shareholders and activists that may like that kind of liquidity, but most of the holders don't have the appetite, and it's not been part of Berkshire's culture. And Warren has kept that powder, kept it dry and found uses for a lot of it, and I think Greg would do the same. And you're right, in terms of the relative scale, it's not wildly high.
And the other footnote I'd add is that Berkshire has always said that it maintains a significant cash balance to assure having liquidity to meet significant insurance claims if catastrophe strikes. In the past bunch of years that number has been $20 billion. And the signals I got from his presentation at the annual meeting is that in light of COVID and potential second order effects that we still haven't seen, that number might need to be higher. So, I think, certainly in the near-term Warren's tenure, I wouldn't expect a dividend out of Berkshire. I do expect to see increasing share buybacks ...
Hartzell: Yeah, we've seen that. Yeah, finally. And I think people have kind of -- I think that was one of the things Ackman anticipated that was going to happen when the share price was below $300,000. And it really didn't happen to any big degree last year. But we've seen a little bit of pick-up with that, and it seemed to be around 1.2X book value or so. Which seemed to be the area that there's a little bit of interest there in buying back shares.
Why do you think -- he loves investing in companies like Apple, even IBM prior to that, they buy back lots of their stock. Yet he's been reticent to do it at Berkshire Hathaway. Even Washington Post, when he directed the buybacks there and added a lot of value, back in the 70s. Why do you think, is it part of the partnership trust thing, is that the reason he hasn't bought them back? Because he clearly likes investing in companies that do that.
Cunningham: Yeah, that's what, he's always said that he's conflicted about buybacks as a strategy at Berkshire, because if it's an attractive investment for Berkshire, so that the price is below value, that means the sellers on the other side are not getting that kind of [laughs] great deal. So, he's got some conflict around that partnership aspect of his view of the holders. On the other hand, his remedy for that is disclosure, this clarity and appreciates that there are times when even quality shareholders, as I call them, have to sell. Estate planning, death in the family, generational problems, the health problems. So, I'd say, I think he ends up being prepared to do it as long as fair disclosure has been made.
But I think it is important to notice, as you just did, that in 2020 the level is significantly higher than in all of the past several years. So, I think that's notable as a part of Berkshire's internal capital allocation.
Hartzell: Yeah, it'll be interesting to see what happens. And the price has gone up too since then; you know, since it was below $300,000. So, quality shareholders, I want to ask about that one more time to just make sure that people listening at home can understand. How do you define a quality shareholder? We know that's people for the long-term. Do you look at the turnover in the stock, the annual turnover, what's a way that somebody at home is looking from the outside can say, I'm looking at this company, but I want to know if they have a quality shareholder base or not?
Cunningham: Excellent question, Buck. So, I drew a matrix, a sort of a 2-by-2, and looked at conviction and duration. And so, conviction, I'm looking for high conviction, high duration, and so conviction is measured by the relative concentration of a portfolio, an investor's portfolio. A concentration of, at one extreme be zero where, you know, it's fully diversified; an index fund like Vanguard or [...] trust or something like that. At the other extreme concentration of close to one will be only one stock, hardly anybody [laughs] does that, but a lot of firms and funds own 20, 30 or 40. And that's a fairly highly concentrated position. And when you look at who does that?
So, I did empirical research to identify which shareholders do that? You know, this is based on public filings. So, I don't have it for individual human beings. And you see Neuberger Berman, Capital World, Franklin, Fidelity and some, mostly smaller firms, $100 billion or $300 billion assets under management. But so those are, I call it, high conviction shareholders. They do a lot of research, they study, they understand, they may even participate a little bit behind the scenes in shaping management.
The other quadrant in there is duration. And here I look at average holding periods, turnover of the portfolio, a number of different metrics to try to identify which of those firms tend to have the longest horizon, the most patience, the greatest patience. And again, you see there are lots of firms that are momentum traders and day traders, arbitrageurs, you know, whose average holding period is extremely short, months, maybe a year. And others that are more than four, five or seven, [laughs] it doesn't get much longer than that most of the time.
And these may have large positions, they may buy big blocks but over a short period of time. So, I'm looking at the shareholder base that does both of those; high conviction, high concentration. So, it's not the indexers, it's not the momentum guys, and I'll leave the act [...] one side. And so, I identify who those firms are, and I discuss a little bit about their investment philosophy. And then I turn around, I look at which companies attract that sort of shareholder in the highest density. And so again, I ran a huge series of empirical tests around the Russell 3000, basically, and then had 2,200 companies that I ranked in order of quality shareholder density.
And Berkshire is way up there at the top. You'll see the listing in the book. I don't publish the whole thing because I don't want to make any of these companies sticky, [laughs] I'd like to see them try to be more nimble. And also, just as a matter of the data that, obviously it changes day-to-day. So, I don't want to put it in a black box, but I identify a lot of them. And then I try to figure out what it is about these companies that attracts this cohort. And some of it is unsurprising. They tend not to do quarterly forecasts, they tend not to do quarterly conference calls, they tend to have very high quality annual meetings, annual shareholder letters, they talk a lot about capital allocation, they themselves emphasize the long-term in their strategy, in their discussion, in their accounting measurements and on and on. We've got a lot of different -- so, that's the method and that's what I try to reveal.
For us sitting at home, The Motley Fool constituents, you know, I've done it. I mean, I did a pretty heavy lift, there's a lot of data in this, and I had experts, PhDs crunch the data. But you can identify which are the highest quality shareholders with little bit of poor man's research. And then you can identify in which companies do they tend to invest, just as an additional filter, and then you think harder about, well, why Danaher, why Markel, why Graham Holdings? And then just add that to your analysis, you still have to do [laughs] fundamental analysis.
But that's, I think, an underappreciated feature in investing. I think people have an intuitive sense that -- and let me just add one thing. So, the other question is performance. And we crunched the data again and saw that the evidence supports the idea that a quality shareholder strategy can systematically outperform, and that a portfolio composed of the top, you know, high density attractors outperforms. So, not every company, not every fund, but it's not a bad tool to add to your investor toolkit. And again, the intuition is, you know, it ought to be the case that the quality of the shareholder matters to the performance of a company, there's got to be some influence. If you've got a bunch of short-term traders; as a manager, you're going to be catering to the short-term traders, so you're going to miss out on a lot of long-term strategic initiatives and so on. But if you've got patient, high conviction shareholders, you've got a runway and you can execute on those strategies.
So, I think there's a lot of intuition around this idea. And what we've done is really try to put as much data behind it as we can and then explain it.
Hartzell: Yeah, that's great. And I think one of the things at The Fool that we've seen over the years, is that, most people, there's a lot of false dichotomies out there, and one of those is that people thought if you invest in tech, you need to turn over and switch in-and-out of shares a lot more because there's disruption and things happen. And what we've actually seen, and David Gardner is really kind of a pioneer for this at The Motley Fool is, he's done the exact opposite of that. He's found really great companies led by people that think in decades, like, Jeff Bezos' Amazon, and he's held them for the long-term. And it's crazy to me, but we see this from people all the time, they have a stock that does well, it goes up 20%, 30%, 50%, they're like, I've got to sell this. And we're like, what? You don't want to sell out of what's doing really well, if it's led by great people and the company is executing on that, let them roll. And if they happen to stumble or something happens temporarily, go ahead and add to that position, you know what I mean? And it's just a hard thing innately for investors to do, is to hold on to their winners, they kind of want to sell them off to lock-in those gains, but...
Cunningham: I think Dave does deserve a lot of credit for that. And it takes a lot of discipline what he has done, and I think he's been proven out, he's been vindicated by his strategy. And I think you mentioned Jeff Bezos, and I think Amazon, and Jeff in particular, exemplify what quality shareholders are looking for. And Amazon has attracted them in high density, and you can see why. I mean, Jeff is always talking about -- you know, the day one thinking, his 1997 letter to shareholders hit everybody over the head about this is going to be a long-term play, [laughs] you know, and it took a long time. But if you stuck with it, I mean, it's an extraordinary set of returns and it's more to come.
Hartzell: Yeah, and it's just, you don't hear that often from the tech area as well either. I'll make sure that Nick gets some questions in here as well, I want to ask one more quick question, though. Tesla and Apple split their stock recently. We know Warren has talked about stock splits, we've talked about them a lot to people, it doesn't really make that much of a difference. What are your thoughts on this? Does that help them attract quality shareholders or the opposite kind?
Cunningham: It has the opposite effect, Buck, you're right. One of the research elements we did for the book when we tried to figure out what are the things that companies do to attract long-term convinced, high-concentrated shareholders is avoid splitting the stock. And it's, I think, pretty obvious to see why. The reason Apple and Tesla are splitting the stock, the Boards of the company have said, is to attract new investors. But what that's going to do is going to attract a lot of short-term investors, going to do sales by some, purchases by others and then continued volatility and churn. And we flipped it around, and if you look at those stocks, companies with the highest share prices, Berkshire is obviously in a class by itself with six-figures, but there are about 10 or 15, last time I looked, that have four-figure stock prices, including, Apple, Amazon, Alphabet and then some other less well-known, but equally important. They have very high-quality shareholder bases. Because it's harder to sell four [laughs] and the other single it sends is that, we're not focused on the stock price here, we're focused on running the business and generating high returns on invested capital. The stock price is a little higher, a little lower, its way out of sight, it doesn't really bother -- doesn't influence our strategic thinking and so I'd rather have a Board of Directors thinking about capital allocation, should we make this acquisition, should we make this share buyback, than thinking, what if we had the stock price about a fifth less, you know, or half-off? So, I think it's a bad idea for both Apple and Tesla, certainly in terms of quality shareholders. They may not care, [laughs] you know, they may have other priorities. Like, someone said Apple is trying to use a low stock price to attract customer loyalty and affection; maybe that's right, but it's not how I think about it. So, just from a quality shareholder perspective, the quality of their shareholder base will decline as a result of the splits; that's what all the evidence suggests.
Sciple: Yeah. So, I want to link this quality shareholder concept with what we talked about earlier when it comes to succession at Berkshire, you talked about Amazon's ability to recruit quality shareholders, how important Bezos' annual letter is to that messaging to shareholders. How significant is the presence of a Founder-Leader at a company when it comes to recruiting quality shareholders? And how do the companies that have been able to maintain quality shareholder basis through a succession cycle, what do they do, how are they able to achieve that?
Cunningham: Oh, that's an excellent question. And the inventory there is mixed. We did not find a strong correlation with a sort of distinctive Founder and high-quality shareholders. And that's, I think, when you look at individuals, you know, some are more trustworthy than others, some have a longer-term horizon than others. They tend to attract, to use an old phrase, the shareholders they deserve. And so those who are long-term thinkers and strategists, do tend to attract. And I think their presence and their personality matters; Jeff is a good example; Mark Leonard at Constellations is an example; Don Graham at Graham Holdings, or formerly The Washington Post, is a good example; Tom Gayner at Markel. So, there's certainly that.
I can list another group of CEOs that are in some ways luminaries and founders and so on, but they haven't exhibited a similar disposition. And it's not criticism, they just have a different approach, a different outlook. They're not interested in the long-term necessarily, they're not interested in attracting any particular sort of shareholder.
On transitions, it's also a very interesting story. I highlight two in the book; one of them I already mentioned is Graham Holdings, it used to be The Washington Post. That business struggled mightily as print gave way to the internet, and it spun off a cable operation and it really morphed into quite a different business. And then Don Graham stepped down as Chairman and CEO and handed the reins over to his son-in-law. A huge change in what the company is and who the leaders were. But what happened is, and what happened in the shareholder base, it was an extremely high-quality shareholder base, including Berkshire Hathaway and a lot of followers of Warren and that tradition. As this transition got under way, that broke up, and those quality shareholders started to leave; and you can see it in the stock list year-to-year. But they've actually figured out they're gradually coming back as well. So, they've managed through transition, I think, relatively successful.
The another example was Leucadia National, the Ian Cummings and Joe Steinberg company that they built up over a period of +30 years, applying traditional value investing principles, a little different than Buffett's, a little more opportunistic, a little more of the old-fashioned cigar butt, that did sell businesses relatively quickly, but they were authentic investors who explained their position, who understood capital allocation and educated their investors using excellent communications, especially an excellent shareholder letter. And they attracted a high density of quality shareholders. Now, they got to the end of the run about five or so years ago. They engineered a very interesting succession plan through which they essentially sold themselves to Jefferies, [laughs] the New York-based investment bank; a very different kind of business.
And what you saw after that transition was a disruption in the quality shareholder base. You saw a lot of quality shareholder stick with, I think saying, look, if that's what Joe and Ian think -- and not just blind faith, Joe and Ian explained the rationale, why Jefferies is attracted, why its leadership understood Leucadia and why you can count on continuity around some of their rationale, and their capital allocation and so on. So, a bunch of quality shareholders stuck with them, but others left.
And in the same way that Graham Holdings, I think that the merger, that the sale, I don't think it's proven out completely, but it's a lot better than a lot of people thought. And so you see somewhat of a migration back in. So, those are, I think, fascinating stories. I explored some others in the book around succession at Progressive insurance and some others.
But, Nick, I think it's a profoundly important question. I think that the leadership is certainly a big part of attracting long-term high-concentration shareholders, and when that changes, people get worried. And that's going to happen to Berkshire Hathaway, I remain confident that that transition will be a little easier than either Graham or Leucadia, and it will prove out. But, you know, the quality shareholder is not stupid, [laughs] and they're not religious. You know, if this is not going to continue to be a worthy company, they will sell.
Hartzell: Yeah. And Leucadia and Jefferies have struggled, I mean, from a business performance-wise, they haven't grown book value in a long time. Rich Handler and a group of [...] but it is different, because it's mostly an investment bank and they've sold off and monetized most of the pieces that Joe and Ian had put together, now it's kind of a pure investment bank. So, yeah, Nick, go ahead.
Sciple: Yeah, I guess, one other question I had just looking forward into the future how companies recruit quality shareholders. Historically, it's been the shareholder letter, all that sort of thing, the annual report. Do you think, we're in this 21st century, we've seen Tesla and other companies say, we're going to use Twitter for official announcements about our company, do you think companies should change the way they communicate to try to recruit shareholders in the year 2020?
Cunningham: Yeah. And Twitter and social media may be part of that in terms of the media outreach. I think some discretion needs to be exercised around that, because you simply get the rapid news cycle. I mean, all the research that I did and that others have one that I read indicates that the more frequently a company is producing information, press releases, 8-Ks, you know, the periodic, the quick updates, the more volatile stock price is, the less long-term the shareholder base tends to be. Which just makes a lot of sense, I mean, there are a bunch of traders out there who are acting on new information. So, the more of it there is, the more likely you have high churn in your stock. So, I'd be pretty careful using a lot of Twitter.
On the other hand, I think we all do need to migrate to platforms, and digital obviously, in 2020. In 2020, we had in North America essentially no live annual meetings of shareholders. Almost everything was done with virtual platforms. And before 2020, you had maybe 50 or 80 big companies a year beginning to experiment that. Intel did it, Duke Energy did it. And I think the results of the experimenters were not bad. A lot of critics said, you can't replicate the in-person feeling, the opportunity to shake hands, and look people in the eye and ask follow-up questions and have breakouts and so on, you can't do that online. And that was a valid criticism; I think I even made it.
On the other hand, it has some advantages. More shareholders can attend, the information tends to be deliverable in a much more efficient and consolidated manner. And the technology permits interaction, so it's really up to the CEO about how many [laughs] follow-ups and so on that she lets them have. So, I think pre-2020 the, sort of, assessment was mixed, but after 2020, a lot of the meetings were exemplary, I participated in a few where it was an excellent meeting. So, I do think, how fast we recover from this pandemic and what restorations we do, I think the digital meeting, the virtual meeting is here to stay. And the best CEOs who are interested in cultivating a quality shareholder base ought to become really good at that and entice long-term committed shareholders on that basis and reach out to them.
So, someone mentioned, I was on the Board of Constellation, we had a virtual annual meeting. We usually have 400 shareholders about, attended in Toronto every year, digitally we had 600. I helped Chair the meeting around, handling the Q&A. And I thought we got as many or better and better questions than we ever had. And I, sort of, chaired the panel, in fact, and we pushed back, I and two other analysts. And I think it was a very good conversation. And then we got a lot of positive feedback from the shareholders. So, even if we could meet live next year, I think we'll add a virtual piece.
But, Nick, I think you're absolutely right that it will pay for corporate leadership to embrace and shape how we use this technology.
Hartzell: Constellation's meeting was great. And the way you grouped the questions, the way it involved all the managers answering questions, I would make a strong call for Berkshire to do that. Maybe you'd be willing to organize questions for them by topic. Because I think some of the way they're doing it right now, it's better than it was prior, you don't get all the questions, how to become a good investor and things like that from somebody's kid that they're holding up there. But the questions that Constellation got were great. And I think there are some important questions that need to be asked at Berkshire, and it would be nice to do a similar thing. And I think maybe that's something they'll consider going forward, because that was great at Constellation.
So, I have two questions left, then I'll let Nick do whatever he wants, but one of those, you just mentioned Constellation, Mark Leonard is a great CEO. For those people listening that have never heard Constellation Software, it's the best company you've never heard of, because it's Canadian, it is a technology company and it's been a wonderful performer. And so, it's a great business, Mark Leonard is the Chairman there, I guess.
And I want to ask you, Larry, since you know both of them very well, can you compare and contrast Mark Leonard to Warren Buffett and maybe what are one or two things they have in common and then one or two things that make them different as leaders of great businesses?
Cunningham: Thanks, Buck. Yeah, I admire them both immensely, and for some of the similar reasons. I'd say, in terms of the one or two things they have in common. The greatest thing that distinguishes them from others, and that they have in common, is a very high degree of rationality. They are more in command of their, kind of, emotional responses to things than anybody I know. I mean, they get happy and sad and joyous and remorseful and stuff, they're human beings, but they're able to control that aspect of their thinking and to really rivet on the substance of what's in front of them like no one else I know or have read about. So, they're [laughs] very much up at the top. And you know, the rest of us can learn from that. I think it is very important to discipline [laughs] yourself around that, to be human, feel emotions, but at the same time to bracket them when you're making especially business or capital allocation decisions.
And the second thing is, I'll call it absorption. They are just very good at digesting enormous amounts of information. And that can be from reading, which they both love to do voraciously. Conversations, lectures, way into the digital information platforms and stuff. And so, they're just very well-read well-rounded. And it's just a capacity to digest information and synthesize it. So, I can go down. So, I think the other big thing, I'll name a third. The other thing they have in common that's maybe most relevant for us is that they think about their companies and their acquisitions or investments and almost every other decision that happens at their companies in terms of capital allocation. It's their North Star. In business, really what you do with every dollar [laughs] is important. And that's how they think. And not every CEO does that. These guys are both trained in the investment world. Warren in the old-fashioned, kind of, merchant acquisition and investment; Mark, more in private equity.
But on the opposite side, on the things where they're different. Yeah, their personalities are quite different, Warren has always been a little bit of a showman. He's an "aw, shucks!" kind of guy, modest, Midwestern and so on, but he welcomed the limelight, he is very happy to be on television. I don't think he has -- you know, he's practically, the tens of thousands with enormous festivities and really a conscious commitment to having a spectacle out of -- you know, he even calls it the Woodstock of Capitalism all that. I think Warren actually is -- not that he's eager for it, but he's quite OK with the extensive coverage on television, now the internet and books and so on.
Mark is exactly the opposite. You know, it wasn't just until a couple of years ago, there was not a photograph of Mark Leonard available on the internet; you couldn't find out what he looked like. These days it's impossible to prevent that, but it's still. He's very, very modest, very circumspect, he'd rather sit -- and he's not an introvert by any means, [laughs] he's very social, a lot of fun, but he doesn't want the limelight. Someone made a joke -- I've got one of the new books, it's called Dear Shareholder, it's a collection of letters of CEOs that have attracted a high density of quality shareholders. And so, I've got, you know, Warren is the dean of that, obviously. Mark Leonard is in there. Prem Watsa is in there; another Canadian investor at Fairfax Financial Holdings. And I named the book, Dear Shareholders: The Best CEO Letters from Warren Buffett to Prem Watsa. (sic) [Dear Shareholder: The Best Executive Letters from Warren Buffett, Prem Watsa and Other Great CEOs] And a lot of people said, well, Mark is by far a better track record than Prem. Why didn't you put Mark on there? I said, Mark would kill me. [laughs] Mark doesn't want his name, you know. Prem on the other hand -- Prem is a little more like Warren, he's -- and I love Prem too. But he's pretty happy to have his name. So, Mark, he does not want the limelight, is not interested in it at all. And I'd say that's the biggest difference.
I mean, another obvious difference, just in terms of their investment scope. Warren has invested throughout industry, across every sector, really. I mean including tech and now Japan, Germany, elsewhere, Mark has invested all over the world, but almost entirely in vertical market software. Software companies. He'd be good going beyond that. So far Constellation is exclusively vertical market software. And so, what they do every day, how they think and what they have to think about is very different. You know, the economic context, the macroeconomic industrial structure of the Berkshire companies are all over the map, [laughs] 40 or 50 of them. So, how you think about incentives and drivers of managers and stuff, performance and business is different. At constellation it's far more similar business to business.
And so, I don't think that says a ton about the individuals, but I think it might say a little.
Hartzell: Yeah. And I think, for those of us who follow on the outside, and Constellation, I think, made over 300 acquisitions throughout their time, so they've been even more acquisitive than Berkshire Hathaway has, that I think the skills that Mark Leonard and team bring to the table will allow them to, kind of, go outside of that vertical market software area. But they've done so well in that, they probably don't want to step out, because the economics don't look as attractive in other places. So, that's great. And we can talk about Constellation for a long time; a wonderful business.
I want to ask one more, and this is about, kind of, ESG, the Environmental, Social, and Governance. You've kind of been on the forefront of the governance part of the ESG movement before it was, kind of, a movement, I would say. This year has had a staggering amount of, kind of, uprise certainly associated with racism throughout our country. And I know in the early days Warren Buffett was involved, with his first wife Susie, on a lot of the Martin Luther King things and racial equality and even gender equality, and we can add that. My question for you is not as a Board member of a public company, but also somebody who's a scholar of Berkshire Hathaway and has done a lot. What can companies out there do?
The NBA players have certainly taken a stand on this and raised awareness of it, but you know, for instance, you mentioned I've been at a Berkshire meeting just a couple of years ago with my son, we walked around, 40,000 people there. I didn't see a whole lot of people of color in the audience. There were certainly a lot more Asians that were there than the previous time that I went before that. But just as you mentioned online, putting the annual letters on there, how do we get the greatness of capitalism and companies out there and make it more approachable for people of color?
Cunningham: Yeah, these are profound questions. And I think that some of it does have to start locally and individually. And I think the upheaval has stimulated a lot of that kind of ground-up individual human beings asking themselves what they can do and then specific communities, churches, and schools, my own university has made a significant public commitment to focusing on inclusion, Boards of Directors of companies more broadly, organizations, business roundtables let's say. And so, I think you're seeing a heightened consciousness around this need.
And I mean, I've done a little bit of it in terms of identifying, especially younger women, in particular, of color and trying to get them into my networks of, let's say, older Whiter guys who have the keys to the boardroom door. And then I think you'll see a lot more of that.
And then as a policy matter, as an intellectual matter, I recently, I did a lot of research on Board gender diversity. And I was focused on this, in part, as the Director of Constellation. So, I was looking, in particular, at Canada. And I did a ton of research, and I've just published an article based on the research in The Canadian Business Law Journal, which is a publication at University of Toronto. I focused on gender diversity within somewhat North American bias and kind of focus on Canada. What I found in the literature was, both, the academic literature and the, sort of, public advocacy literature, were two big arguments for increased Board gender diversity. And one of them was social justice, fairness, it's the right thing to do. You just can't exclude half of the population from important functions like this. So, we ought to just make that cultural change in the name of justice and doing right.
In other words, it was an economic argument that said that diversification of Board is associated, but some people said it causes enhanced economic performance at companies. And there was a lot of rhetoric around that performance connection and, as I said, some assertions of causation.
When I dug in the literature, I found the arguments on the social justice aspect to be compelling, the economic argument, the evidence didn't support many of the claims. And so, I came away from this concluding that it's a bad idea for advocates of more gender diversity. And I think this is my hypothesis, this discussion would apply also to minority diversity and beyond Boards. It's not a great idea to make economic arguments that we will be richer if we do this or we will have higher returns on invested capital, or this company will be better and will be a better performer. I can see why people made those arguments, but they've got a rhetorical punch that they can persuade Directors who feel like they owe it to the shareholder to deliver high returns, to try to get them to agree. But since the data doesn't support it, I'm worried that when we appoint a more diverse Board and the returns don't wear out, that group is going to be stigmatized. And I think that's the worst thing that could happen.
So, I think the social justice argument is compelling and I'd elevate it. And I'd say, look, the economics -- I'll bet there's going to be a random distribution, you know, every individual is a little stronger or weaker around, you know, [laughs] convincing their colleagues that this is a good or bad acquisition and so on. So, leave that to the side and say, it's correct, it's right.
Hartzell: Yeah, that's good. I agree. Yeah.
Sciple: So, I've got a couple of closing questions. So, first of all, on the ESG question, you mentioned you serve on multiple boards, you're Vice Chairman at Constellation, study this area. How do you think that there's this conversation around, the move to stakeholder capitalism, you mentioned the business roundtable, how do you think corporate governance truly is different, say, 10 years from now versus a lot of these conversations we're having? How much do you think is implemented and what do you think are the changes that we could expect?
Cunningham: I think that my concern is that, just as I said a minute ago about the rhetoric of economic outperformance, I'm a little concerned about the rhetoric of a new capitalism or stakeholder capitalism or a new hierarchy and which constituents count. And my focal point for that concern is the business roundtable's mission statement signed last August by 180 or so CEOs of major companies. They identified a list of priorities in corporate administration and what's striking about the list is that its shareholder is at the bottom, it starts with employees and then it includes customers, communities and shareholders are at the bottom. And there's a lot of news made around how this is a new approach to capitalism; it's not shareholder capitalism, its stakeholder capitalism.
What bothered me about that is that there's actually nothing new in the statement. And I think it's misleading to describe it as this new thing. The statement is almost a carbon copy of the 1943 credo adopted by Johnson & Johnson, one of the most shareholder capitalist companies in the world. But what they said in 1943, and what they still say now, is that the reason we're in business is to provide excellent products for customers; the doctors and patients. And then it's to build a workforce and train people and provide a livelihood, and then to protect our communities and finally to deliver a return to shareholders. And I just think that's how it's always been, that a company earns profit for its shareholders by catering to its customers and rewarding its employees. And I think a thoroughgoing embrace of that is fair and fine, and I worry that what the business roundtable did was a little more political than real. And that it doesn't add value to the conversation or progress in governance, but it's either a bit of a whitewash or a bit of a dodge or a bit of a leave us alone. And so that's my concern around it.
And you know, how different and so in, it lost me. I think the question of race and gender is, I think, the highest priority. And maybe that's in the social sector. The bit about the environment; I mean, that's a serious concern. My overall critique of the ESG movement is that we have had the engagements of this sort throughout American economic history under different labels. Before ESG, it was corporate social responsibility, before that the stakeholder model. And so, there's a lot of history to this, and I think it's an endless tension about how much emphasis ought to be put on the bottom-line and shareholder returns versus those intermediate ones in terms of revenues and labor costs. And I think we have to continue to have those conversations.
But I guess my big concern is how the current dialogue is dominated by index investors whose business model is such that they can really only speak to very high-level general propositions. And I think it's because they own 4,000 companies. And so, they can't really take an informed position about whether at Constellation, that the Chairman and the CEO ought to be different people, or whether at Berkshire there are too many friends and family of Warren Buffett. They can't do that, so they end up saying, all Chairs and CEOs need to be split or you need an independent outside, all boards need to be a majority of independent. And I worry about that in corporate governance, I worry about it even more in environmental, maybe even in social, where it's just easier for BlackRock's Larry Fink to say, here's how all companies need to be, because he can't afford to go in and look individually. So, that's my greatest concern is that the indexers -- I mean, the business model is wonderful in a way, let's deliver the market for ordinary people at virtually no cost or risk. But then when they inject themselves in environmental, social, governments and other things, they can only do it wholesale, [laughs] and it concerns me. That's one of the motivations for the quality shareholder project too, because I think that cohort has better incentives to make tailored recommendations around certainly governance. And I think it's also true to other social and environmental stuff.
Hartzell: Yeah.
Sciple: Yeah, to kind of just to conclude, also I had a couple of last questions on Warren Buffett. You know, we're at a time now, it seems like every 20 years we get this idea that value investing is dead, or that Warren Buffett has lost it and all that. Where would you put the current narrative around Buffett as compared to where these discussions have been in the past?
Cunningham: I think you're exactly right; you see this cyclicality. And Warren is one of a kind, and he becomes a great target for criticism. And so, [laughs] he's contrarian and people criticize and like to, sort of, follow the lead and be contrarian to. And he still -- so, he's iconic and truly generous, he is a class by himself. And even the people who have accepted or share the intellectual outlook, long-term committed shareholders, are a very small portion of the total population. I'd say my estimate, based on research, is that they represent about 15% of ownership of equity cap, the quality shareholders do. 40% is by indexers, 40% is by transit; and 5% or so in varying combinations is held by activists. So, it's a rare and lonely [laughs] -- it's a small and kind of lonely community. On the other hand, there's a lot of collegiality, and there's a thick ecosystem and people know each other and tend to see each. And that is part of the reason why Motley Fool has been so successful.
And we weather the storms. And so that whole cohort. Well, in 1999, we failed here; 2008, you failed there; and 2020, you failed here, you know. And the research, I mean I think this is very interesting, the research on, can value systematically outperform versus indexing, is vibrant, we've seen it endlessly. I think it's inconclusive; others draw stronger conclusions about what they've seen in the evidence. But to be sure, the relative delta varies over time. And of late, I guess, the value crowd lags, you know, because the FANGs have just been so, kind of, phenomenal.
But you know, where we are with views of Warren and views of the school he represents, do go in a bit of ebb-and-flow, at least externally. I mean, I think the people -- [laughs] readers of my books, let's say, they tend to be steady believers [laughs] and practitioners throughout the 25 or so years that I've been doing ...
Sciple: Right. And that brings me to my last question. Obviously, attitudes throughout Warren Buffett's career of whether he's got it right or wrong, have fluctuated. But he's 90 years old, we're looking now back more to his career more than we're looking toward the future. You know 20, 30 years from now, what do you think is the lasting legacy of Warren Buffett for investors?
Cunningham: To me, you know, let me start out the conversation identifying four possible answers to that question: Investment prowess, management prowess, philanthropic generosity, or educator. I'd add a fifth. And I think that his greatest achievement and the thing for which he'll be most greatly remembered is building a company that was bigger than himself. Again, I'm very bullish on Berkshire Hathaway. I think it'll be here in 30 years. I may be wrong. But I think that certainly he deserves credit for that. You know, he poured his ego into Berkshire Hathaway, his cultural fingerprints are all over it in terms of modesty, decentralization, thrift, permanence. He's designed it, and it's in his image.
And yet 400,000 employees, 800 subsidiaries, $500 billion of assets. This diverse, massive organization gets all that, and it is so big and powerful and I think magnetics that it'll last a long time. So, it's partly a prediction, partly a hope because I think it's magnificent that he was able -- I mean, this company is so distinctive and so special, and so just absolutely unusual in corporate America that I hope it continues, and I think it will. And I think if it does, that would be his lasting legacy.
Sciple: All right. Well, Lawrence, thank you so much for taking the time to sit with us. If folks want to go find your books or keep track with what you're doing, where can they go find your work?
Cunningham: I guess the best place is my school, George Washington University, you put in my name in that, you'll get my bio and links to -- I'm running an initiative on the quality shareholder program, you'll get links to a lot of the literature around that. And I've got, obviously, lots of books for sale [laughs] on Amazon, and lots of my articles are free on the SSRN. So, I think just googling my name will yield plenty of avenues.
Hartzell: Great. Well, thank you very much. We appreciate it, Larry; it was great catching up again. We appreciate all your insights on Berkshire Hathaway and social, governance and all that kind of stuff. Have a wonderful rest of your Summer and a great school year, whether it be virtual or whatever else, and hopefully we'll see you at a Berkshire Hathaway annual meeting in the near future in-person.
Cunningham: Always a pleasure. Thank you, both, very much.
Sciple: As always, people on the program may own companies discussed on the show and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear.
Thanks to Steve Broido for mixing the show. For Buck Hartzell and Lawrence Cunningham, I'm Nick Sciple, thanks for listening and Fool on!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Buck Hartzell owns shares of Apple, Berkshire Hathaway (A shares), Berkshire Hathaway (B shares), Fairfax Financial, Jefferies Financial Group Inc., and Markel. Nick Sciple owns shares of Alphabet (C shares), Apple, and Berkshire Hathaway (B shares) and has the following options: long January 2021 $100 puts on Tesla and long January 2021 $50 puts on Tesla. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Constellation Brands, Jefferies Financial Group Inc., Markel, Tesla, and Twitter. The Motley Fool recommends Dominion Energy, Inc, Intel, and Johnson & Johnson and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In this episode of Industry Focus: Wildcard, Nick Sciple is joined by Motley Fool analyst Buck Hartzell, and they interview Professor Lawrence Cunningham about his book Quality Shareholders: How the Best Managers Attract and Keep Them. They bought a small German motorcycle supply business five or seven years ago, and obviously the subsidiaries tend to operate globally, but this is really the first significant investment that Omaha has, that is, Warren's portfolio has been done outside of the United States. And I think the upheaval has stimulated a lot of that kind of ground-up individual human beings asking themselves what they can do and then specific communities, churches, and schools, my own university has made a significant public commitment to focusing on inclusion, Boards of Directors of companies more broadly, organizations, business roundtables let's say.
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Buck Hartzell owns shares of Apple, Berkshire Hathaway (A shares), Berkshire Hathaway (B shares), Fairfax Financial, Jefferies Financial Group Inc., and Markel. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Constellation Brands, Jefferies Financial Group Inc., Markel, Tesla, and Twitter. The Motley Fool recommends Dominion Energy, Inc, Intel, and Johnson & Johnson and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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But I do think that as a style, it's not the Berkshire style of investing, either the kind of shareholders Berkshire wants to attract or the kind of shareholder Berkshire wants to be. So, that's the kind of shareholder he wants, that's the kind of Berkshire Buffett wants, that's the kind of shareholder he's always been. And then in the shareholder piece, you'll see a gradual sale of Warren's holdings over a period of about 12 years, where his estate will transfer about 5% of his shares to the Bill & Melinda Gates Foundation, which will then be required to liquidate it and make gifts, so over a 12-year period you'll see the company go from having a controlling shareholder to not having a control shareholder.
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So, let's talk a little bit about, there's been some great things that are going on at Berkshire Hathaway and some changes that are going on. [laughs] Mark doesn't want his name, you know. And then I think you'll see a lot more of that.
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2020-09-08 00:00:00 UTC
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INSIGHT-U.S. utilities say Biden plan to cut C02 hinges on breakthroughs
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https://www.nasdaq.com/articles/insight-u.s.-utilities-say-biden-plan-to-cut-c02-hinges-on-breakthroughs-2020-09-08-0
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By Nichola Groom and Valerie Volcovici
Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities.
The country’s top power producers said rapid advances in nascent technologies - such as batteries to store power for lean times, carbon capture to trap waste from fossil fuels and advanced nuclear power - will be critical to reaching net-zero carbon dioxide emissions.
But these technologies are currently either too costly for mass deployment or not yet commercially viable, the companies said. Historically, utilities have invested little in emerging technologies because they are required by regulators to keep costs low.
Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. All but four responded. The news organization also mined public statements, state regulatory filings and corporate documents to determine these utilities’ views.
Those views cast doubt over the feasibility of Biden’s proposed mandate as he prepares to face off with President Donald Trump – a climate change skeptic and booster of fossil fuels - in the November election.
"I'm not going to say it’s impossible,” said Adam Richins, Chief Operating Officer of the IDACORP Inc IDA.N unit Idaho Power, which supplies electricity to parts of Oregon and Idaho and has a plan to supply 100% clean energy by 2045. “I would just say the plan is very ambitious."
(See graphics on U.S energy mix with or without policy changes.)
A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal.
“Joe Biden believes in the potential of American workers' ingenuity and will mobilize our nation’s talent and grit to build a modern, clean electric infrastructure," said spokesman Matt Hill.
Biden has called climate change the biggest challenge facing America and the world, and in late July announced a proposal to spend $2 trillion on clean energy – paid for through corporate taxes.
The power sector accounts for nearly a third of U.S. C02 emissions, roughly on par with transportation, and scientists say slashing output is essential to helping avoid the worst impacts of global warming.
Solar and wind power are the most readily available alternatives to fossil fuel plants, and large amounts of both are being added to U.S. grids. But utilities say they need other resources that can be dispatched when the sun goes down or wind is low.
The Trump administration has dismantled Obama-era regulations that would have required power producers to slash CO2 emissions 32% below 2005 levels by 2030.
White House spokesman Judd Deere said in a statement that Biden’s climate plan included “unrealistic mandates that would cripple America’s economy and crush our poorest communities.”
TARGETS TAKE TIME
Responding in part to investor pressure or American state-mandated targets, more than half of those contacted by Reuters have pledged to eliminate all of their carbon emissions by 2050 at the latest, with some promising earlier timelines.
These include Idaho Power, Pinnacle West Capital Corp PNW.N unit Arizona Public Service, CMS Energy Corp CMS.N, Duke Energy Corp DUK.N, Southern Co SO.N, Xcel Energy Inc XEL.O and Dominion Energy Inc D.N.
But none of the companies has fully explained how it will achieve that goal.
Xcel, which has among the most aggressive plans to move away from fossil fuels, said it will achieve an 80% reduction in CO2 emissions by 2030 with large additions of solar and wind power. But eliminating carbon emissions entirely will take another two decades, the utility said, far longer than Biden’s plan calls for.
"We established a 2050 target for a carbon-free electric system because we know that development of those technologies will take time," Xcel said in a statement.
Dominion, Southern, Duke and others for now are relying on large amounts of natural gas-fired power to supplement increased reliance on renewables.
Natural gas emits about half as much CO2 as coal when burned, and its increased use in recent years has helped the United States slash emissions. But gas is a potent contributor to climate change when it leaks. Scientists say it has a tendency to escape from infrastructure in the form of methane, a climate-heating component of natural gas.
Reuters’ review of utility documents shows that over the next decade, natural gas is expected to make up between a fifth and two-thirds of the companies’ regulated subsidiaries’ energy-producing capacity. Overall, it generates more than a third of U.S. power and will continue to do so through 2035, according to the federal Energy Information Administration.
Companies like Duke and Southern have been criticized by fossil-fuel opponents for marketing climate-friendly credentials while moving slowly to eliminate C02 emissions.
"These utilities are trying to have their cake and eat it too and hope investors are too dumb to notice," said Dave Pomerantz, executive director of the Energy and Policy Institute, a group that advocates for a transition to clean energy.
Duke spokesman Neil Nissan called the criticism “unfounded,” saying the company has reduced emissions dramatically by retiring coal plants and will double its renewable capacity in the next five years. Southern said natural gas enables the growth of renewables by ensuring grid reliability.
STRUGGLING WITH NEW TECHNOLOGIES
Many of the utilities surveyed - including American Electric Power Company Inc AEP.N, Entergy Corp ETR.N and Vistra Corp VST.N - said they can’t commit to eliminating carbon emissions without new technologies.
"Whether these advancements will occur at the level and speed necessary for integration into the power sector’s transition prior to 2030, or even 2050, remains uncertain," said Mike Twomey, a senior vice president at Entergy.
Large-scale batteries that can store renewable power are more expensive than natural gas and typically deliver power for only about four hours.
Meanwhile, methods to capture carbon emissions have been dealt a string of setbacks, most recently with the shutdown of Petra Nova, a clean-energy facility in Texas that had been plagued by mechanical problems. It was the only project in the country that captured carbon from a coal-fired power plant.
Alternatives like small nuclear reactors and using hydrogen to create electricity have yet to be proven or made widely available commercially.
NextEra Energy Inc NEE.N, for instance, said in July it would build a $65 million pilot project in Florida to produce hydrogen from solar power, but it does not expect the technology to replace natural gas in turbines at a meaningful scale until at least 2030.
GRILLING COMPANIES
Some large investors are pressuring the industry to act more swiftly on their pledges to achieve net-zero emissions.
"A goal without a plan to achieve that goal is hollow," said Greg Rivara, spokesman for Illinois State Treasurer Michael Frerichs, who oversees a $31 billion portfolio that includes shares of Southern.
The California State Teachers’ Retirement System (CALSTRS), a behemoth pension fund that owns shares of Dominion, Duke and Southern, said it was reasonable for utilities to factor technological advances into their long-term planning. But a portfolio manager warned that investors want to make sure utilities don’t build too many new natural gas plants in the meantime.
“It’s fair to say we grill companies pretty hard on that,” said Travis Antoniono, who handles sustainable investments at CALSTRS.
The industry is counting, to some degree, on scientific discovery to take them beyond fossil fuels.
The Edison Electric Institute, a trade group for investor-owned utilities, said it is halfway through a study of the technologies its members will need to get to a maximum reduction in carbon emissions.
"The funny thing about technology is there is always some random breakthrough thing you can't plan for," said Emily Fisher, EEI’s general counsel.
U.S. energy mix with policy changeshttps://graphics.reuters.com/USA-CLIMATECHANGE/UTILITIES/rlgpdogekvo/
U.S. energy mix without policy changeshttps://graphics.reuters.com/USA-CLIMATECHANGE/UTILITIES/azgvonllopd/
(Nichola Groom reported from Los Angeles; Valerie Volcovici from Washington, D.C. Editing by Richard Valdmanis and Julie Marquis)
((nichola.groom@thomsonreuters.com; valerie.volcovici@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. NextEra Energy Inc NEE.N, for instance, said in July it would build a $65 million pilot project in Florida to produce hydrogen from solar power, but it does not expect the technology to replace natural gas in turbines at a meaningful scale until at least 2030. The California State Teachers’ Retirement System (CALSTRS), a behemoth pension fund that owns shares of Dominion, Duke and Southern, said it was reasonable for utilities to factor technological advances into their long-term planning.
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By Nichola Groom and Valerie Volcovici Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities. A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal. These include Idaho Power, Pinnacle West Capital Corp PNW.N unit Arizona Public Service, CMS Energy Corp CMS.N, Duke Energy Corp DUK.N, Southern Co SO.N, Xcel Energy Inc XEL.O and Dominion Energy Inc D.N.
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By Nichola Groom and Valerie Volcovici Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities. The country’s top power producers said rapid advances in nascent technologies - such as batteries to store power for lean times, carbon capture to trap waste from fossil fuels and advanced nuclear power - will be critical to reaching net-zero carbon dioxide emissions. These include Idaho Power, Pinnacle West Capital Corp PNW.N unit Arizona Public Service, CMS Energy Corp CMS.N, Duke Energy Corp DUK.N, Southern Co SO.N, Xcel Energy Inc XEL.O and Dominion Energy Inc D.N.
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Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal. But eliminating carbon emissions entirely will take another two decades, the utility said, far longer than Biden’s plan calls for.
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699015.0
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2020-09-08 00:00:00 UTC
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INSIGHT-U.S. utilities say Biden plan to cut C02 hinges on breakthroughs
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https://www.nasdaq.com/articles/insight-u.s.-utilities-say-biden-plan-to-cut-c02-hinges-on-breakthroughs-2020-09-08
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By Nichola Groom and Valerie Volcovici
Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities.
The country’s top power producers said rapid advances in nascent technologies - such as batteries to store power for lean times, carbon capture to trap waste from fossil fuels and advanced nuclear power - will be critical to reaching net-zero carbon dioxide emissions.
But these technologies are currently either too costly for mass deployment or not yet commercially viable, the companies said. Historically, utilities have invested little in emerging technologies because they are required by regulators to keep costs low.
Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. All but four responded. The news organization also mined public statements, state regulatory filings and corporate documents to determine these utilities’ views.
Those views cast doubt over the feasibility of Biden’s proposed mandate as he prepares to face off with President Donald Trump – a climate change skeptic and booster of fossil fuels - in the November election.
"I'm not going to say it’s impossible,” said Adam Richins, Chief Operating Officer of the IDACORP Inc IDA.N unit Idaho Power, which supplies electricity to parts of Oregon and Idaho and has a plan to supply 100% clean energy by 2045. “I would just say the plan is very ambitious."
A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal.
“Joe Biden believes in the potential of American workers' ingenuity and will mobilize our nation’s talent and grit to build a modern, clean electric infrastructure," said spokesman Matt Hill.
Biden has called climate change the biggest challenge facing America and the world, and in late July announced a proposal to spend $2 trillion on clean energy – paid for through corporate taxes.
The power sector accounts for nearly a third of U.S. C02 emissions, roughly on par with transportation, and scientists say slashing output is essential to helping avoid the worst impacts of global warming.
Solar and wind power are the most readily available alternatives to fossil fuel plants, and large amounts of both are being added to U.S. grids. But utilities say they need other resources that can be dispatched when the sun goes down or wind is low.
The Trump administration has dismantled Obama-era regulations that would have required power producers to slash CO2 emissions 32% below 2005 levels by 2030.
White House spokesman Judd Deere said in a statement that Biden’s climate plan included “unrealistic mandates that would cripple America’s economy and crush our poorest communities.”
TARGETS TAKE TIME
Responding in part to investor pressure or American state-mandated targets, more than half of those contacted by Reuters have pledged to eliminate all of their carbon emissions by 2050 at the latest, with some promising earlier timelines.
These include Idaho Power, Pinnacle West Capital Corp PNW.N unit Arizona Public Service, CMS Energy Corp CMS.N, Duke Energy Corp DUK.N, Southern Co SO.N, Xcel Energy Inc XEL.O and Dominion Energy Inc D.N.
But none of the companies has fully explained how it will achieve that goal.
Xcel, which has among the most aggressive plans to move away from fossil fuels, said it will achieve an 80% reduction in CO2 emissions by 2030 with large additions of solar and wind power. But eliminating carbon emissions entirely will take another two decades, the utility said, far longer than Biden’s plan calls for.
"We established a 2050 target for a carbon-free electric system because we know that development of those technologies will take time," Xcel said in a statement.
Dominion, Southern, Duke and others for now are relying on large amounts of natural gas-fired power to supplement increased reliance on renewables.
Natural gas emits about half as much CO2 as coal when burned, and its increased use in recent years has helped the United States slash emissions. But gas is a potent contributor to climate change when it leaks. Scientists say it has a tendency to escape from infrastructure in the form of methane, a climate-heating component of natural gas.
Reuters’ review of utility documents shows that over the next decade, natural gas is expected to make up between a fifth and two-thirds of the companies’ regulated subsidiaries’ energy-producing capacity. Overall, it generates more than a third of U.S. power and will continue to do so through 2035, according to the federal Energy Information Administration.
Companies like Duke and Southern have been criticized by fossil-fuel opponents for marketing climate-friendly credentials while moving slowly to eliminate C02 emissions.
"These utilities are trying to have their cake and eat it too and hope investors are too dumb to notice," said Dave Pomerantz, executive director of the Energy and Policy Institute, a group that advocates for a transition to clean energy.
Duke spokesman Neil Nissan called the criticism “unfounded,” saying the company has reduced emissions dramatically by retiring coal plants and will double its renewable capacity in the next five years. Southern said natural gas enables the growth of renewables by ensuring grid reliability.
STRUGGLING WITH NEW TECHNOLOGIES
Many of the utilities surveyed - including American Electric Power Company Inc AEP.N, Entergy Corp ETR.N and Vistra Corp VST.N - said they can’t commit to eliminating carbon emissions without new technologies.
"Whether these advancements will occur at the level and speed necessary for integration into the power sector’s transition prior to 2030, or even 2050, remains uncertain," said Mike Twomey, a senior vice president at Entergy.
Large-scale batteries that can store renewable power are more expensive than natural gas and typically deliver power for only about four hours.
Meanwhile, methods to capture carbon emissions have been dealt a string of setbacks, most recently with the shutdown of Petra Nova, a clean-energy facility in Texas that had been plagued by mechanical problems. It was the only project in the country that captured carbon from a coal-fired power plant.
Alternatives like small nuclear reactors and using hydrogen to create electricity have yet to be proven or made widely available commercially.
NextEra Energy Inc NEE.N, for instance, said in July it would build a $65 million pilot project in Florida to produce hydrogen from solar power, but it does not expect the technology to replace natural gas in turbines at a meaningful scale until at least 2030.
GRILLING COMPANIES
Some large investors are pressuring the industry to act more swiftly on their pledges to achieve net-zero emissions.
"A goal without a plan to achieve that goal is hollow," said Greg Rivara, spokesman for Illinois State Treasurer Michael Frerichs, who oversees a $31 billion portfolio that includes shares of Southern.
The California State Teachers’ Retirement System (CALSTRS), a behemoth pension fund that owns shares of Dominion, Duke and Southern, said it was reasonable for utilities to factor technological advances into their long-term planning. But a portfolio manager warned that investors want to make sure utilities don’t build too many new natural gas plants in the meantime.
“It’s fair to say we grill companies pretty hard on that,” said Travis Antoniono, who handles sustainable investments at CALSTRS.
The industry is counting, to some degree, on scientific discovery to take them beyond fossil fuels.
The Edison Electric Institute, a trade group for investor-owned utilities, said it is halfway through a study of the technologies its members will need to get to a maximum reduction in carbon emissions.
"The funny thing about technology is there is always some random breakthrough thing you can't plan for," said Emily Fisher, EEI’s general counsel.
(Nichola Groom reported from Los Angeles; Valerie Volcovici from Washington, D.C. Editing by Richard Valdmanis and Julie Marquis)
((nichola.groom@thomsonreuters.com; valerie.volcovici@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. NextEra Energy Inc NEE.N, for instance, said in July it would build a $65 million pilot project in Florida to produce hydrogen from solar power, but it does not expect the technology to replace natural gas in turbines at a meaningful scale until at least 2030. The California State Teachers’ Retirement System (CALSTRS), a behemoth pension fund that owns shares of Dominion, Duke and Southern, said it was reasonable for utilities to factor technological advances into their long-term planning.
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By Nichola Groom and Valerie Volcovici Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities. A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal. These include Idaho Power, Pinnacle West Capital Corp PNW.N unit Arizona Public Service, CMS Energy Corp CMS.N, Duke Energy Corp DUK.N, Southern Co SO.N, Xcel Energy Inc XEL.O and Dominion Energy Inc D.N.
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By Nichola Groom and Valerie Volcovici Sept 8 (Reuters) - The U.S. power industry would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology, according to a Reuters analysis of planning documents and a survey of top utilities. The country’s top power producers said rapid advances in nascent technologies - such as batteries to store power for lean times, carbon capture to trap waste from fossil fuels and advanced nuclear power - will be critical to reaching net-zero carbon dioxide emissions. Many of the utilities surveyed - including American Electric Power Company Inc AEP.N, Entergy Corp ETR.N and Vistra Corp VST.N - said they can’t commit to eliminating carbon emissions without new technologies.
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Reuters contacted the 10 largest U.S. publicly traded power producers and three others with ambitious greenhouse gas reduction goals to determine their outlook on reducing the carbon dioxide emissions that lead to global warming. A spokesman for Biden’s campaign acknowledged the technology gap and said the former vice president’s climate plan includes “historic investment” in clean energy to help utilities meet the carbon-neutral goal. But eliminating carbon emissions entirely will take another two decades, the utility said, far longer than Biden’s plan calls for.
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699016.0
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2020-09-03 00:00:00 UTC
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Why Dominion Energy Cutting Its Dividend Is Actually Good for Investors
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https://www.nasdaq.com/articles/why-dominion-energy-cutting-its-dividend-is-actually-good-for-investors-2020-09-03
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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.
Getting regular
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.
Image source: Getty Images.
The long-term goal has been to create more stable top- and bottom-line performance so that investors can be more sure of what to expect from the company over time. That goal includes the dividend as well. But the recently announced dividend cut appears to contradict that messaging...or does it?
Today, Dominion is really three businesses in one. The largest piece of what it does is own and operate regulated utilities. These are boring businesses that would be appropriate for widows and orphans, to use an old Wall Street cliche for the most risk-averse investors one can imagine. Then it has a small segment selling power to other companies, largely derived from renewable sources. And lastly, it owns midstream energy assets. These are the pipelines and other facilities that help move oil and natural gas from where they are drilled to where they eventually get used. The key here is that the pipes Dominion owns are largely fee-based and regulated by the federal government, so they aren't as risky as they may seem.
For the most part, Dominion has been a fairly consistent performer since it got rid of its far more volatile exploration business. But the midstream sector has started to change lately, and not in a good way.
Shifting with the times
The headwinds that Dominion faces in the midstream space started in 2018, when a tax law change altered the benefit of the master limited partnership model. At that time, Dominion controlled a partnership that it had intended to use as a funding vehicle. This was a common approach at the time, with companies selling midstream assets to a partnership (also known as dropdowns) and using the cash generated from the transaction to invest in growth projects. The tax law change killed the benefit of this for Dominion, and it bought the controlled partnership, opting instead to sell assets and take on more debt in its effort to raise capital.
D data by YCharts.
Following that move, the company started to face increasing headwinds in its effort to build a key pipeline project it had in the works, known as the Atlantic Coast Pipeline. It wasn't the only company facing material pushback, however, as the entire pipeline industry was seeing the same kind of trouble. One legal case regarding the Atlantic Coast Pipeline actually went all the way up to the Supreme Court. Dominion eventually won the case, but the experience and what it was seeing in the rest of the pipeline space led it to drop the project. It believed that there was too much risk of further delays (including the potential that the project wouldn't get completed) and cost increases to keep going.
At the same time it announced the decision on the Atlantic Coast project, it also said that it was basically exiting the midstream space. The reason was essentially the same one that led it to stop work on the Atlantic Coast Pipeline. Most of the business would be sold to Berkshire Hathaway. The bad news is that Dominion's midstream segment was expected to account for around a quarter of its earnings in 2020. Pull that out, and there's no way it could afford to keep paying its dividend at the same level as before. Dominion basically has no choice but to cut its dividend if it sells its pipelines.
But at this point, it has completed the transformation into a boring utility. In fact, now that it has ripped the Band-Aid off, Dominion believes that it will be able to grow its earnings at around 6.5% a year for the foreseeable future. That's a strong number in the utility space. The dividend, meanwhile, should expand at a roughly similar clip -- also a generous growth rate compared to those of peers. The payout ratio, meanwhile, is expected to drop from over 80% (at the high end of the sector) to a more reasonable 65%. In other words, Dominion is resetting and positioning itself for stronger long-term performance.
Don't bail so fast
No income investor likes to see a dividend get cut. However, it pays to think about why a dividend is being reduced before simply dumping a stock on such news. In the case of Dominion, this dividend cut is likely going to make it an even more attractive dividend stock in the long term. Yes, losing that extra income might hurt, but it looks like that near-term pain may be worth it for the long-term gain.
10 stocks we like better than Dominion Energy, Inc
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Dominion Energy, Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of August 1, 2020
Reuben Gregg Brewer owns shares of Dominion Energy, Inc. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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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%. Shifting with the times The headwinds that Dominion faces in the midstream space started in 2018, when a tax law change altered the benefit of the master limited partnership model. The tax law change killed the benefit of this for Dominion, and it bought the controlled partnership, opting instead to sell assets and take on more debt in its effort to raise capital.
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Shifting with the times The headwinds that Dominion faces in the midstream space started in 2018, when a tax law change altered the benefit of the master limited partnership model. Following that move, the company started to face increasing headwinds in its effort to build a key pipeline project it had in the works, known as the Atlantic Coast Pipeline. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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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%. In the case of Dominion, this dividend cut is likely going to make it an even more attractive dividend stock in the long term. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Today, Dominion is really three businesses in one. Following that move, the company started to face increasing headwinds in its effort to build a key pipeline project it had in the works, known as the Atlantic Coast Pipeline. In the case of Dominion, this dividend cut is likely going to make it an even more attractive dividend stock in the long term.
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699017.0
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2020-09-03 00:00:00 UTC
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Dominion Energy a Top 25 Dividend Giant With 4.72% Yield (D)
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https://www.nasdaq.com/articles/dominion-energy-a-top-25-dividend-giant-with-4.72-yield-d-2020-09-03
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Dominion Energy Inc (Symbol: D) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, with a whopping $8.00B worth of stock held by ETFs, and above-average ''DividendRank'' statistics including a strong 4.72% yield, according to the most recent Dividend Channel ''DividendRank'' report. The report noted a strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points.
The annualized dividend paid by Dominion Energy Inc is $3.76/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/03/2020. Below is a long-term dividend history chart for D, which the report stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.
25 Dividend Giants Widely Held By ETFs »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dominion Energy Inc (Symbol: D) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, with a whopping $8.00B worth of stock held by ETFs, and above-average ''DividendRank'' statistics including a strong 4.72% yield, according to the most recent Dividend Channel ''DividendRank'' report. The report noted a strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. Below is a long-term dividend history chart for D, which the report stressed as being of key importance.
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Dominion Energy Inc (Symbol: D) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, with a whopping $8.00B worth of stock held by ETFs, and above-average ''DividendRank'' statistics including a strong 4.72% yield, according to the most recent Dividend Channel ''DividendRank'' report. The report noted a strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. 25 Dividend Giants Widely Held By ETFs » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dominion Energy Inc (Symbol: D) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, with a whopping $8.00B worth of stock held by ETFs, and above-average ''DividendRank'' statistics including a strong 4.72% yield, according to the most recent Dividend Channel ''DividendRank'' report. The report noted a strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. The annualized dividend paid by Dominion Energy Inc is $3.76/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/03/2020.
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Dominion Energy Inc (Symbol: D) has been named as a Top 25 ''Dividend Giant'' by ETF Channel, with a whopping $8.00B worth of stock held by ETFs, and above-average ''DividendRank'' statistics including a strong 4.72% yield, according to the most recent Dividend Channel ''DividendRank'' report. The report noted a strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. The annualized dividend paid by Dominion Energy Inc is $3.76/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/03/2020.
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699018.0
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2020-09-02 00:00:00 UTC
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2 Fintech Stocks We're Ready to Buy Now
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https://www.nasdaq.com/articles/2-fintech-stocks-were-ready-to-buy-now-2020-09-03
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In this installment of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, wish a very happy 90th birthday to Warren Buffett and share some of the greatest lessons learned from him over the years. Then, Frankel discusses why recent IPO Lemonade (NYSE: LMND) is at the top of his buy list right now, despite being a very young business in a competitive market, and Jason discusses why he's about ready to pull the trigger on Bill.com (NYSE: BILL).
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Walmart
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
Stock Advisor returns as of 2/1/20
This video was recorded on Aug. 31, 2020.
Jason Moser: It's Monday, Aug. 31. I'm your host Jason Moser. On this week's Financials show, we're going to talk a little bit of Warren Buffett. Little Buffett, little Berkshire, the newly minted nonagenarian. Matt and I have a couple of stocks that we're actually going to pitch to you today, so not ones to watch, but a couple of stocks that we think, in the financial space, are good-looking opportunities today for investors taking the long-view, of course. And as you probably guessed, joining me this week, as always, it's Certified Financial Planner Matt Frankel. Matt, how's everything going?
Matt Frankel: Hey, it's another day in paradise down here in South Carolina. It's a beautiful sunny day and nothing I'd rather be doing than hanging out with you guys.
Moser: Well, I love it, love it, love it. And I'm enjoying what we're going to talk about today digging into the show. And what we're going to talk about, I think, is a lot of fun. I've always enjoyed following Warren Buffett. To see him turn 90 over the weekend I thought was really special. And, hey, listen, I'm excited we actually get to throw some stocks out there for listeners today to really ponder, you know, to consider adding to their portfolio. We're going to throw a couple of stock ideas your way.
But first, let's talk about the birthday boy here. Over the weekend, Warren Buffett turned 90 years old, you know, cheeseburgers and cherry cokes, [laughs] and man! the guy is just, he's just making it happen and looking better than ever. So, it was really nice to see that, Happy Birthday, Mr. Buffett! Certainly, I saw a lot of people on Twitter wishing you well. And you're, kind of, like our North Star here at The Motley Fool in a lot of ways.
And you know, along with the birthday news, there was some news of some new investments on the part of Berkshire Hathaway and Mr. Buffett. So, Matt, I wanted to talk with you about that first, because you know, Berkshire Hathaway, they essentially invested stakes valued at around $6 billion right now in five different Japanese companies. And he said something that I thought was really -- it may on the surface look like a little bit of an odd investment, but he said something in the interview regarding it that I think just encapsulates really what it's all about. He says, we're happy to be a part of the future of Japan. And that's really what investing is, you're participating in the future. And so clearly, he sees Japan with a bright future, an economy that is doing a lot of great stuff and a lot of advances and innovation there.
Five different companies, a lot of money. Talk to us a little bit about these companies and this investment, Matt.
Frankel: Yeah. So, these are essentially, they're known as trading companies. It's a Japanese-specific business model. Where these are essentially big conglomerates that invest in a bunch of different businesses, kind of, sounds like Berkshire Hathaway. So, not only did Buffett spread his money out between five different companies, but these are five different companies that spread their own investments out among a bunch of different operations. They have things like transportation, metals mining, infrastructure, a lot of them have energy operations, things like that. So, these are five trading companies. I think of this kind of in the same sense that I think of Buffett's bank investments or -- [laughs] and I know he doesn't own them anymore, but his airline investments. In the sense that he's not picking a winner. He sees a long-tailed opportunity here and he just kind of likes the whole space, in this case, Japan. He likes the Japanese economy and he's, kind of, investing in the whole thing, not just one part of it.
Moser: So, Matt, I don't want to interrupt, but I have to ask. It sounds like maybe Warren Buffett is taking the basket approach. Would you agree?
Frankel: He is, this is his, I guess, Japan basket, I guess you'd call it.
Moser: [laughs] I love it, I love it, I love it.
Frankel: The Buffett Japan basket, I guess we could call this. But a couple of significant things to mention here. As we mentioned, this is a little over $6 billion at the current market value. That's the biggest investment, I mean I know it's not a single company, but this is the biggest investment that Berkshire has announced in some time. I know that Dominion natural gas buy was $10 billion, but that included, like, $6 billion worth of debt, so it was only about $4 billion worth of cash that Buffett put up for that. We mentioned Bank of America recently, but Berkshire only invested about $2 billion in additional shares. So, this $6 billion investment is the biggest purchase Berkshire has made in some time.
So, why is this significant? I think it's significant, really, for two reasons. One, it shows that Buffett is really committed to putting some of Berkshire's giant mountain of cash to work. I mean, Berkshire had over $140 billion on its balance sheet at the end of the second quarter. We mentioned the Dominion assets, the Bank of America stock that he bought, those were all things that happened in the third quarter. And this purchase happened, if you read the press release, over a 12-month period. These aren't U.S. stocks, so they didn't show up on the company's 13F filing. But Berkshire made these purchases over the course of a year, so that also shows that -- remember how everyone was getting frustrated in the March and April period when Berkshire literally bought nothing according to its 13F? So, maybe Berkshire wasn't being as conservative as you thought; they were quietly buying up these Japanese companies.
And like you said, this was pretty consistently over the course of a year. So, in the early days of the pandemic, Berkshire was putting money to work, just not in obvious visible ways to us. So, this is definitely a significant thing. It's not a giant investment by Berkshire standards. About $6 billion is a little over 1% of Berkshire's market cap. So, even if these are wildly successful, they're not going to be that much needle moving acquisitions, not like the Apple investment or anything like that. But it's significant that Buffett really seems committed to finding ways and thinking outside of his usual box in putting this money to work.
Moser: Yeah, I'm glad you made that point regarding -- you know, our conversations all throughout the year, kind of, you know, why wasn't he putting money to work? And well, it turns out he was, just in a little bit of a different way. And it definitely sounds like he is open to growing those investments as well. I think I saw where he said he was happy to take it to ownership stakes in any of those companies up to 9% or maybe 9.9%, and maybe that's where the cutoff is, so that he doesn't have to necessarily report. But I think any which way you cut it, yeah, it's a bet on the future of Japan, it's a bet on the global economy. It is a basket approach, I think is just probably the easiest way to put it, because he wasn't really placing his investment in one name. I mean, he spread that across five different companies. And so, I think that's a pretty sensible way to go about it, especially a country where -- I mean, anytime you're outside of your home stadium, so to speak, it's a little bit more difficult, the degree of difficulty goes up. And so, I think spreading that risk around makes sense.
Matt, I wanted to talk for just a minute about Warren's birthday, because one of the things that came up over the weekend or I saw this on Twitter, I thought it was really cool. One of our colleagues here at the Fool, Anand Chokkavelu, he's been with the company for, well, longer than I have. He's been here ever since I've been here, so he's been here for longer than I have, which, you know, is to plus-10 years at least. But he is a Buffett guy, I've learned a lot from reading Anand's writing through the years. And one of the things he did, I think it's really cool, he said on Twitter, he said, Aug. 30 is Warren Buffett's 90th birthday. Each year I celebrate the Babe Ruth of investing's birthday by adding another reason we love our hero. And then he went on to rattle off 90 tweets of just really great gems, things that he and we have learned from Warren Buffett along the way.
And you know, we wanted to pick out things that we have learned from him, the lessons that we use in our investing philosophy. And I'll just say, I think it was the 35th point that Anand made here, but it really resonated with me, because it was a quote, and it's on keeping it simple, stupid! And the quote is, "The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective." And that's one of those things that resonates with me, because I say oftentimes, and maybe I got it from this, but investing is as easy or as difficult as you want to make it. So, I try to keep it simple, I try to keep it easy [laughs] and not difficult. So, that's one of those Buffett-isms that sticks with me even today. I was wondering if there are a couple of lessons, one or two lessons there that you wanted to highlight this week in honor of Mr. Buffett's birthday?
Frankel: Yeah, the one you just said sounds similar to one that I really love, that's: You don't need to do extraordinary things to get extraordinary results. But it's really tough to just pick one or two. I wrote something about my 100 favorite Buffett quotes.
Moser: And we will tweet that out on The Motley Fool Industry Focus feed too for the listeners, along with Anand's 90 gems there; we'll retweet that on the feed as well.
Frankel: We will. And I can share three of my favorite Buffett lessons that I've learned and put into practice myself. No. 1, Buffett loves to buy companies that are in temporary trouble. This was the origin of his American Express stake, just to name one. This is where he got the Bank of America stake originally during the financial crisis; you know, a company in temporary trouble. I'm sorry, a great company in temporary trouble. You know, a lot of companies that have temporary trouble can go bankrupt. He wants great companies in temporary trouble.
So, to apply this to my own investment philosophy, this is where my own Bank of America investment came from. This is why I bought companies like Empire State Realty Trust. I mean, the Empire State Building is a fantastic asset. The company has got a rock-solid balance sheet, but it's got temporary trouble right now. You know, New York offices are not exactly thriving at the moment. Ryman Hospitality Properties is one we've talked about; great company, temporary trouble. Conferences in group events aren't a thing right now. So, buying great companies in temporary trouble is one of my favorite Buffett lessons.
Another one: A climate of fear is a long-term investor's best friend. I've put more money to work in the market in March through May of this year than I have probably in the previous three years combined. And it's because, it was a big -- I mean, March especially, is probably the worst climate of fear that's happened in my lifetime, including the financial crisis. So, it's just been a climate of fear, which as a long-term investor -- as a short-term investor, my portfolio has gone like this; the people listening can't really see this, but it's been kind of a roller-coaster ride since March. I remember the day my portfolio peaked in value, all-time high, the last day I was at Fool HQ, which was in late-February at some point. I think the last time you saw me live with Jason was the best day, my peak net worth, since then, it was like a roller coaster. First, you have the giant drop. And then, it kind of goes like this for a while, and like this. So, as a short-term investor, it's been kind of a hectic time. And if I was obsessing about the short-term swings in my portfolio, I would never get any sleep right now. But as a long-term investor, I know that I've bought some excellent companies at low prices; and that's kind of a Buffett mentality.
You know, you just turn off the news. I haven't turned on CNBC in three months. I love CNBC, it's a great news channel, but I haven't turned them on in three months just because I don't want to pay attention to the short-term swings and I don't want somebody yelling at me about the short-term swings, the way they do on there, you know, trying to make them seem even worse than they are.
So, ignoring the headlines, focusing on excellent companies at great values. And finally, looking for a margin of safety when you invest. That's something Buffett talks about -- the way he says it is, if you were driving a truck that weighs 9,900 pounds and a bridge said capacity 10,000 pounds, would you drive across it?
Moser: I'd be thinking twice about that one for sure.
Frankel: Right. And what he says, you probably drive down the road a little bit and find another bridge that says capacity 15,000 pounds. That's a margin of safety. So, that's what we look for in stocks. I mentioned Empire State Realty, that's a great one with a margin of safety, because it's a terrible business to be in right now, office space in New York City that's pretty much shut down. But the company has about $1 billion in liquidity, they have excellent credit, they have very little debt compared to their peers. That's a margin of safety, having that much cash in the bank that you could be flexible, do whatever you want with. So, those are my top three. I know I've rambled on a little bit, but I do love Buffett lessons and I could talk about all 100 if you really want me to.
Moser: Yeah, we could go through and listen. There's an entire series of shows here, and maybe we'll [laughs] talk to Anand about that, because there's a lot to dig into there with the stuff that he tweeted out, it was really great. So, look for that on the Industry Focus feed.
Matt, let's jump into the ideas we wanted to get into today, because these ideas, you know, they employ our investing philosophies, lessons we've learned. And certainly, Warren Buffett and Charlie Munger, they've been a part of that all along the way, but we wanted to throw a couple of ideas in the finance space to listeners today. These are ideas that we think really look like good investable ideas, worthy of consideration for investors today. And so, I'm going to let you start, and Matt, let's take about five minutes each and let's just, kind of, make our case. You know, this is, we're not putting me versus you. I mean, maybe we'll throw a poll out there on Twitter to see who likes it. But just, you know, go in, give us five minutes and talk about the stock that you're pitching today and why you like it.
Frankel: Sure. I'm actually going to go do something rare for me and pitch a recent IPO. Normally, I'd advise staying away from those. And it is Lemonade. LMND is the ticker symbol. If you're not familiar, they are an insurance tech company. Insurance is a massive market. You know, over 10% of U.S. GDP is insurance. It's a $5 trillion annual market.
Lemonade is an insurance tech company. Their basic idea is to use artificial intelligence and other modern technologies to make the insurance business quicker, easier and more affordable than it ever has been before. It kind of reminds me of, you remember when GEICO first got really popular because of their "15 minutes could save you 15% or more," remember that line. So it's kind of something like that, except now you can get a quote in a few seconds thanks to the technology. So, the insurance business, the general idea is that it generates money that can then be invested in something else while you're waiting to pay out claims, and Lemonade does it a little bit differently. First of all, for right now, they offer homeowners, renters and pet insurance. Those sound kind of like three random things for an insurance company to offer. They're planning to add things like health insurance and life insurance eventually, but right now they're just kind of ramping up.
So, the way they plan to do this is, one, their business model is a little misunderstood, because they say that everything that's not paid out in claims, they donate to charity. Which sounds like a very noble cause but a terrible profit model. So, [laughs] what they do, they take an upfront fee, a portion of the premium right off the bat that is their money to cover their costs, invest if they want to, things like that, it's 25%. So, 25% of the premium goes to paying their expenses and can be invested, it's the ...
Moser: It's, sort of, their version of a float, I guess, yeah?
Frankel: Sure. And the other 75%, they use to purchase reinsurance policies. That, kind of, instead of making a variable payout for claims -- you know, as claims come in, they pay them out, and so and so on. The reinsurance allows them to, kind of, make a flat cost of paying out claims. They buy these reinsurance policies; they have a predictable cost of claims. That 25% is predictable money that's in their pocket. Not in their pocket, I mean, that's what they can use to run their business. So, over time this can be profitable.
I love the charitable aspect of the operation. I love that. One Buffett lesson that really applies to this, not only is insurance Buffett's favorite industry, Berkshire Hathaway, at its core is an insurance company. But Buffett has taught us to look for durable competitive advantages. The use of artificial intelligence, you know, technologies that other insurance companies don't use and getting a, kind of, first-mover advantage in that way, gives them the durable competitive advantage of having a favorable cost structure. It's cheaper to generate a policy through artificial intelligence than through a live agent. You know, the same idea with banks. It's cheaper to process a deposit through a mobile app than it is to have a teller assist you. So, they use the same kind of idea here. And that's a durable advantage; especially since they're really the first ones to really develop these insurance technologies. They're the first tech-focused insurance company; you know, GEICO has a mobile app, but that's not the focus of their business, using tech.
So, that's a durable competitive advantage. I think this business has a ton of room to grow over time, the gross so far has been very impressive. Most of their customers, 70% of their customers, are under 35. So, they're bringing in people who are new to the insurance world. 90% said they didn't switch from another insurance company, so that means they're getting a lot of first-timers. So, renters' insurance and homeowners' insurance especially, they're targeting first-time homebuyers, for example. These are people who are young and could be Lemonade customers for the next 50 years. So, it's a long-tailed customer base, cost advantages. They're doing a great job of, kind of, bringing newer people who don't -- maybe people who don't have renters' insurance right now, bringing them into the insurance economy, which could eventually be upgraded to homeowners' insurance once these people buy homes.
So, there's a lot of room to grow this business. I really like Lemonade's model. Like, any IPO I would advise, kind of, taking a small nibble at first, I wouldn't advise putting, you know, 10% of your portfolio [laughs] into the stock right now. But it's a recent IPO, there's a lot of execution risk; we won't sugarcoat it. Whenever you're trying to be a pioneer in a space and really disrupt the $5 trillion industry, there's a ton of execution risk. So, I would advise taking a small nibble at first, but this is a stock that's on my watchlist. And obviously now that I've mentioned it right now, I can't buy it in the next few days, but it's one that I plan to at least take a small nibble in my portfolio in the near future.
Moser: Yeah, I like that. I like that charitable aspect to it. And I think, you mentioned the younger demographic, I think that resonates a lot with the younger demographic. And I also think this is probably a business that does pretty well with, sort of, word-of-mouth advertising. I mean, I would imagine that a lot of people just talk with their friends and family about this company. And maybe, you know, given the branding and what they're doing, and that aspect of the business, the word-of-mouth, hopefully that's something that can -- you know, they don't have to spend so much, really, to create that awareness and acquire those customers. But, yeah, that's -- we talked about Lemonade on the show before, I really like that one. That's great.
Another one we've talked about on the show before, and I'm going with this week is Bill.com, ticker is BILL; very easy to remember. But if you remember, Bill.com, this was founded in 2006 by Rene Lacerte. And their mission is to make it simple to connect and do business; that's a pretty wide-reaching mission, of course. But what they do is they provide cloud-based software that digitizes and automates back office financial operations, primarily for small- to medium-size businesses, those SMBs that we talk about.
It is a relative newcomer to the public markets as well. They just IPO'd in December 2019, and shares have done really well since that initial pricing of $22. Digging into the business, for me, it starts to become clear why, I think -- again, they're trying to help these small- to medium-size businesses essentially make paper-based manual transactions obsolete. You know, a lot of these businesses still rely on writing checks and keeping paper letters and whatnot, but Bill.com is really trying to bring all of these small- to medium-size businesses into the 21st century and making it cost effective.
According to the SMB Technology Adoption Index, in 2016, more than 90% of small- to medium-size businesses surveyed still relied on paper checks to make and accept business-to-business payments. So, you can see big opportunities there to eliminate maybe not cash, but checks, right. We talk about the War on Cash; this is very similar, in that, they're trying to eliminate that paper trail. It's a SaaS business, the customers pay a monthly subscription for services. They also benefit from transactions conducted on the platform and revenue generated on interest earned from customer funds held in trust. It's a small part of the business today, but they continue to grow and could become more meaningful.
And they do all this with artificial intelligence and AI-driven platforms. That's really one of their competitive advantages is, really trying to use technology to make this as efficient a business as possible. And we talk about efficiency, I mean they are doing something here. At the end of this most recent quarter they reported last week, more than 98,000 customers, which was up 28% from a year ago. They processed $25.4 billion in total payment volume, which was up, I think, 26% from a year ago. And then at the end of the fourth quarter, they held over 2.5 million network members; that was up 39% from the 1.8 million members at the end of the last fiscal year. They processed 5.6 million payments for the quarter, Matt; 5.6 million. And so, you've got this big network of providers and participants, members and ultimately what this can do is create a very compelling network effect over time, assuming that they continue to grow that customer base.
And certainly, I think you're seeing that businesses more and more would like to move away from paper and checks and whatnot. And so Bill.com, it's not the only one out there really doing what it's trying to do, still a very young company. Like I said, relatively new to the public markets. But Rene Lacerte, the CEO, the Founder, he's got a strong history in this space and he seems like [laughs] he knows what he's doing. It is unprofitable. I think probably the biggest risk today is the valuation. It is trading at around 48X sales, so clearly -- I mean, in a market where a lot of these businesses are trading this way, Bill.com is no exception.
So, like you said with Lemonade, I think it's one where I would advise nibbling, I would advise buying this in thirds maybe. And say, OK, if you know how much money you would want to invest in this business, split that total amount up into three different tranches and just invest one tranche at a time. Maybe get some skin in the game to start following it. If you find another more opportunistic entry point down the road, add that second or third tranche. But like you, Matt, this is a business that I actually want to bring into my own personal portfolio. So, my intention is that once our time is up here and we can actually make these transactions, I personally am going to put a little money to work in Bill.com as well, because I just have seen what they're doing, and while it's a very competitive space, it's also a very big market. And Mr. Lacerte seems like a really compelling founder-leader.
So, there you go, Bill.com and Lemonade. And the ticker for Lemonade, again, Matt, was... ?
Frankel: LMND. And since this is the Buffett episode, I'm going to go one step further and ask you a question, then I'll answer it about Lemonade.
Moser: OK.
Frankel: Do you think Warren Buffett should or will buy Bill.com stock, not the company?
Moser: Stock, not the company. OK. Well, I don't know that he will, I think he should. And I think that just based on the investments in PagSeguro and StoneCo, for example -- and maybe it's not even Buffett particularly, but the team that he's assembled there, I think they see the merits of the space, I think they see the merits of the fintech space and what it's doing. I think that it has a lot of qualities that Mr. Buffett and company appreciate. So, it would not surprise me if they did buy it, but it may be a little bit too small of a company even for him. I mean, like I said, the valuation is pretty crazy and I don't know [laughs] there's that margin of safety that he feels so good about today.
How about you -- what do you think with Lemonade?
Frankel: Yeah, I mean, I think he should. And there are a couple of reasons. One, because insurance, you know, is Buffett's favorite business, and they're kind of the future of insurance. And Buffett has a history of taking nibbles on some up-and-comers in his favorite spaces. Think of StoneCo. You know, Buffett loves payment processing. He's owned American Express for a long time. He has positions in Visa and MasterCard, and then StoneCo is the Brazilian kind of equivalent. And he took a nice nibble in that. I could see him doing a similar thing with a company like Lemonade, because you know, they're the higher-tech players. He kind of missed the boat on a lot of the big tech crazes, like Amazon and Google, things like that, and he has expressed regret over it. So, I think, you know, he can redeem himself a little bit by getting in on the ground floor of an up-and-coming insurance tech play like Lemonade. They're a reinsurance customer. Buffett has a lot of reinsurance businesses. There could be a lot of synergies there. It's a play that would make sense, I think, as a nibble.
Moser: Yeah, I think you're right. Given his penchant for insurance. And I bet you, he loves what that company stands for, we've talked about it, he'd appreciate that, I think. So, well, hey, folks, listen, there are two companies that Matt and I really like, we wanted to go one step further than just ones to watch this week and really talk about companies that we feel strongly about, and strongly enough to put our own money to work. And so, I'm excited to see how these work out. I love that Lemonade pitch. Matt, I think that's a cool-looking company. I've just really been impressed with what I've learned about Bill.com and I'm going to have a lot of fun following these; I know you will too.
Frankel: For sure.
Moser: Well, that's going to do it for us this week, folks. And, Matt, before I leave, I just want to wish you guys well. Have a safe trip. Given that you're in South Carolina, are you flying down to Florida or you guys going to drive?
Frankel: No. And for those -- we talked about this before the recording started, I think, but for those who are just listening on the podcast, we're going to Disney World for the weekend. We are driving. It's about a six-hour drive from where I live. We have to make reservations, it's a little bit of a different system than we're used to, but we were able to -- we were worried, because of Labor Day, you know. You take Labor Day and Disney, and I can just start getting claustrophobic with all the crowds.
Moser: [laughs] Not the place you want to be.
Frankel: Right. But they're limiting capacity to, like, 20%. So, I mean, even -- you know, how busy could it get? [laughs]
Moser: That sounds like a dream, man. I think that ought to be a lot of fun.
Frankel: Yeah. And we were able to reserve all three parks we wanted on the days we wanted. And I keep looking at the Disney app and all the lines are, like, five or 10 minutes for all the rides [laughs] we want to do, so ...
Moser: Man, that ought to be a lot of fun.
Frankel: Yeah, it just seems like a nice, like a once-in-a-lifetime opportunity to -- if you're not that worried about the -- and we're going to be taking precautions, and my wife, you know, she buys sanitizer by the gallon for things like this. So, we're going to be taking precautions. You know, I'm not saying, don't worry about the virus. But from everything I hear, Disney is doing a great job at keeping everything clean and following protocols and things like that. And I haven't read any -- they've been open for almost two months now, I haven't read anything about someone -- like a case being traced back to Disney World.
Moser: [laughs] I'd imagine that they're probably setting the standard for keeping a park clean and safe, so. Well, we'll talk about it when you get back. And as a reminder, folks, with next week being Labor Day weekend, on next Monday we will be off as the office will be closed, so no Industry Focus next Monday. We will join back with you on the following Monday. We'll talk about Matt's trip and get his report on the state of travel and entertainment in the Southeast of the United States of America.
But remember, you can always reach out to us on Twitter @MFIndustryFocus, you can drop us an email at IndustryFocus@Fool.com. Let us know if you're traveling anywhere, tell us how that's going, we'd love to hear it. You know, any compelling stuff out there? Hey, we'll bring it over to the show too.
But as always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Thanks, as always, to Tim Sparks for putting the show together. For Matt Frankel, I'm Jason Moser, thanks for listening and we will see you not next week, but the week after. Happy Labor Day, folks!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jason Moser owns shares of Amazon, Mastercard, and Visa. Matthew Frankel, CFP owns shares of American Express, Bank of America, Berkshire Hathaway (B shares), Empire State Realty Trust, Ryman Hospitality Properties, and Walt Disney and has the following options: short January 2021 $23 puts on Bank of America. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Empire State Realty Trust, Mastercard, PagSeguro Digital, Ryman Hospitality Properties, Twitter, Visa, and Walt Disney. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In this installment of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, wish a very happy 90th birthday to Warren Buffett and share some of the greatest lessons learned from him over the years. But what they do is they provide cloud-based software that digitizes and automates back office financial operations, primarily for small- to medium-size businesses, those SMBs that we talk about. According to the SMB Technology Adoption Index, in 2016, more than 90% of small- to medium-size businesses surveyed still relied on paper checks to make and accept business-to-business payments.
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Matthew Frankel, CFP owns shares of American Express, Bank of America, Berkshire Hathaway (B shares), Empire State Realty Trust, Ryman Hospitality Properties, and Walt Disney and has the following options: short January 2021 $23 puts on Bank of America. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Empire State Realty Trust, Mastercard, PagSeguro Digital, Ryman Hospitality Properties, Twitter, Visa, and Walt Disney. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), and short October 2020 $125 calls on Walt Disney.
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One Buffett lesson that really applies to this, not only is insurance Buffett's favorite industry, Berkshire Hathaway, at its core is an insurance company. They're doing a great job of, kind of, bringing newer people who don't -- maybe people who don't have renters' insurance right now, bringing them into the insurance economy, which could eventually be upgraded to homeowners' insurance once these people buy homes. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), and short October 2020 $125 calls on Walt Disney.
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Talk to us a little bit about these companies and this investment, Matt. Moser: OK. Frankel: Do you think Warren Buffett should or will buy Bill.com stock, not the company? In this installment of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, wish a very happy 90th birthday to Warren Buffett and share some of the greatest lessons learned from him over the years.
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2020-08-31 00:00:00 UTC
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Warren Buffett Just Invested Billions in Japan -- Here's Why It Matters
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https://www.nasdaq.com/articles/warren-buffett-just-invested-billions-in-japan-heres-why-it-matters-2020-08-31
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by billionaire investor Warren Buffett, just announced a relatively large investment in five Japanese companies. The investment, which is meant to be a long-term holding, is the latest in a string of billion-dollar buys Berkshire has made that we've learned about in recent weeks.
With that in mind, here's what we know about Berkshire's investment and why shareholders should be excited about it.
Warren Buffett. Image source: The Motley Fool.
Berkshire is putting billions to work in Japan
Berkshire Hathaway just announced that it has acquired a little more than a 5% stake in five Japanese companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. All five trade on the Tokyo Stock Exchange, where Berkshire made its purchases over the course of the past year, according to the press release. They're all trading companies (diverse conglomerates -- known as "sogo shosha" in Japan) with operations in a variety of industries.
Just to name one example, Mitsubishi Corporation (not to be confused with the automaker of the same name) has operations in information technology, infrastructure, finance, metal mining, energy, heavy machinery, chemicals, and consumer products.
While we don't know how much Berkshire paid for its shares in each company, the current value of Berkshire's investment is roughly $6.5 billion (depending on how much more than 5% of the shares Berkshire bought).
Berkshire made it clear in its press release that these are intended as long-term investments, meaning that Buffett isn't simply attempting to capitalize on a short-term mispricing or anything like that. And Berkshire says that it may buy even more -- up to 9.9% of each, with larger stakes possible with the permission of each company's board of directors.
It's also worth mentioning that although these are technically five separate investments, they are very similar in nature. Think of this in the same manner as Berkshire owning shares of several different bank stocks, or (until recently) all four major U.S. airlines. Buffett seems to have identified a market opportunity, so instead of trying to pick a winner, he's using the idea that a rising tide will lift all ships and spreading his money around.
A relatively small piece of Berkshire, but here's why it matters
Now, an investment of over $6 billion may sound like a large amount of money, and to most people and companies it is. However, it's important to point out that this represents just over 1% of Berkshire's total market capitalization. So even if they're very successful, these Japanese stock investments aren't likely to be a major needle-mover for Berkshire all by themselves. But that's not the point.
The key takeaway here is that this tells us a few things that Berkshire shareholders desperately needed to hear. First, it shows that the recent investments in Dominion's (NYSE: D) natural gas assets and Bank of America (NYSE: BAC) stock weren't just a blip -- Buffett seems truly ready and committed to putting Berkshire's 12-figure cash hoard to work. After all, while this is technically five different investments, in terms of actual cash spent, this is the most Buffett has put to work in a single type of investment in some time.
Furthermore, it tells investors that when the U.S. and world stock markets were in a tailspin earlier this year, Berkshire may not have been as inactive as it seemed. From the press release, we learned that the company had built these stakes over a period of about 12 months -- it didn't just buy shares, it acquired them over a period of time, including the turbulent first half of 2020.
The bottom line is that investors have been frustrated by Berkshire's lack of investment action for some time, but this move just goes to show that Buffett has some tricks up his sleeves – even at 90 years old.
10 stocks we like better than Berkshire Hathaway
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
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*Stock Advisor returns as of August 1, 2020
Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short January 2021 $23 puts on Bank of America. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Just to name one example, Mitsubishi Corporation (not to be confused with the automaker of the same name) has operations in information technology, infrastructure, finance, metal mining, energy, heavy machinery, chemicals, and consumer products. Berkshire made it clear in its press release that these are intended as long-term investments, meaning that Buffett isn't simply attempting to capitalize on a short-term mispricing or anything like that. The bottom line is that investors have been frustrated by Berkshire's lack of investment action for some time, but this move just goes to show that Buffett has some tricks up his sleeves – even at 90 years old.
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by billionaire investor Warren Buffett, just announced a relatively large investment in five Japanese companies. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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While we don't know how much Berkshire paid for its shares in each company, the current value of Berkshire's investment is roughly $6.5 billion (depending on how much more than 5% of the shares Berkshire bought). See the 10 stocks *Stock Advisor returns as of August 1, 2020 Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short January 2021 $23 puts on Bank of America. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by billionaire investor Warren Buffett, just announced a relatively large investment in five Japanese companies. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The investment, which is meant to be a long-term holding, is the latest in a string of billion-dollar buys Berkshire has made that we've learned about in recent weeks.
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2020-08-29 00:00:00 UTC
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Is AES Corporation Stock a Buy?
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AES Corporation (NYSE: AES) is anything but your typical power company. What it does differently, however, sets it apart in a way that could make it a perfect fit for your portfolio. Here's what you need to know about this unique utility and its 3.2% dividend yield.
The road less traveled
When most people think about a utility, a company with a government-granted monopoly to provide a region with electricity probably comes to mind. That's the conservative "widows and orphans" type of utility stock that investors expect to produce reliable income and slow (but consistent) growth over time. But as far as AES is concerned, you have to throw that image out the window.
Image source: Getty Images.
For starters, AES has a global presence, with operations in 13 countries. Around 36% of its adjusted pre-tax contribution (PTC is a company measure of financial performance) comes from the United States and utilities (the boring "widows and orphans" kind). South America makes up another 30% of that total, with Mexico and Central America at 20%, and Eurasia chiming in with 10%. There is a lot of geographic diversification here.
In addition to that, there's a unique business mix. Only about 15% of adjusted pre-tax contribution comes from what the company calls utilities, which are generally what you would expect them to be (though not necessarily located in the United States). The rest of PTC comes from contracted power operations, in which AES owns a power asset and sells the generation to others. Roughly 15% of PTC is tied to short-term contracts and 70% to long-term contracts. Selling power under long-term contracts is a relatively conservative business in which even cautious utilities are involved, but short-term contracts can be a little more risky. The average contract life across the company's contracted power business is around 14 years.
AES is in the middle of a major repositioning plan, like many utilities around the world. By 2024, it hopes to generate around half of its power from renewable sources like solar and wind. However, it also has a long history of being at the leading edge of technology. It currently has a partnership with Siemens, known as Fluence, that develops energy storage systems. This partnership has developed or been awarded contracts for 1.7 gigawatts of storage systems across 21 countries, which effectively increases AES' geographic reach even further than its core business.
Some caveats
There's no question that AES takes an interesting approach in the utility space. If your goal is to add a boring old utility to your portfolio, then this stock is probably not for you. However, if you are looking to invest in a dynamic power company that has the potential to grow relatively quickly because it operates in developing regions (notably Central and South America), then you might decide that it is a good fit. But there's things that need to be considered before you hit the buy button.
For example, less-developed countries can be subject to political and financial uncertainties that you wouldn't expect in the United States. Currency impacts are a notable ongoing issue for the company, with some years benefiting from changing relative valuations and some suffering. Meanwhile, Brazil and Argentina, two counties in which AES has sizable operations, are both experiencing material political and financial troubles which are only partially related to COVID-19. While it wouldn't be fair to suggest that the United States is immune to political and financial issues, it is larger and more stable politically. The U.S. dollar's prominent role in global trade is also a stabilizing force. These aren't knocks on AES, but something that investors will need to understand and accept as part of the business environment. So far, AES has managed to handle these uncertainties in relative stride.
AES Dividend Per Share (Quarterly) data by YCharts.
What you get in exchange for this added risk is, as noted, the potential for higher growth. Looking at dividends here helps, since generating dividend income is a core investment theme in the utility space. AES's dividend increased by more than 40% over the past five years, which is a fairly impressive number in the utility space. However, there are domestically focused peers with similar, if not better, dividend growth. So investors could get the same level of dividend growth without the foreign exposure and material exposure to contract-based businesses. AES' roughly 3.2% yield, meanwhile, doesn't particularly stand out relative to its peers. Although hardly a clear win for AES, it does hold up fairly well compared to other utilities on the dividend front -- but only if you can stomach the risk profile.
Spicing up your utility holdings
AES is probably not a good choice for conservative long-term investors. In fact, it's also likely to be a less-than-desirable pick if you want to add a single "core" utility stock to your portfolio.
However, if you are looking to add some diversification to your existing utility holdings, then AES starts to look pretty enticing. That said, you'll need to be able to handle some ups and downs based on its unique business model. At the end of the day, AES is an interesting option for the right investor, but it is definitely not the right stock for every investor.
10 stocks we like better than The AES Corporation
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and The AES Corporation wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of August 1, 2020
Reuben Gregg Brewer owns shares of Dominion Energy, Inc and Southern Company. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and NextEra Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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That's the conservative "widows and orphans" type of utility stock that investors expect to produce reliable income and slow (but consistent) growth over time. This partnership has developed or been awarded contracts for 1.7 gigawatts of storage systems across 21 countries, which effectively increases AES' geographic reach even further than its core business. However, if you are looking to invest in a dynamic power company that has the potential to grow relatively quickly because it operates in developing regions (notably Central and South America), then you might decide that it is a good fit.
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The rest of PTC comes from contracted power operations, in which AES owns a power asset and sells the generation to others. Selling power under long-term contracts is a relatively conservative business in which even cautious utilities are involved, but short-term contracts can be a little more risky. However, if you are looking to invest in a dynamic power company that has the potential to grow relatively quickly because it operates in developing regions (notably Central and South America), then you might decide that it is a good fit.
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This partnership has developed or been awarded contracts for 1.7 gigawatts of storage systems across 21 countries, which effectively increases AES' geographic reach even further than its core business. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and The AES Corporation wasn't one of them! What it does differently, however, sets it apart in a way that could make it a perfect fit for your portfolio.
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Here's what you need to know about this unique utility and its 3.2% dividend yield. Looking at dividends here helps, since generating dividend income is a core investment theme in the utility space. What it does differently, however, sets it apart in a way that could make it a perfect fit for your portfolio.
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2020-08-26 00:00:00 UTC
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30 Dividend Stocks to Buy Now for 20 Years of Income Growth
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Unlike every other crisis that America has faced in modern history, the novel coronavirus pandemic affects each of us directly. No one can say that they haven’t felt the impact of this terrible outbreak. Therefore, the upcoming 2020 election could very well be a one-issue race. But don’t adopt the same singular attitude for your dividend stocks to buy.
Of course, it’s tempting to focus just on the coronavirus. From the moment we wake up to the time we close our eyes, we are reminded about the repercussions of the new normal. It’s hard to imagine that the Covid-19 pandemic will fade away. But in all likelihood, it will. Despite the temptation to wallow in immediacy bias, you can’t let this crisis overrun your strategy for selecting dividend stocks to buy with a long-term horizon.
Just how long are we talking about? In this write-up, we’re going to tackle 30 dividend-yielding companies with the potential to provide 20-plus years of income growth. Though a seemingly daunting task, in some ways, it’s much easier when you’re working with greater time margins.
For one thing, blue-chip dividend stocks trade on the fundamentals. Sure, we’ve seen incredible performances from publicly traded companies that frankly have no business receiving such premiums. Nevertheless, over a period of several years, it’s highly unlikely that these speculative ventures will still be viable.
15 Stocks to Buy Now for a 'Vaxtober Surprise'
Second, some things never change. Cynically, humans will never get along. Therefore, the defense industry provides several compelling long-haul opportunities. And while individual vaccine plays are a guessing game, big-name healthcare firms will probably be relevant as ever. If you want to get a head start with your passive income strategy, consider these dividend stocks to buy:
Duke Energy (NYSE:DUK)
Dominion Energy (NYSE:D)
NextEra Energy (NYSE:NEE)
Microsoft (NASDAQ:MSFT)
Sony (NYSE:SNE)
Intel (NASDAQ:INTC)
Walmart (NYSE:WMT)
Home Depot (NYSE:HD)
Kroger (NYSE:KR)
Johnson & Johnson (NYSE:JNJ)
Gilead Sciences (NASDAQ:GILD)
AbbVie (NYSE:ABBV)
Intuit (NASDAQ:INTU)
Accenture (NYSE:ACN)
H&R Block (NYSE:HRB)
Disney (NYSE:DIS)
Comcast (NASDAQ:CMCSA)
Raytheon Technologies (NYSE:RTX)
Lockheed Martin (NYSE:LMT)
Huntington Ingalls Industries (NYSE:HII)
Leidos (NYSE:LDOS)
Toyota (NYSE:TM)
Ford (NYSE:F)
General Motors (NYSE:GM)
Franco-Nevada (NYSE:FNV)
Corteva (NYSE:CTVA)
Albemarle (NYSE:ALB)
AT&T (NYSE:T)
Altria Group (NYSE:MO)
AMC Entertainment (NYSE:AMC)
Dividend Stocks to Buy: Duke Energy (DUK)
Source: jadimages / Shutterstock.com
Dividend Yield: 4.8%
No matter how much technology influences our world, one thing is clear: When people flip the switch, they expect the lights to turn on. When it doesn’t, there are problems. Recently, this vulnerability came to light when a sweltering heat wave in California caused increased energy usage, resulting in rolling blackouts impacting millions.
Under normal conditions, utility firms like Duke Energy represent a solid source of steady capital gains and robust passive income. With the crazy year that we’re having, the case for DUK stock becomes stronger in my opinion. Sure, the company has suffered a negative impact from the pandemic — what organization hasn’t? But its relevance has never been more prominent.
Of course, there are far sexier investments than DUK stock. But with relative insulation from bearish events and its 4.77% yield, Duke Energy is one of the best dividend stocks to buy for the long term.
Dominion Energy (D)
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Source: ying / Shutterstock.com
Dividend Yield: 4.8%
Almost always, utility firms are boring. However, Dominion Energy has generated some headlines lately. Unfortunately, they were for the wrong reasons. In its quarter ended June 30, 2020, Dominion rang up $3.59 billion in revenue. Unfortunately, this tally was nearly 10% below that of the year-ago quarter.
Not surprisingly, the novel coronavirus took its toll on the power and energy company. As well, D stock has been on a downward trek since climbing in early June on positive economic data.
Amid this crisis, you can probably expect some additional turbulence in D stock. While front-page economic metrics, such as the 10.2% unemployment rate in July, are encouraging, we’re still not out of the woods. For instance, weekly jobless claims remain stubbornly high, reflecting our prolonged crisis.
Still, we’re talking about a 20-year time horizon. Unless you imagine a future where electricity is irrelevant, you can trust Dominion Energy for your list of dividend stocks to buy.
Dividend Stocks to Buy: NextEra Energy (NEE)
NEE) logo is displayed on a smartphone screen." width="300" height="169">
Source: IgorGolovniov/Shutterstock.com
Dividend Yield: 2%
I haven’t been the greatest proponent of the clean and renewable energy industry. In fact, I’ve been downright skeptical. But I know that I am not alone. However, the latest heat wave that has scorched major parts of this country has demonstrated that we need alternative energy solutions.
Now, I’m not suggesting that companies like NextEra Energy will replace traditional sources of energy production. Rather, NextEra and its portfolio of clean energy production sites helps mitigate our dependence on singular power sources. With the advent of electric vehicles and other technologies, we’re putting strain on already deeply pressured utility infrastructures. Thus, NEE stock may enjoy a very long upside pathway.
In the meantime, you can sit back and enjoy its 1.98% yield. While not the most generous outlay of passive income, NEE stock has significant capital gains potential due to its next-generation propositions. Therefore, don’t dismiss it when researching which dividend stocks to buy.
Microsoft (MSFT)
MSFT) logo above the entrance." width="300" height="169">
Source: NYCStock / Shutterstock.com
Dividend Yield: 1%
Let me just say this right off the bat: Unless you have an ungodly amount of shares, you’re not going to retire early with Microsoft’s 0.96% yield. What MSFT stock does provide is an upside trajectory that should easily last for two decades thanks to its incredibly dominant business software applications.
First, when it comes to desktop operating systems, Microsoft Windows owns the vast majority of market share at nearly 78%. And this stems from both convenience and necessity. In my opinion, Microsoft products are intuitive. More importantly, the business community agrees. Therefore, I expect the company’s Office 365, offered as a software-as-a-solution platform, to continue dominating.
Second, MSFT stock isn’t just levered to software applications. Over the years, it has transformed into a powerhouse across multiple industries, such as cloud computing and video games. While it’s not the most generous among dividend stocks to buy, it’s easily a credible one.
Dividend Stocks to Buy: Sony (SNE)
SNE) sign hangs at the Sony Interactive Entertainment offices in Silicon Valley." width="300" height="169">
Source: Sundry Photography / Shutterstock.com
Dividend Yield: 0.6%
Having been a business analyst at Sony, I’m biased toward the company’s competency in crafting world-class consumer electronics products. However, even I was a bit surprised at how well SNE stock has held up during this coronavirus mess. Then, I looked at popular trading app Robinhood’s top 100 stocks and sure enough, SNE is right up there.
Why? Well, the easy answer is that Robinhood caters to a younger crowd. And what appeals nowadays to the younger crowed? Yup, you guessed it — video games.
I’ve been through some ups and downs with Sony. But the one business that has always kept the lights on was PlayStation. With the upcoming release of the PS5, Sony has a real winner on its hands; hence, the rise of SNE stock.
Admittedly, as a candidate for most generous dividend stocks to buy, SNE wouldn’t even dream of making the cut. However, keep in mind that the explosive video game industry will likely enjoy a generational effect as gamer parents pass on their addictions to their kids. Therefore, keep close tabs on Sony.
Intel (INTC)
Source: Kate Krav-Rude / Shutterstock.com
Dividend Yield: 2.7%
If you want to dial up the risk factor in your dividend stocks to buy, you should take a look at Intel. Yes, I know, INTC stock really stunk up the markets after the semiconductor firm revealed that it will delay its 7-nanometer chips to at least 2022.
It used to be that people pejoratively called Advanced Micro Devices (NASDAQ:AMD) the poor man’s Intel. Now, the poor man’s Intel is Intel.
However, INTC stock has something that its rival doesn’t — a dividend that yields nearly 2.7%. So, in some ways, AMD is a lesser investment. Of course, I’m only joking. This isn’t the only setback that Intel has had. Last year, it ignominiously apologized for disappointing its customers and partners with multiple, frustrating delays.
But if you’re going to give me a 20-year time horizon, I’d be comfortable directing some capital toward INTC stock. Remember, this isn’t a fly-by-night operation. Historically, Intel has suffered severe setbacks before and it has the right stuff to recover.
Dividend Stocks to Buy: Walmart (WMT)
Source: Jonathan Weiss / Shutterstock.com
Dividend Yield: 1.7%
Following the Great Recession, Americans became familiar with the term “too big to fail.” For Walmart, this is an apt description, at least when it comes to the retail segment. As much as you might complain that Walmart is killing mom-and-pop businesses, the sad reality is that the company understands the American psyche better than most.
Even with the advent of e-commerce, there’s no greater convenience than driving up to a store and buying what you want on the spot. In addition, Walmart democratizes the big-box experience, utilizing its massive footprint to deliver everyday low pricing. Sure, the actual Walmart experience is depressing, but owning WMT stock is a different story.
With insulation from Amazon (NASDAQ:AMZN), along with protection against recessions, WMT stock is very appealing for the long haul. Even if U.S.-China relations deteriorate unfavorably for Walmart, people will still buy stuff. As a 20-year play, WMT is one of the best retail dividend stocks to buy.
Home Depot (HD)
Source: Ken Wolter / Shutterstock.com
Dividend Yield: 2.1%
If there’s one company in the broader retail category that I believe is permanently insulated from Amazon, it’s Home Depot. I don’t care if Amazon creates a drone network where power tools are airdropped. Nothing beats the convenience and hands-on shopping experience necessary to make good home repair and maintenance purchases.
If anything, the coronavirus has emphasized why HD stock is one of the best dividend stocks to buy. Other than edible products, Home Depot provides a wide range of critical goods during a crisis.
Home Depot doesn’t turn its back on its customers during hurricanes and other natural disasters. I’m glad it applied the same ethos toward this pandemic.
Further, HD stock has in my opinion a coronavirus catalyst. With fears of infection came the increased demand for contactless services. Personally, I’ve been very impressed with the company’s ship-from-store delivery alternative, which is super quick and convenient. As people take advantage of such services, this will bolster Home Depot’s online channels.
Dividend Stocks to Buy: Kroger (KR)
Source: Jonathan Weiss / Shutterstock.com
Dividend Yield: 2%
If Walmart is too big to fail, Kroger is certainly too important to fail. When the coronavirus first started infecting people in the U.S., I knew it was too late. That’s why I went to my local Ralphs — Kroger’s biggest subsidiary — before this event happened. I’m glad I did.
In March, you couldn’t find a single roll of toilet paper. And Ralphs stores are huge.
Of course, the pandemic isn’t the only reason why KR stock is one of the top dividend stocks to buy over the next few decades. As you know, humans don’t do so well without nourishment. But one thing the coronavirus did change is the appetite for certain restaurant businesses.
For instance, it’s very possible that the buffet business model is permanently busted. In that case, we could see more families decide to eat in. Though cynical, this would be a benefit to KR stock.
Johnson & Johnson (JNJ)
Source: Alexander Tolstykh / Shutterstock.com
Dividend Yield: 2.7%
Arguably, healthcare giant Johnson & Johnson is one of the beneficiaries of the coronavirus pandemic, but not for the reason you might think. As you know, Johnson & Johnson was one of the most trusted brands in the industry. Unfortunately, the talcum powder scandal put a dent in the company’s image and stymied JNJ stock.
However, the Covid-19 crisis made most people forget about Johnson & Johnson’s shocking missteps. As well, management attempted to drive home some goodwill by working on a single-dose Covid-19 vaccine. Certainly, the organization is one of the few with the scale to mass produce a vaccine.
Once we’re out of this pandemic, I believe most Americans will feel relief. Because of this possible dynamic, JNJ stock may end up receiving a reprieve. Along with the underlying company’s myriad healthcare-related solutions, I see this as a fresh start among dividend stocks to buy.
Dividend Stocks to Buy: Gilead Sciences (GILD)
Source: Casimiro PT / Shutterstock.com
Dividend Yield: 4.1%
Earlier this year, Gilead Sciences was at the forefront of novel coronavirus research. In its analysis, Gilead discovered that remdesivir — basically a repurposed drug — may help treat Covid-19. That’s an important distinction from a vaccine, which doesn’t really help if you’re already suffering from the disease.
Even better, remdesivir received support from both White House health advisor Dr. Anthony Fauci and President Donald Trump. As it turned out, this was a rare showing of public consensus.
However, with Operation Warp Speed, investor sentiment shifted quickly toward the vaccine race. Because the government was backstopping biotechnology firms in this specialty, GILD stock fell out of favor. Admittedly, shares don’t look so inviting right now.
What is inviting, though, is Gilead’s 4.1% yield. And who knows? If remdesivir isn’t the magic bullet for Covid-19, maybe it could be repurposed for the next big pandemic. Therefore, GILD may have a long life as one of healthcare’s dividend stocks to buy.
AbbVie (ABBV)
Source: Piotr Swat / Shutterstock.com
Dividend Yield: 5%
When the coronavirus first devastated the investment markets, AbbVie was one of the victims. The drug maker’s biggest product is Humira, which is used to treat several types of autoimmune diseases. However, that was also the problem for ABBV stock. Patients who use Humira necessarily have underlying health conditions that make them especially vulnerable to Covid-19.
Thus, while ABBV stock bounced back from its March doldrums, its overall performance has been muted, especially compared to companies that are connected to developing a coronavirus solution.
However, what makes ABBV one of the most compelling dividend stocks to buy is AbbVie’s acquisition of Allergan, the maker of Botox. As you know, millennials are a narcissistic generation obsessed with their youth. But when they realize that youth is not an asset but an ephemeral condition, they’ll quickly jump to anti-aging products.
Sure, it’s a terrible investment from one angle. But from another, it’s quite hilarious!
Dividend Stocks to Buy: Intuit (INTU)
Source: dennizn / Shutterstock.com
Dividend Yield: 0.7%
I imagine not too many people care that intently about tax software developers like Intuit. And you would be right. While INTU stock presents a steady source of capital growth, as one of the best dividend stocks to buy, it’s not that appealing, particularly with a lowly yield of 0.66%.
So, why mention it at all? As a pre-pandemic play, INTU stock probably had a limited audience. But in the new normal, many corporations have reconsidered the idea of work. Naturally, with millions of people forced to operate from home, this abrupt shift forced the discussion.
As the New York Times noted, individual employees are also rethinking their work-life balance. Frankly, many of them don’t want to lose the freedom that they suddenly enjoy. And this may inspire a move toward the gig economy, also known as the economy of independent contractors.
However, that implies more complex tax structures, which is where Intuit products will come in very handy. So yes, it’s boring, but don’t overlook INTU in your search for dividend stocks to buy.
Accenture (ACN)
Source: josefkubes / Shutterstock.com
Dividend Yield: 1.3%
While some reports have suggested that the work-from-home transition has been a success, other data suggests something different. According to Laszlo Bock, CEO of human resources startup Humu, early productivity gains came from “people being terrified of losing their jobs, and that fear-driven productivity is not sustainable.”
This is where Accenture comes into play. A business services and consultation specialist, Accenture knows how to maximize efficiencies in their corporate clients’ workflows. However, the unprecedented Covid-19 disaster initially threw the company for a loop. Still, the consultant firm rose to the occasion, making ACN stock one of the quiet winners of this year.
Thanks to a successful migration to Microsoft Teams, Accenture is a step ahead in terms of applying best practices in the new normal. Even if the pandemic doesn’t have a long shelf life, Accenture proved through the coronavirus disaster that it can enhance productivity under duress.
It’s an excellent marketing showpiece, one that makes ACN one of the most credible long-term dividend stocks to buy.
Dividend Stocks to Buy: H&R Block (HRB)
Source: Ken Wolter / Shutterstock.com
Dividend Yield: 7.1%
Within the publicly traded professional services industry, H&R Block represents one of the riskiest dividend stocks to buy. Due to its headline yield of 7.1%, you may rightfully wonder if that is sustainable. In addition, HRB stock is a coronavirus loser, failing to excite even the boldest of investors.
So, if you want to take a pass on HRB stock, I understand. It’s not for everyone. However, if you want an asset that features both tremendous capital gains potential and generous yields, H&R Block may be your ticket.
As I mentioned with Intuit, the shift to the gig economy will likely drive demand for tax-related services. After all, doing taxes as a W2 employee, even without Schedule A deductions, is straightforward. As a 1099 contractor, it’s a little bit of a different story.
As employees make the transition to independent contracting, many will seek in-person guidance before venturing on their own tax journeys. Thus, I see a multi-year narrative for the patient investor.
Disney (DIS)
Source: spiderman777 / Shutterstock.com
Dividend Yield: 1.3%
When the Covid-19 crisis first struck the United States, Disney was among the worst hit among blue-chip dividend stocks to buy. The company even had to forego its July payout. Honestly, you can’t blame investors for being jittery. While the Magic Kingdom has an enviable content library, nobody wanted to sit for two hours in a crowded cineplex with possibly hundreds of strangers.
In addition, Disney’s resort business, which in any normal period is a net positive for DIS stock, suddenly became a liability. Again, the same apprehensions applied: Who wants to be crammed in with the walking sick?
But in the long run, I believe investors will look back on the present price of DIS stock as a discounted opportunity. First, there was a key positive takeaway from Disney’s third-quarter earnings report. Walt Disney World posted a meager profit, which is brilliant news considering increased cancellation rates. Over time, the coronavirus will become a thing of the past.
Second, Disney still owns the Star Wars franchise. Once the acute pandemic nightmares fade from our memory, we will return to the box office. And that makes Disney a worthwhile candidate among dividend stocks to buy.
Dividend Stocks to Buy: Comcast (CMCSA)
Source: Ken Wolter / Shutterstock.com
Dividend Yield: 2.1%
Another major entertainment player, Comcast, likewise suffered badly from the initial coronavirus outbreak. Although CMCSA stock doesn’t have the benefit of the Star Wars franchise, the underlying company levers an enviable content portfolio. Thus, the temporary shuttering of movie theaters, particularly during the summer blockbuster season, was a terrible blow to Comcast.
Nevertheless, as a longer-term investment, you should keep this name on your list of dividend stocks to buy. As I mentioned with several of the companies above, the coronavirus will become a thing of the past. Yes, some memories of it will linger. But as social creatures, we’re going to do what comes naturally to us. Therefore, I doubt that the movie theater business model will be permanently destroyed.
In addition, Comcast’s theme parks should gain relevancy over the next two decades. With so much of our entertainment coming from home-based channels, it will be a real treat to go outside for a change. Therefore, don’t be afraid to take a shot on CMCSA stock if you have a very long time window.
Raytheon Technologies (RTX)
Source: JHVEPhoto / Shutterstock.com
Dividend Yield: 3.1%
Remember when I said at the beginning that at no point in time will humans all get along? Yeah. I meant that. That suggests that over the next 20 years, some of the best dividend stocks to buy will be defense plays like Raytheon Technologies.
RTX just hit the public markets in April 2020, after Raytheon merged with United Technologies. Together, they formed a truly giant aerospace and defense company.
The stock market has not been kind to RTX, as shares are down to the tune of 36.8% in 2020. Over the long term, however, Raytheon Technologies offers the sort of income potential you want to keep in your portfolio.
To start, the merger brought together defense brands like Pratt & Whitney, Raytheon Missiles & Defense and Collins Aerospace. These businesses give you exposure to everything from crewed space missions to best-in-class weapons systems and commercial aircraft engines. At a time when geopolitical instability continues to climb, it makes a lot of sense to shore up your portfolio with RTX stock.
But most importantly, RTX is also a true dividend payer. With a quarterly dividend of 47.5 cents — annualized for a yield of 3.1% — you can rest easy. The stock will recover, Raytheon will keep driving innovation and your portfolio will flourish.
Dividend Stocks to Buy: Lockheed Martin (LMT)
Source: Ken Wolter / Shutterstock.com
Dividend Yield: 2.4%
Have you caught up on the Republican National Convention? If I’m reading between the lines correctly, should Trump win reelection, the U.S. is going to come at China like you wouldn’t believe.
If you want a sign to buy Lockheed Martin and LMT stock, this is it.
Of course, the RNC is a nearer-term catalyst for Lockheed and the defense industry. But bear in mind that the last Cold War we had with the now-defunct Soviet Union lasted decades. If we have another one with China, it could conceivably last at least 10 years, if not more.
Specifically for LMT stock, one of the best tools of U.S. foreign policy is air superiority. Nothing stops bad ideas from our adversaries from materializing than a show of technologically advanced force. Thus, Lockheed is a strong candidate for dividend stocks to buy.
Huntington Ingalls Industries (HII)
Source: IgorGolovniov / Shutterstock.com
Dividend Yield: 2.6%
While Alexander Hamilton is now probably best known as the inspiration for a Broadway show bearing his name, the former secretary of the U.S. Department of Treasury was instrumental in forming the U.S. Revenue Cutter Service. As a recently birthed nation, the U.S. was bleeding cash due to piracy. To protect vital shipping lanes, the Revenue Cutter Service was formed, becoming a key reason why we are the greatest nation on earth.
Over time, the RCS evolved into the U.S. Coast Guard. While its role has changed, the Coast Guard continues to secure our nation from maritime threats. And Huntington Ingalls Industries proudly serves this military branch by manufacturing its Legend-class National Security Cutters.
That’s one reason to buy HII stock — national security will never go out of style. Another is that Huntington develops the various ships that comprise the U.S. Navy’s fleet. And with protection of commerce interests in the open seas of vital global importance, Huntington will enjoy decades — heck, centuries — of upside.
Therefore, you may want to pick up some HII stock now while the market is acting irrationally toward it.
Dividend Stocks to Buy: Leidos (LDOS)
Source: Jer123 / Shutterstock.com
Dividend Yield: 1.5%
Even without the threat of deep-seated, prolonged geopolitical threats, Leidos is one of the most relevant dividend stocks to buy. Primarily, this is due to the company’s multivariate business units. From defense systems to civil solutions to healthcare, buying LDOS stock gives you exposure to critical industries.
What I like about Leidos currently is that many of these industries require revamping and upgrading to address new threats. For instance, its security detection and automation solutions will be critical in the new normal. As I stated earlier, the coronavirus will fade. But another pandemic is never too far away.
Given the destruction that Covid-19 imposed, it’s vital that we prepare our infrastructure to respond to the next threat. Therefore, LDOS stock is a solid name to own, especially since our expectations for security have changed.
Toyota (TM)
Source: josefkubes / Shutterstock.com
Dividend Yield: 3%
One of the reasons for the dominance of Toyota is that the Japanese automaker is a “generational” company. In other words, this organization prides itself in long-term thinking and even then, it is open to continuous improvement.
Better yet, the volatility resultant from the novel coronavirus has given TM stock a very generous 3% yield. I use that descriptor because this is one of the dividend stocks to buy that you can trust for decades. Again, the business model is based off moving “slowly, gradually, and steadily,” as the Harvard Business Review once noted.
Further, Toyota may end up sparking a paradigm shift in the electric vehicle space. The company has developed a solid-state battery, which among its myriad advantages include the ability to charge from zero to full in less than 15 minutes. If you drive an EV, you know that’s a gamechanger.
To be fair, full implementation of solid-state batteries is likely years away. Toyota still has kinks to address. However, management claims it will produce such batteries by 2025. If so, you’re going to want TM stock now.
Dividend Stocks to Buy: Ford (F)
Source: Vitaliy Karimov / Shutterstock.com
Dividend Yield: 8.8%
If you’re like many proud Americans, you embrace the technological prowess of Tesla (NASDAQ:TSLA) and its founder, Elon Musk. However, Tesla is a growth play, not an investment for passive income. Really, who knows if the company will ever make that transition?
However, the benefit for rival Ford is that it’s an iconic automaker with a historically stable dividend. Unfortunately, at the start of the pandemic, Ford had to suspend its dividend. But with a typical annual payout of 60 cents, F stock would currently sport a yield of nearly 9%. And as experts wait for that dividend to return, many see it as a buy.
As I wrote recently, I changed my mind about Ford. With its sharp shift toward electric vehicles, the company is taking a clear shot at Tesla. And this strategy may pan out. In my opinion, the Ford Mustang Mach-E is gorgeous and priced right.
While some Mustang enthusiasts are alarmed at Ford’s decision to dilute the brand by slapping it on an SUV, here’s the reality: Traditional pony car enthusiasts are dying off. The new generation loves SUVs or practical performance platforms. Finally, Ford offers universal appeal and that makes me happy to own F stock for the long term.
General Motors (GM)
Source: Katherine Welles / Shutterstock.com
Dividend Yield: 5%
As a kid, I’ve always wondered why automakers couldn’t put an attractive chassis on a less-expensive platform and save costs elsewhere. As an adult, I still don’t know why automakers refuse to adopt this seemingly simple concept.
Well, let’s give credit where it’s due. Although I’ve bashed American car brands like General Motors left and right, I must say that its eighth-generation Chevrolet Corvette is an absolute stunner. Chances are, you share the same opinion. Featuring a wild chassis that’s more fitting for a Ferrari (NYSE:RACE), the Corvette is something a new Ferrari will never be — affordable.
This car would be constantly flying out of dealership doors back ten years ago. So, it’s a true testament to GM that they’re so strongly in demand today. Right now, there’s just no room for two-door, two-seat sports cars when SUVs dominate. However, the Corvette is disrupting this paradigm, making GM stock a solid buy.
Will that sentiment hold up in the future? I think it will. With most manufacturers transitioning toward SUVs and crossovers, that leaves a viable niche for affordable performance cars. As millennials get older and bring in more discretionary income, this should boost Corvette sales. That’s a win today and decades down the road for GM stock.
Dividend Stocks to Buy: Franco-Nevada (FNV)
Source: Shutterstock
Dividend Yield: 0.7%
Typically, gold miners don’t make the best dividend stocks to buy because of their volatility in the equity markets. However, Franco-Nevada offers a different take. Rather than participating directly in the mining and exploration of precious metals, Franco operates a royalty and streaming business. This enables the company to benefit from gold demand while mitigating many of the unknowns associated with direct involvement.
Therefore, if you want a longer-term investment in the precious metals sector, FNV stock is a solid choice. It doesn’t offer the greatest yield, but it has plenty of capital growth potential to make up for it.
Given what has transpired in this crisis, I believe we’ll see unprecedented growth in gold and other precious metals. While our memories of the coronavirus will fade, we still have damages to pay, as well as lost opportunity costs. That’s going to cloud our fiscal picture for years, perhaps decades. Unfortunately, this gives FNV stock a longer-than-expected upside pathway.
Corteva (CTVA)
Source: Jonathan Weiss / Shutterstock
Dividend Yield: 1.8%
Once part of DowDuPont — which later became DuPont de Nemours (NYSE:DD) — Corteva spun off to become an independent public company. As a result, it’s the biggest pure-play agricultural company in the world, providing farmers with the seeds and other necessary products for food development.
Naturally, CTVA stock is a permanently relevant investment. Moving forward, it’s going to be even more critical, which is why you should keep Corteva on your list of dividend stocks to buy.
For one thing, increased immigration into the U.S. will grow our population, putting an incredible strain on our food resources. Therefore, I anticipate agricultural science to take prominence over the next few decades. While CTVA stock may be choppy today, it will likely forge a decidedly bullish trend channel.
Second, the Covid-19 crisis has only further articulated the importance of robust food supply chains. With this space gaining much-needed attention, Corteva can enjoy fundamental tailwinds.
Dividend Stocks to Buy: Albemarle (ALB)
Source: IgorGolovniov/Shutterstock.com
Dividend Yield: 1.7%
Thanks to the EV revolution, automakers making the electric transition should perform very well. But many of the plays in this space are purely focused on growth. With that being said, if you want to have some exposure to this space but also the stability of dividends, you should check out Albemarle.
One of the industry leaders in lithium and lithium derivatives, ALB stock will likely enjoy significant upside over the long run. While it may not offer the explosive capital returns of Tesla, Albemarle offers passive income while you ride the EV wave. Furthermore, Tesla has a market risk in that competitors can take share.
Let’s face it — even the cheapest Tesla model is still an expensive purchase for most households. So, if Ford or Toyota can come up with a less-expensive alternative, they could end up asserting dominance. But really, who knows?
That’s the selling point for ALB stock. You don’t have to play guessing games because Albemarle is selling the tickets. Therefore, keep this in your portfolio of dividend stocks to buy.
AT&T (T)
Source: Roman Tiraspolsky / Shutterstock.com
Dividend Yield: 7%
For the last three dividend stocks to buy, I’m going to focus on speculative names. In this context, that means these companies offer very generous yields. At the same time, they may not be sustainable. Therefore, please invest at your own risk.
First up, I’m going with telecommunications giant AT&T. As you probably heard, AT&T has courted much criticism for ballooning its debt, particularly with acquisitions that haven’t panned out. Certainly, the company is bloated. Yet on the flip side, it’s one of the few organizations that can competently roll out the next-generation 5G network. Plus, that 7% dividend yield for T stock looks mighty tasty.
Another factor supporting AT&T is its vast content library. Because of its TimeWarner acquisition in 2018, HBO is now under the AT&T umbrella. As you know (because you probably watched it), the cable channel was a massive hit thanks to Game of Thrones. I’m betting that HBO will offer several hit series over the next two decades.
Yes, T stock is risky. But I think it’s on the credible side of the risk-reward spectrum.
Dividend Stocks to Buy: Altria Group (MO)
Source: Kristi Blokhin / Shutterstock.com
Dividend Yield: 7.9%
For my second idea of tempting, high-yield dividend stocks to buy, I’m going vice with Altria Group. Historically, MO stock has moved higher thanks to its underlying addictive product. But over the last several years, smoking rates have dropped significantly, according to the Centers for Disease Control and Prevention.
Obviously, that’s not great news for MO stock. But it’s possible that the coronavirus pandemic could result in higher-than-anticipated smoking rates for 2020. Like it or not, people smoke cigarettes mainly for stress release. Well, there has been a lot of stress during this crisis. Because the economic impact of Covid-19 will stay with us for at least several more years, Altria has a potentially large addressable market.
Plus, the broader smokeless tobacco products brought on by the vaping craze will likely see tremendous upside in the years ahead. Since Altria knows a thing or two about cigarettes, it has an opportunity to develop and market smoking cessation devices that feature authentic experiences.
While there’s no guarantee that the market will play out like this, it’s an intriguing concept.
AMC Entertainment (AMC)
Source: Helen89 / Shutterstock.com
Dividend Yield: 7.7%
Oh yes, here’s the granddaddy of risky dividend stocks to buy, AMC Entertainment. When the coronavirus hit us, the last thing people wanted to do was to be in cramped quarters with strangers.
The pandemic has been an ugly paradigm shift for AMC stock. Usually, movie theaters have a recession-proof reputation. At its core, films represent inexpensive escapism. Indeed, the Great Depression inspired the so-called golden age of Hollywood.
What’s changed dramatically about this recession is that we didn’t have that traditional comfort anymore. So, AMC stock sank to sorrowful depths.
But if we’re talking about a 20-year period, I think investors may want to reconsider AMC as a viable candidate for dividend stocks to buy. Because the bottom line is that as society is normalizing, the movie theater is already one of the first entertainment platforms to accept customers.
And if we do have a prolonged recession, the box office will still be one of the cheapest. Thus, AMC very well could represent an explosive recovery and a little bit of passive income along the way.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. On the date of publication, Josh Enomoto held a long position in SNE, F, T, MO, AMC and gold bullion.
The post 30 Dividend Stocks to Buy Now for 20 Years of Income Growth appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Huntington Ingalls Industries (HII) Source: IgorGolovniov / Shutterstock.com Dividend Yield: 2.6% While Alexander Hamilton is now probably best known as the inspiration for a Broadway show bearing his name, the former secretary of the U.S. Department of Treasury was instrumental in forming the U.S. Revenue Cutter Service. General Motors (GM) Source: Katherine Welles / Shutterstock.com Dividend Yield: 5% As a kid, I’ve always wondered why automakers couldn’t put an attractive chassis on a less-expensive platform and save costs elsewhere. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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If you want to get a head start with your passive income strategy, consider these dividend stocks to buy: Duke Energy (NYSE:DUK) Dominion Energy (NYSE:D) NextEra Energy (NYSE:NEE) Microsoft (NASDAQ:MSFT) Sony (NYSE:SNE) Intel (NASDAQ:INTC) Walmart (NYSE:WMT) Home Depot (NYSE:HD) Kroger (NYSE:KR) Johnson & Johnson (NYSE:JNJ) Gilead Sciences (NASDAQ:GILD) AbbVie (NYSE:ABBV) Intuit (NASDAQ:INTU) Accenture (NYSE:ACN) H&R Block (NYSE:HRB) Disney (NYSE:DIS) Comcast (NASDAQ:CMCSA) Raytheon Technologies (NYSE:RTX) Lockheed Martin (NYSE:LMT) Huntington Ingalls Industries (NYSE:HII) Leidos (NYSE:LDOS) Toyota (NYSE:TM) Ford (NYSE:F) General Motors (NYSE:GM) Franco-Nevada (NYSE:FNV) Corteva (NYSE:CTVA) Albemarle (NYSE:ALB) Altria Group (NYSE:MO) AMC Entertainment (NYSE:AMC) Dividend Stocks to Buy: Duke Energy (DUK) Source: jadimages / Shutterstock.com Dividend Yield: 4.8% No matter how much technology influences our world, one thing is clear: When people flip the switch, they expect the lights to turn on. Dividend Stocks to Buy: Comcast (CMCSA) Source: Ken Wolter / Shutterstock.com Dividend Yield: 2.1% Another major entertainment player, Comcast, likewise suffered badly from the initial coronavirus outbreak.
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If you want to get a head start with your passive income strategy, consider these dividend stocks to buy: Duke Energy (NYSE:DUK) Dominion Energy (NYSE:D) NextEra Energy (NYSE:NEE) Microsoft (NASDAQ:MSFT) Sony (NYSE:SNE) Intel (NASDAQ:INTC) Walmart (NYSE:WMT) Home Depot (NYSE:HD) Kroger (NYSE:KR) Johnson & Johnson (NYSE:JNJ) Gilead Sciences (NASDAQ:GILD) AbbVie (NYSE:ABBV) Intuit (NASDAQ:INTU) Accenture (NYSE:ACN) H&R Block (NYSE:HRB) Disney (NYSE:DIS) Comcast (NASDAQ:CMCSA) Raytheon Technologies (NYSE:RTX) Lockheed Martin (NYSE:LMT) Huntington Ingalls Industries (NYSE:HII) Leidos (NYSE:LDOS) Toyota (NYSE:TM) Ford (NYSE:F) General Motors (NYSE:GM) Franco-Nevada (NYSE:FNV) Corteva (NYSE:CTVA) Albemarle (NYSE:ALB) Dividend Stocks to Buy: H&R Block (HRB) Source: Ken Wolter / Shutterstock.com Dividend Yield: 7.1% Within the publicly traded professional services industry, H&R Block represents one of the riskiest dividend stocks to buy. Dividend Stocks to Buy: Franco-Nevada (FNV) Source: Shutterstock Dividend Yield: 0.7% Typically, gold miners don’t make the best dividend stocks to buy because of their volatility in the equity markets.
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Dividend Stocks to Buy: Franco-Nevada (FNV) Source: Shutterstock Dividend Yield: 0.7% Typically, gold miners don’t make the best dividend stocks to buy because of their volatility in the equity markets. Dividend Stocks to Buy: Albemarle (ALB) Source: IgorGolovniov/Shutterstock.com Dividend Yield: 1.7% Thanks to the EV revolution, automakers making the electric transition should perform very well. Therefore, keep this in your portfolio of dividend stocks to buy.
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2020-08-26 00:00:00 UTC
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7 Renewable Energy Stocks for a Cleaner Future
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Renewable energy stocks are delivering for investors again in 2020. Following a stellar showing, the S&P Global Clean Energy Index is higher by almost 43% year-to-date.
The rise of renewables is coming at the expense of traditional fossil fuels. Price action confirms as much as the S&P Energy Select Sector Index is lower by about 40% this year. There are stark realities applying to traditional and renewable energy stocks. In the U.S., a slew of state governments are increasing adoption of green energy sources.
Likewise, as prices decline, more corporations and consumers are embracing solar and wind power. Adding to the pressure on fossil fuels producers and bolstering the case for alternative energy equities is that an array of institutional investors, including college endowments, are saying “no” to coal, gas, and oil exposure.
Adding to the near-term case for renewable energy stocks is former Vice President Joe Biden’s poll numbers against President Trump. Put simply, there are positive correlations between clean energy equities and the Democratic nominees poll status.
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So the time could be right to consider these green energy stocks.
Tesla (NASDAQ:TSLA)
First Solar (NASDAQ:FSLR)
NextEra Energy Partners (NYSE:NEP)
Dominion Energy (NYSE:D)
Enphase Energy (NASDAQ:ENPH)
Sunrun (NASDAQ:RUN)
ON Semiconductor (NASDAQ:ON)
Tesla (TSLA)
Source: Sheila Fitzgerald / Shutterstock.com
One of the most obvious renewable energy stocks is Tesla. Tesla is primarily known as the high-flying make of pricey electric vehicles, a status worth something, as evidenced by TSLA stock more than tripling this year. However, Elon Musk’s company is a more encompassing clean energy play.
It reaches into residential solar installations via its SolarCity, a company Tesla essentially rescued a few years ago. Moreover, Tesla is looking to make its own lithium-ion battery cells – a task made easier by last year’s $200 million purchase of Maxwell. That deal could help Tesla solve one of the most important riddles in the electric vehicle space: expanding battery capacity while not losing power after a charge.
Via it’s Powerwall product, Tesla helps solar customers solve another quagmire: accessing power when the renewable energy flails, as it recently did in California, prompting a spate of rolling blackouts. Powerall allows residential customers to store solar power and use it when the sun isn’t out or when the the traditional electric grid fails.
Of course, electric vehicles will be a major driver of TSLA stock. In the first half of this year, Tesla controlled 81.66% of the North American electric vehicle market.
First Solar (FSLR)
FSLR) logo on smartphone in front of computer screen with graphs" width="300" height="169">
Source: IgorGolovniov / Shutterstock.com
First Solar is the largest U.S.-based solar company. Up 38% year-to-date, the stock resides around two-year highs. And there could be more in the offing for the solar panels giant. Not only did the company recently crush second-quarter estimates, its Series 6 product has 12 gigawatts of order backlog from this year through 2023.
Adding to the case for FSLR stock is that the company is shedding some non-essential businesses, such as project construction and operating services. Those units were homes to waning margins and no longer an important focuses for the company. Impressively, First Solar has one of the industry’s strongest balance sheets and is on pace to deliver robust free cash flow over the next several years.
“We continue to believe First Solar can reach $5 per share of annual free cash flow before growth by 2023. We value its cash and 2021-22 backlog at $26 per share,” according to Morningstar.
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First Solar is well-positioned to capitalize on expanding solar power adoption around the world. When companies and states set net zero carbon goals by such and such a year, solar is often part of the equation. First Solar should benefit from the trends of declining costs and increased adoption.
NextEra Energy Partners (NEP)
NEE) website on a mobile phone screen representing renewable energy stocks" width="300" height="169">
Source: madamF / Shutterstock.com
Of renewable energy stocks, NextEra Energy Partners has a great setup. It was spun off from NextEra Energy (NYSE:NEE). NEP runs NEE’s renewables businesses, a coup for the spin off because the former parent is the world’s largest producer of solar and wind power.
Another benefit to investors beyond the built-in relationship with NEE is that renewable energy isn’t a regulated market, as are traditional utilities. That means NEP can sell its power all over the U.S., expanding its client base beyond its former parent.
In addition to its solar and wind exposure, NEE is a player in the burgeoning battery storage arena. The company also sees opportunity in hydrogen – one of the most overlooked corners of the renewable space. Emissions-free hydrogen power could take some time to materially affect NEE’s bottom line for the better, but there’s a 3.77% dividend yield to compensate patient investors.
Dominion Energy (D)
Source: ying / Shutterstock.com
Dominion Energy could be another version of NEE. The company recently sold its natural gas pipeline and output business to Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) for $10 billion to — you guessed it — focus more on renewables.
Virginia, Dominion’s home state, has one of the most ambitious clean energy agendas in the country. The commonwealth wants to have a combined 21 gigawatts of solar and wind power and 2.7 GW of storage over the next 15 years. That’s heavy built in demand at home for Dominion. Currently, renewables make up about 5% of the company’s production portfolio, but that number is poised to soar. Jettisoning the gas business makes it easier for Dominion to hone its green focus.
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Owing to its history as a traditional utilities provider, Dominion stock still acts the part and has a 4.79% yield to go along with it. That’s exceptional in the renewable energy realm.
Enphase Energy (ENPH)
Source: IgorGolovniov / Shutterstock.com
Enphase is a designer and producer of home solar energy kits with a specialty in solar power inverters, which allow solar power to be fed directly to power grids. The company’s Ensemble energy storage product suite puts it into competition with the aforementioned Tesla Powerwall offering, but there’s room for multiple players in this market.
In the U.S. alone last year, solar installations jumped 23%. That was a record, but it’s one that’s going to fall in a big way in 2020 with installations forecast to climb 47%. The global market for photovalaic (PV) inverters is strong, too, pointing to international opportunity for Enphase.
“The PV inverter market achieved record shipments, growing by 19% to 126 GW in 2019 driven by booming shipments in key markets such as the United States, Spain, Latin America, Ukraine, and Vietnam. PV inverter revenue also increased rapidly, surpassing $9.1 billion in 2019 for the first time,” notes IHS Markit.
The research firm said the residential market drove that growth, led by China, United States, Netherlands, Japan, and Australia.
Sunrun (RUN)
RUN) logo is displayed on a smartphone screen in front of an American flag." width="300" height="169">
Source: IgorGolovniov / Shutterstock.com
Cue the solar-related puns for Sunrun, because RUN stock is higher by 267% this year, making it one of the best-performing clean energy names. Sunrun’s home battery solution, Brightbox, puts it at the forefront of the residential storage market. Recently, RUN stock more than doubled in the span of just 16 trading sessions. Analysts say this is an example of a name that should benefit if Biden wins the White House.
“The company may also benefit if a Democratic sweep during the November U.S. election brings Mr. [Joe] Biden’s renewable energy policy to fruition (Biden targets deploying solar on ~8mm rooftops), though we are not baking this into our model at this time,” writes JPMorgan’s Paul Coster.
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The stock, a recent addition to the S&P MidCap 400 Index, could offer investors more upside if it can effectively scale to the point that it drives customer acquisition costs lower and as virtual power grids become more readily accepted. Virtual grids are a longer-ranging catalyst, but if Sunrun is able to execute on that front, its 2020 performance could be just the start of something more substantive.
ON Semiconductor (ON)
Source: Shutterstock
Semiconductors are integral parts of the renewable energy equation. That’s significant for ON Semiconductor, as the company continues efforts to bolster business outside of the commoditized memory chip space.
In recent years, the company made deals to bolster its footprints in the automotive, power management, and image sensors sectors. Although ON often flies under the radar in the semiconductor equity conversation, it has deep reach into the alternative energy ecosystem and belongs among renewable energy stocks.
“ON Semiconductor’s boost and inverter Power Integrated Modules (PIMS) anchor the solar power system, while our gate drivers, sensing, control, and peripheral power products complete the system,” according to the company.
ON chips are used to power electrification in electric vehicles and in charging products for those vehicles, confirming that the chip maker has product depth in the alternative energy industry.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
The post 7 Renewable Energy Stocks for a Cleaner Future appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Adding to the pressure on fossil fuels producers and bolstering the case for alternative energy equities is that an array of institutional investors, including college endowments, are saying “no” to coal, gas, and oil exposure. Via it’s Powerwall product, Tesla helps solar customers solve another quagmire: accessing power when the renewable energy flails, as it recently did in California, prompting a spate of rolling blackouts. The company’s Ensemble energy storage product suite puts it into competition with the aforementioned Tesla Powerwall offering, but there’s room for multiple players in this market.
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Tesla (NASDAQ:TSLA) First Solar (NASDAQ:FSLR) NextEra Energy Partners (NYSE:NEP) Dominion Energy (NYSE:D) Enphase Energy (NASDAQ:ENPH) Sunrun (NASDAQ:RUN) ON Semiconductor (NASDAQ:ON) Tesla (TSLA) Source: Sheila Fitzgerald / Shutterstock.com One of the most obvious renewable energy stocks is Tesla. First Solar (FSLR) FSLR) logo on smartphone in front of computer screen with graphs" width="300" height="169"> Source: IgorGolovniov / Shutterstock.com First Solar is the largest U.S.-based solar company. NextEra Energy Partners (NEP) NEE) website on a mobile phone screen representing renewable energy stocks" width="300" height="169"> Source: madamF / Shutterstock.com Of renewable energy stocks, NextEra Energy Partners has a great setup.
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Tesla (NASDAQ:TSLA) First Solar (NASDAQ:FSLR) NextEra Energy Partners (NYSE:NEP) Dominion Energy (NYSE:D) Enphase Energy (NASDAQ:ENPH) Sunrun (NASDAQ:RUN) ON Semiconductor (NASDAQ:ON) Tesla (TSLA) Source: Sheila Fitzgerald / Shutterstock.com One of the most obvious renewable energy stocks is Tesla. NextEra Energy Partners (NEP) NEE) website on a mobile phone screen representing renewable energy stocks" width="300" height="169"> Source: madamF / Shutterstock.com Of renewable energy stocks, NextEra Energy Partners has a great setup. Enphase Energy (ENPH) Source: IgorGolovniov / Shutterstock.com Enphase is a designer and producer of home solar energy kits with a specialty in solar power inverters, which allow solar power to be fed directly to power grids.
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Tesla (NASDAQ:TSLA) First Solar (NASDAQ:FSLR) NextEra Energy Partners (NYSE:NEP) Dominion Energy (NYSE:D) Enphase Energy (NASDAQ:ENPH) Sunrun (NASDAQ:RUN) ON Semiconductor (NASDAQ:ON) Tesla (TSLA) Source: Sheila Fitzgerald / Shutterstock.com One of the most obvious renewable energy stocks is Tesla. That deal could help Tesla solve one of the most important riddles in the electric vehicle space: expanding battery capacity while not losing power after a charge. NextEra Energy Partners (NEP) NEE) website on a mobile phone screen representing renewable energy stocks" width="300" height="169"> Source: madamF / Shutterstock.com Of renewable energy stocks, NextEra Energy Partners has a great setup.
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2020-08-25 00:00:00 UTC
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3 Natural Gas Stocks to Buy Before Prices Rebound
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Using the United States Natural Gas Fund ETF (NYSEARCA:UNG) as the bogey, it’s fair to say commodity itself remain challenged, and it’s more difficult to find the best natural gas stocks to buy. Over the past year, UNG, which tracks front-month natural gas futures, is lower by 25%.
A variety of factors are at play, namely increased adoption of renewable energy sources at both the corporate and consumer levels and the U.S. producing too much of the commodity. Those are prime ingredients in a recipe for depressed prices.
However, as UNG’s nearly 32% gain over the last month proves, investors shouldn’t be hasty in writing obituaries for natural gas stocks to buy. As the recent wave of blackouts in California proves, there’s still a place for natural gas in the U.S. energy lexicon. As temperatures surged in the Golden State, some areas fell victim to power outages because utilities companies didn’t have enough renewable energy to meet.
10 Growth Stocks That Could Seriously Double
For those that need a little more convincing about natural gas equities, Warren Buffett recently plunked down $10 billion to purchase Dominion Energy’s (NYSE:D) natural gas transmission and storage business. That says the commodity isn’t going anywhere and with that in mind, here are a few natural gas stocks to buy:
Cabot Oil and Gas (NYSE:COG)
Kinder Morgan (NYSE:KMI)
EQT Corporation (NYSE:EQT)
Natural Gas Stocks to Buy: Cabot Oil and Gas (COG)
Source: Shutterstock
Cabot Oil and Gas is higher by 12% this year, a stellar performance relative to broader energy sector and natural gas equity benchmarks. Obviously, performance is important, but with Cabot, investors should understand why this is a natural gas stock to buy.
Consider two of the primary reasons why the broader energy sector is being punished this year: negative dividend action and markets’ discovery that when times were good, many companies in the space feasted on debt – a chicken that’s come home to roost in this year’s trying environment.
However, Cabot has the balance sheet to not only forge ahead with its capital spending plans this year, but it’s also financially sound enough to support its dividend. COG stock yields 2.4%, which is low relative to the broader sector, but that’s a plus because many of the energy sector dividend offenders this year were high-yielding stocks prior to cutting or suspending payouts.
In the second quarter, Cabot had a free cash flow deficit, but the company said it expected that condition for the first half of this year before turning positive in the back half. On a brighter note, all of its operating expenses were either in line with or below estimates during the June quarter indicating management is doing an admirable job of cost containment.
Kinder Morgan (KMI)
KMI) sign on grass" width="300" height="169">
Source: JHVEPhoto/Shutterstock.com
Down 33% year-to-date, Kinder Morgan is rebound play/redemption idea among natural gas stocks to buy. Adding to the risk/reward proposition is a dividend yield of 7.4% on KMI stock. That’s getting into an area where investors may ponder if a cut is coming.
However, Kinder Morgan, like some other energy companies, appears intent on defending its payout by way of reducing capital spending. The pipeline operator actually boosted its dividend 5% in April while saying its trimming 2020 capital spending by $700 million. Interestingly, the dividend increase was lower than expected and the company said it still intends to get the annual payout up to $1.25 per share from $1.05 today.
Although Kinder Morgan’s natural gas pipeline volumes were up 3% in the June quarter, the company felt the adverse effects of reduced oil and gas production and lower demand for refined products owing to the novel coronavirus pandemic.
10 Growth Stocks That Could Seriously Double
In bright news, executives see incremental signs of improvement in some areas of the business, Chairman Richard Kinder has recently been a buyer of KMI stock and the company reduced debt by $10 billion since 2015.
EQT Corporation (EQT)
Source: Shutterstock
Saving the best for last, at least in terms of 2020 performance, there’s EQT Corp., which is higher by more than 47% this year. The Pennsylvania-based company had 17.5 trillion cubic feet of natural gas reserves at the end of 2019 and isn’t heavily involved in oil output, making it a pure natural gas stock to buy.
Aug. 21 was an interesting day for the gas producer. Citigroup initiated coverage of EQT with a “buy” rating, but Pittsburgh Steelers legend and Hall of Famer Jerome Bettis hit the company with a $66 million racial discrimination lawsuit. Bettis and his brother own a trucking company that hauled water and drilling mud to EQT sites. They allege the company severed the agreement while maintaining similar contracts with white-owned firms.
The litigation is ill-timed, particularly in the current climate, but markets will determine how this public relations issue affects EQT stock.
In the meantime, the name is positioned as winner as more states, including California, realize that in their efforts to boost renewable capacity, a backup plan in the form of natural gas is still needed. As a pure play natural gas name, EQT stock should be a winner of temperatures across the U.S. continue soaring this summer.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
The post 3 Natural Gas Stocks to Buy Before Prices Rebound appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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As temperatures surged in the Golden State, some areas fell victim to power outages because utilities companies didn’t have enough renewable energy to meet. Citigroup initiated coverage of EQT with a “buy” rating, but Pittsburgh Steelers legend and Hall of Famer Jerome Bettis hit the company with a $66 million racial discrimination lawsuit. In the meantime, the name is positioned as winner as more states, including California, realize that in their efforts to boost renewable capacity, a backup plan in the form of natural gas is still needed.
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That says the commodity isn’t going anywhere and with that in mind, here are a few natural gas stocks to buy: Cabot Oil and Gas (NYSE:COG) Kinder Morgan (NYSE:KMI) EQT Corporation (NYSE:EQT) Natural Gas Stocks to Buy: Cabot Oil and Gas (COG) Source: Shutterstock Cabot Oil and Gas is higher by 12% this year, a stellar performance relative to broader energy sector and natural gas equity benchmarks. Kinder Morgan (KMI) KMI) sign on grass" width="300" height="169"> Source: JHVEPhoto/Shutterstock.com Down 33% year-to-date, Kinder Morgan is rebound play/redemption idea among natural gas stocks to buy. The post 3 Natural Gas Stocks to Buy Before Prices Rebound appeared first on InvestorPlace.
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips Using the United States Natural Gas Fund ETF (NYSEARCA:UNG) as the bogey, it’s fair to say commodity itself remain challenged, and it’s more difficult to find the best natural gas stocks to buy. That says the commodity isn’t going anywhere and with that in mind, here are a few natural gas stocks to buy: Cabot Oil and Gas (NYSE:COG) Kinder Morgan (NYSE:KMI) EQT Corporation (NYSE:EQT) Natural Gas Stocks to Buy: Cabot Oil and Gas (COG) Source: Shutterstock Cabot Oil and Gas is higher by 12% this year, a stellar performance relative to broader energy sector and natural gas equity benchmarks. The Pennsylvania-based company had 17.5 trillion cubic feet of natural gas reserves at the end of 2019 and isn’t heavily involved in oil output, making it a pure natural gas stock to buy.
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However, as UNG’s nearly 32% gain over the last month proves, investors shouldn’t be hasty in writing obituaries for natural gas stocks to buy. That says the commodity isn’t going anywhere and with that in mind, here are a few natural gas stocks to buy: Cabot Oil and Gas (NYSE:COG) Kinder Morgan (NYSE:KMI) EQT Corporation (NYSE:EQT) Natural Gas Stocks to Buy: Cabot Oil and Gas (COG) Source: Shutterstock Cabot Oil and Gas is higher by 12% this year, a stellar performance relative to broader energy sector and natural gas equity benchmarks. However, Kinder Morgan, like some other energy companies, appears intent on defending its payout by way of reducing capital spending.
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699024.0
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2020-08-24 00:00:00 UTC
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Brookfield to Buy Blackstone's Stake in Cheniere Energy Partners
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https://www.nasdaq.com/articles/brookfield-to-buy-blackstones-stake-in-cheniere-energy-partners-2020-08-24
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Brookfield Asset Management (NYSE: BAM) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (NYSEMKT: CQP) from private equity giant Blackstone Group (NYSE: BX), according to a report by Bloomberg. The deal price of $34.25 per unit (slightly below its current price of $38.67 a unit) values Blackstone's 41% interest in Cheniere at roughly $7 billion.
Bloomberg had previously reported that Brookfield was negotiating with Blackstone to acquire its stake in Cheniere Energy Partners, which operates the Sabine Pass LNG export terminal in Louisiana. The two companies have since sealed a deal. According to an SEC filing, Blackstone Infrastructure Partners and Brookfield Infrastructure will team up to acquire the 41% interest in Cheniere currently held by Blackstone Energy Partners. Blackstone Infrastructure will purchase 50.01%, while Brookfield Infrastructure will buy 49.99% of the minority stake. If either entity cannot complete their side of the agreement, the other will have the right to purchase the entire interest.
Image source: Getty Images.
Blackstone Group initially made a $1.5 billion investment in Cheniere Energy Partners in 2012. That helped the company finance the development of the Sabine Pass LNG terminal, which started exporting LNG in 2016. The facility currently sells more than 85% of the LNG it produces under 20-year contracts with global LNG traders and utilities. Those agreements generate more than $3.3 billion in fee-based income.
For Brookfield, this investment is its second purchase of a stake in an LNG export facility in the past year, as it also bought a 25% interest in Cove Point LNG from Dominion (NYSE: D) last October. The main attraction of these assets is the stable contractually secured cash flow from the production of a cleaner-burning fossil fuel.
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Matthew DiLallo owns shares of Brookfield Asset Management. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends Dominion Energy, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Brookfield Asset Management (NYSE: BAM) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (NYSEMKT: CQP) from private equity giant Blackstone Group (NYSE: BX), according to a report by Bloomberg. Bloomberg had previously reported that Brookfield was negotiating with Blackstone to acquire its stake in Cheniere Energy Partners, which operates the Sabine Pass LNG export terminal in Louisiana. The main attraction of these assets is the stable contractually secured cash flow from the production of a cleaner-burning fossil fuel.
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Brookfield Asset Management (NYSE: BAM) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (NYSEMKT: CQP) from private equity giant Blackstone Group (NYSE: BX), according to a report by Bloomberg. Bloomberg had previously reported that Brookfield was negotiating with Blackstone to acquire its stake in Cheniere Energy Partners, which operates the Sabine Pass LNG export terminal in Louisiana. The Motley Fool owns shares of and recommends Brookfield Asset Management.
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Brookfield Asset Management (NYSE: BAM) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (NYSEMKT: CQP) from private equity giant Blackstone Group (NYSE: BX), according to a report by Bloomberg. Bloomberg had previously reported that Brookfield was negotiating with Blackstone to acquire its stake in Cheniere Energy Partners, which operates the Sabine Pass LNG export terminal in Louisiana. According to an SEC filing, Blackstone Infrastructure Partners and Brookfield Infrastructure will team up to acquire the 41% interest in Cheniere currently held by Blackstone Energy Partners.
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Blackstone Group initially made a $1.5 billion investment in Cheniere Energy Partners in 2012. For Brookfield, this investment is its second purchase of a stake in an LNG export facility in the past year, as it also bought a 25% interest in Cove Point LNG from Dominion (NYSE: D) last October. Brookfield Asset Management (NYSE: BAM) has agreed to acquire an interest in liquefied natural gas (LNG) producer Cheniere Energy Partners (NYSEMKT: CQP) from private equity giant Blackstone Group (NYSE: BX), according to a report by Bloomberg.
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699025.0
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2020-08-20 00:00:00 UTC
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April 2021 Options Now Available For Dominion Energy (D)
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https://www.nasdaq.com/articles/april-2021-options-now-available-for-dominion-energy-d-2020-08-20
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Investors in Dominion Energy Inc (Symbol: D) saw new options become available today, for the April 2021 expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 239 days until expiration the newly available contracts represent a potential opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the D options chain for the new April 2021 contracts and identified one put and one call contract of particular interest.
The put contract at the $77.50 strike price has a current bid of $6.20. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $77.50, but will also collect the premium, putting the cost basis of the shares at $71.30 (before broker commissions). To an investor already interested in purchasing shares of D, that could represent an attractive alternative to paying $77.97/share today.
Because the $77.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 8.00% return on the cash commitment, or 12.22% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Dominion Energy Inc , and highlighting in green where the $77.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $80.00 strike price has a current bid of $3.10. If an investor was to purchase shares of D stock at the current price level of $77.97/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $80.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.58% if the stock gets called away at the April 2021 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if D shares really soar, which is why looking at the trailing twelve month trading history for Dominion Energy Inc , as well as studying the business fundamentals becomes important. Below is a chart showing D's trailing twelve month trading history, with the $80.00 strike highlighted in red:
Considering the fact that the $80.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.98% boost of extra return to the investor, or 6.07% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $77.97) to be 44%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Because the $77.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. Of course, a lot of upside could potentially be left on the table if D shares really soar, which is why looking at the trailing twelve month trading history for Dominion Energy Inc , as well as studying the business fundamentals becomes important. Below is a chart showing D's trailing twelve month trading history, with the $80.00 strike highlighted in red: Considering the fact that the $80.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected.
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The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Below is a chart showing the trailing twelve month trading history for Dominion Energy Inc , and highlighting in green where the $77.50 strike is located relative to that history: Turning to the calls side of the option chain, the call contract at the $80.00 strike price has a current bid of $3.10. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%.
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Below is a chart showing the trailing twelve month trading history for Dominion Energy Inc , and highlighting in green where the $77.50 strike is located relative to that history: Turning to the calls side of the option chain, the call contract at the $80.00 strike price has a current bid of $3.10. Below is a chart showing D's trailing twelve month trading history, with the $80.00 strike highlighted in red: Considering the fact that the $80.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted).
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At Stock Options Channel, our YieldBoost formula has looked up and down the D options chain for the new April 2021 contracts and identified one put and one call contract of particular interest. Should the contract expire worthless, the premium would represent a 8.00% return on the cash commitment, or 12.22% annualized — at Stock Options Channel we call this the YieldBoost. Below is a chart showing D's trailing twelve month trading history, with the $80.00 strike highlighted in red: Considering the fact that the $80.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected.
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2020-08-14 00:00:00 UTC
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The 6 Best Solar Stocks to Buy Right Now
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https://www.nasdaq.com/articles/the-6-best-solar-stocks-to-buy-right-now-2020-08-14
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Almost anywhere you look in the market, you can find stocks with price-earnings ratios in the triple digits. But no sector makes this reality more evident than renewables. With that in mind, where should investors be looking for solar stocks to buy?
Small firms that have survived the boom-and-bust cycles of recent years are once again in fashion. And low interest rates means financing solar is a more compelling option for homeowners and businesses. Why? Solar creates more energy independence and helps property owners save money over the long term.
What’s more, if paired with a generator, solar becomes a way to lean less on the increasingly stressed, antiquated and unreliable energy grid.
But small companies are just one way to take advantage. As I mentioned last week, there are some big companies leading an eco-friendly shift in institutional investing.
8 Cheap Stocks to Keep on Your Short List
Most of the best solar stocks to buy today are solid, large-cap stocks that have plenty going for them. And they help investors avoid the big premiums that typical solar plays command. Lastly, these six picks are all strong long-term investments.
NextEra Energy (NYSE:NEE)
Dominion Energy (NYSE:D)
Duke Energy (NYSE:DUK)
Xcel Energy (NYSE:XEL)
Hannon Armstrong Sustainable Infrastructure (NYSE:HASI)
Canadian Solar (NASDAQ:CSIQ)
Solar Stocks to Buy: NextEra Energy (NEE)
NEE) website on a mobile phone screen" width="300" height="169">
Source: madamF / Shutterstock.com
Its regulated business may be the leading utility in southern Florida, but its unregulated business is the world’s largest producer of wind and solar energy.
And this is precisely the kind of stock I’m talking about here. It offers a steady, regulated utility business, so there’s a solid dividend and nearly guaranteed returns, as well as a business with a massive growth kicker.
Florida Power & Light (now FPL) was launched in 1928, and has been powering the second fastest-growing city and region in the United States.
In 2009, it became the largest renewable energy producer in the U.S. And it has grown that lead ever since. That size and scale makes it very attractive to businesses and other utilities that want to add renewable energy to their energy mix but can’t afford to build at scale.
The stock is up 30% in the past 12 months, and still delivers a nearly 2% dividend. But there’s plenty of upside left.
Dominion Energy (D)
D) pick-up truck." width="300" height="169">
Source: ying / Shutterstock.com
With a $66 billion market capitalization, Dominion is one of the biggest utilities on the East Coast. With 7 million customers, its prime service area includes the Washington, D.C. metropolitan area including the Pentagon, as well as Tidewater Virginia, where one of the biggest shipyards and a significant number of armed forces sit.
In recent years, Dominion was focused on taking advantage of its natural gas properties in the Marcellus Shale and elsewhere. The industry was converting coal-fired plants to natural gas, and there were enormous export possibilities present.
But it ran into significant headwinds building pipelines out of the Marcellus to distribution centers in Virginia and North Carolina. Even as it prevailed in court, it sold most of its gas pipeline and production business to Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).
Now, it’s plowing that cash into expanding its solar and wind operations. And Wall Street is loving it. It’s up about 4% in the last year and has a 4.7% dividend as well.
Solar Stocks to Buy: Duke Energy (DUK)
Source: jadimages / Shutterstock.com
This North Carolina-based utility has been a leader in alternative energy resources for decades.
DUK has about 7.8 million customers across the Carolinas, Florida, Ohio, Kentucky and Indiana. In the old days, King Coal powered the plants that generated electricity for these markets, since most of its service area was in or very near coal country.
But it started to realize that East Coast coal was a dwindling — and dirty — resource and saw the need to pivot to more efficient and cheaper resources. That transition has been underway for decades. And now, DUK is a leader in utility-scale renewable energy distribution and development.
DUK stock is off about 8% for the year, but its 4.6% dividend gets you back close to breakeven. It’s a great long-term pick for investors looking for stable, investor-friendly growth.
Xcel Energy (XEL)
Source: Diyana Dimitrova / Shutterstock.com
Usually, there’s not a lot of news about upper-Midwest companies unless they’re exploration and production companies, agriculture firms or mining companies.
XEL is a Minnesota-based utility with 3.7 million electric and 2.1 million natural gas customers in its home state, as well as the Dakotas, Colorado, Michigan, Wisconsin, Texas and New Mexico.
In a region where there’s plenty of coal and natural gas, XEL was the first major corporation to declare that its electricity generation was going 100% carbon-free by 2050, and 80% carbon-free by 2030. That’s a big deal.
It has significant plans to add solar and wind from now to then. And that will transform energy systems in the High Plains.
XEL stock is up almost 13% in 2020, but it remains a bargain. That’s why Xcel Energy is one of the best solar stocks to buy.
Solar Stocks to Buy: Hannon Armstrong Sustainable Infrastructure (HASI)
Source: Shutterstock
Beyond the great long-term choices the utilities here offer, this is a hidden gem that has been overlooked by the broader market.
And, it is a great play for two reasons. First, it is set up as a real estate investment trust (REIT), which means it pays you its net profits in the form of dividends.
Second, its primary focus is the financing, development and installation of renewable energy projects. And most of these projects have state or federal backing, so the financing is rock solid, as well as the rents.
At this point, HASI sports a $2.8 billion market cap, and it’s about as expensive as the average S&P 500 stock, even in this hot sector. Plus, it’s up nearly 45% in the last year and still delivers a 3.4% dividend.
Canadian Solar (CSIQ)
Source: Shutter B Photo / Shutterstock.com
I’m sure some of you are hankering for a pure-play solar company, so I found one that avoids the triple-digit valuations that most firms have at this point.
That other danger to avoid is buying companies that have a lot of potential, but don’t have the established markets to make it work. If you remember SolarCity, a solar company that was bankrolled by billionaire Elon Musk, it could barely make it through the troughs and valleys and was finally absorbed into Tesla (NASDAQ:TSLA). It’s not easy.
But CSIQ doesn’t have those problems because its main market, as its name suggests, is Canada. But it has subsidiaries in 20 countries on six continents including 17 manufacturing facilities in Asia and the Americas.
It has shipped over 46 gigawatt modules and currently sits on a 15-GW production backlog, which means CSIQ has plenty of business to keep it going, even during a global pandemic.
What’s more, it has a U.S. division, Recurrent Energy, that has 2.4 GW of projects up and running in the U.S. and a 7-GW project pipeline.
CSIQ stock’s trailing P/E is still below 6 times and it’s up 17% in the past year. It has a $1.5 billion market cap, so it’s not huge, but it’s big enough for institutions to buy in.
Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps — and into safe, top-performing income investments. Neil’s new income program is a cash-generating machine … one that can help you collect $208 every day the market’s open. Neil does not have any holdings in the securities mentioned above.
The post The 6 Best Solar Stocks to Buy Right Now appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Solar Stocks to Buy: Hannon Armstrong Sustainable Infrastructure (HASI) Source: Shutterstock Beyond the great long-term choices the utilities here offer, this is a hidden gem that has been overlooked by the broader market. If you remember SolarCity, a solar company that was bankrolled by billionaire Elon Musk, it could barely make it through the troughs and valleys and was finally absorbed into Tesla (NASDAQ:TSLA). Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps — and into safe, top-performing income investments.
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NextEra Energy (NYSE:NEE) Dominion Energy (NYSE:D) Duke Energy (NYSE:DUK) Xcel Energy (NYSE:XEL) Hannon Armstrong Sustainable Infrastructure (NYSE:HASI) Canadian Solar (NASDAQ:CSIQ) Solar Stocks to Buy: NextEra Energy (NEE) NEE) website on a mobile phone screen" width="300" height="169"> Source: madamF / Shutterstock.com Its regulated business may be the leading utility in southern Florida, but its unregulated business is the world’s largest producer of wind and solar energy. Solar Stocks to Buy: Duke Energy (DUK) Source: jadimages / Shutterstock.com This North Carolina-based utility has been a leader in alternative energy resources for decades. Solar Stocks to Buy: Hannon Armstrong Sustainable Infrastructure (HASI) Source: Shutterstock Beyond the great long-term choices the utilities here offer, this is a hidden gem that has been overlooked by the broader market.
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8 Cheap Stocks to Keep on Your Short List Most of the best solar stocks to buy today are solid, large-cap stocks that have plenty going for them. NextEra Energy (NYSE:NEE) Dominion Energy (NYSE:D) Duke Energy (NYSE:DUK) Xcel Energy (NYSE:XEL) Hannon Armstrong Sustainable Infrastructure (NYSE:HASI) Canadian Solar (NASDAQ:CSIQ) Solar Stocks to Buy: NextEra Energy (NEE) NEE) website on a mobile phone screen" width="300" height="169"> Source: madamF / Shutterstock.com Its regulated business may be the leading utility in southern Florida, but its unregulated business is the world’s largest producer of wind and solar energy. Solar Stocks to Buy: Duke Energy (DUK) Source: jadimages / Shutterstock.com This North Carolina-based utility has been a leader in alternative energy resources for decades.
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8 Cheap Stocks to Keep on Your Short List Most of the best solar stocks to buy today are solid, large-cap stocks that have plenty going for them. Solar Stocks to Buy: Duke Energy (DUK) Source: jadimages / Shutterstock.com This North Carolina-based utility has been a leader in alternative energy resources for decades. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Almost anywhere you look in the market, you can find stocks with price-earnings ratios in the triple digits.
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699027.0
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2020-08-12 00:00:00 UTC
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MVP Southgate natgas pipe startup seen in 2021 despite N.Carolina permit denial
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https://www.nasdaq.com/articles/mvp-southgate-natgas-pipe-startup-seen-in-2021-despite-n.carolina-permit-denial-2020-08-12
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Aug 12 (Reuters) - The companies developing the Mountain Valley Southgate natural gas pipeline expansion from Virginia to North Carolina said on Wednesday they continue to target a 2021 startup for the project after North Carolina regulators denied a water permit.
The North Carolina Department of Environmental Quality (DEQ) denied the permit on Tuesday due to uncertainty around whether Equitrans Midstream Corp ETRN.N will ever complete the $5.4 bllion-$5.7 billion Mountain Valley Pipeline (MVP) from West Virginia to Virginia. A unit of Equitrans is leading the MVP project.
"We are disappointed by the decision," project spokesperson Shawn Day said, noting "Work on MVP is 92% complete, and that project is targeted to enter service in early 2021."
Mountain Valley is one of several U.S. oil and gas pipelines delayed by regulatory and legal fights with environmental and local groups that found problems with federal permits issued by the Trump administration.
Other projects similarly held up include Dominion Energy Inc's D.N $8 billion Atlantic Coast gas pipe that was canceled in July.
The North Carolina rejection caused some analysts to question whether Equitrans will be able to finish Southgate by the end of 2021, if ever.
"We are skeptical the DEQ will issue the permit until MVP is fully operating, if ever," analysts at Height Capital Markets in Washington, D.C., said, noting they expect MVP to enter service in 2021.
When Equitrans started construction on MVP in February 2018, it estimated the project would cost about $3.5 billion and enter service by the end of 2018.
The 303-mile (488-kilometer) MVP mainline is designed to carry 2 billion cubic feet per day (bcfd) of gas from the Marcellus and Utica Shale in Pennsylvania, West Virginia and Ohio.
The 75-mile Southgate extension is designed to carry 0.3 bcfd to Dominion's North Carolina subsidiary and could be expanded to 0.9 bcfd.
UPDATE 1-EQM stops some work on WV-VA Mountain Valley natgas pipe
INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks
U.S. court ruling could threaten pipeline projects with delays
Montana judge upholds ruling that canceled Keystone XL pipeline permit
ETRN and EQM Announce First Quarter 2020 Results
UPDATE 1-Dominion confirms $8 bln Atlantic Coast natgas pipe cost, early 2022 in service
EQM sees U.S. Mountain Valley natgas pipe on in 2020, analysts not so sure
EQM delays WV-VA Mountain Valley natgas pipe to early 2021
UPDATE 7-Court orders Dakota pipeline shut in latest blow to U.S. fossil fuel projects
UPDATE 1-Court ruling in Keystone XL case another blow to big U.S. pipelines, say energy analysts
Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion
UPDATE 2-Dominion, Duke exit pipeline project after years of delays
Equitrans confirms early 2021 startup for Mountain Valley natural gas pipeline
(Reporting By Scott DiSavino Editing by Marguerita Choy)
((scott.disavino@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Mountain Valley is one of several U.S. oil and gas pipelines delayed by regulatory and legal fights with environmental and local groups that found problems with federal permits issued by the Trump administration. Other projects similarly held up include Dominion Energy Inc's D.N $8 billion Atlantic Coast gas pipe that was canceled in July. The 303-mile (488-kilometer) MVP mainline is designed to carry 2 billion cubic feet per day (bcfd) of gas from the Marcellus and Utica Shale in Pennsylvania, West Virginia and Ohio.
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Aug 12 (Reuters) - The companies developing the Mountain Valley Southgate natural gas pipeline expansion from Virginia to North Carolina said on Wednesday they continue to target a 2021 startup for the project after North Carolina regulators denied a water permit. The North Carolina Department of Environmental Quality (DEQ) denied the permit on Tuesday due to uncertainty around whether Equitrans Midstream Corp ETRN.N will ever complete the $5.4 bllion-$5.7 billion Mountain Valley Pipeline (MVP) from West Virginia to Virginia. UPDATE 1-EQM stops some work on WV-VA Mountain Valley natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks U.S. court ruling could threaten pipeline projects with delays Montana judge upholds ruling that canceled Keystone XL pipeline permit ETRN and EQM Announce First Quarter 2020 Results UPDATE 1-Dominion confirms $8 bln Atlantic Coast natgas pipe cost, early 2022 in service EQM sees U.S. Mountain Valley natgas pipe on in 2020, analysts not so sure EQM delays WV-VA Mountain Valley natgas pipe to early 2021 UPDATE 7-Court orders Dakota pipeline shut in latest blow to U.S. fossil fuel projects UPDATE 1-Court ruling in Keystone XL case another blow to big U.S. pipelines, say energy analysts Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion UPDATE 2-Dominion, Duke exit pipeline project after years of delays Equitrans confirms early 2021 startup for Mountain Valley natural gas pipeline (Reporting By Scott DiSavino Editing by Marguerita Choy) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 12 (Reuters) - The companies developing the Mountain Valley Southgate natural gas pipeline expansion from Virginia to North Carolina said on Wednesday they continue to target a 2021 startup for the project after North Carolina regulators denied a water permit. The North Carolina Department of Environmental Quality (DEQ) denied the permit on Tuesday due to uncertainty around whether Equitrans Midstream Corp ETRN.N will ever complete the $5.4 bllion-$5.7 billion Mountain Valley Pipeline (MVP) from West Virginia to Virginia. UPDATE 1-EQM stops some work on WV-VA Mountain Valley natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks U.S. court ruling could threaten pipeline projects with delays Montana judge upholds ruling that canceled Keystone XL pipeline permit ETRN and EQM Announce First Quarter 2020 Results UPDATE 1-Dominion confirms $8 bln Atlantic Coast natgas pipe cost, early 2022 in service EQM sees U.S. Mountain Valley natgas pipe on in 2020, analysts not so sure EQM delays WV-VA Mountain Valley natgas pipe to early 2021 UPDATE 7-Court orders Dakota pipeline shut in latest blow to U.S. fossil fuel projects UPDATE 1-Court ruling in Keystone XL case another blow to big U.S. pipelines, say energy analysts Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion UPDATE 2-Dominion, Duke exit pipeline project after years of delays Equitrans confirms early 2021 startup for Mountain Valley natural gas pipeline (Reporting By Scott DiSavino Editing by Marguerita Choy) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The North Carolina Department of Environmental Quality (DEQ) denied the permit on Tuesday due to uncertainty around whether Equitrans Midstream Corp ETRN.N will ever complete the $5.4 bllion-$5.7 billion Mountain Valley Pipeline (MVP) from West Virginia to Virginia. "We are disappointed by the decision," project spokesperson Shawn Day said, noting "Work on MVP is 92% complete, and that project is targeted to enter service in early 2021." UPDATE 1-EQM stops some work on WV-VA Mountain Valley natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks U.S. court ruling could threaten pipeline projects with delays Montana judge upholds ruling that canceled Keystone XL pipeline permit ETRN and EQM Announce First Quarter 2020 Results UPDATE 1-Dominion confirms $8 bln Atlantic Coast natgas pipe cost, early 2022 in service EQM sees U.S. Mountain Valley natgas pipe on in 2020, analysts not so sure EQM delays WV-VA Mountain Valley natgas pipe to early 2021 UPDATE 7-Court orders Dakota pipeline shut in latest blow to U.S. fossil fuel projects UPDATE 1-Court ruling in Keystone XL case another blow to big U.S. pipelines, say energy analysts Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion UPDATE 2-Dominion, Duke exit pipeline project after years of delays Equitrans confirms early 2021 startup for Mountain Valley natural gas pipeline (Reporting By Scott DiSavino Editing by Marguerita Choy) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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699028.0
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2020-08-12 00:00:00 UTC
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Noteworthy ETF Inflows: XLU, D, DUK, SO
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https://www.nasdaq.com/articles/noteworthy-etf-inflows%3A-xlu-d-duk-so-2020-08-12
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $457.1 million dollar inflow -- that's a 4.0% increase week over week in outstanding units (from 189,870,000 to 197,470,000). Among the largest underlying components of XLU, in trading today Dominion Energy Inc (Symbol: D) is up about 0.6%, Duke Energy Corp (Symbol: DUK) is up about 0.7%, and Southern Company (Symbol: SO) is higher by about 0.8%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average:
Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $60.74. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Click here to find out which 9 other ETFs had notable inflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $457.1 million dollar inflow -- that's a 4.0% increase week over week in outstanding units (from 189,870,000 to 197,470,000). These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Among the largest underlying components of XLU, in trading today Dominion Energy Inc (Symbol: D) is up about 0.6%, Duke Energy Corp (Symbol: DUK) is up about 0.7%, and Southern Company (Symbol: SO) is higher by about 0.8%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $60.74. Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $457.1 million dollar inflow -- that's a 4.0% increase week over week in outstanding units (from 189,870,000 to 197,470,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $60.74. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $457.1 million dollar inflow -- that's a 4.0% increase week over week in outstanding units (from 189,870,000 to 197,470,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $60.74. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand.
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699029.0
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2020-08-11 00:00:00 UTC
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Why Dominion Energy Is a Top 10 Utility Dividend Stock (D)
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https://www.nasdaq.com/articles/why-dominion-energy-is-a-top-10-utility-dividend-stock-d-2020-08-11
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Dominion Energy Inc (Symbol: D) has been named as a Top 10 dividend paying utility stock, according to Dividend Channel, which published its weekly ''DividendRank'' report. The report noted that among utilities, D shares displayed both attractive valuation metrics and strong profitability metrics. The report also cited the strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points.
The report stated, ''Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research.''
The annualized dividend paid by Dominion Energy Inc is $3.76/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/03/2020. Below is a long-term dividend history chart for D, which Dividend Channel stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.
The Top 10 DividendRank'ed Utility Stocks »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The report also cited the strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. The report stated, ''Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research.''
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Dominion Energy Inc (Symbol: D) has been named as a Top 10 dividend paying utility stock, according to Dividend Channel, which published its weekly ''DividendRank'' report. The report noted that among utilities, D shares displayed both attractive valuation metrics and strong profitability metrics. The report also cited the strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points.
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Dominion Energy Inc (Symbol: D) has been named as a Top 10 dividend paying utility stock, according to Dividend Channel, which published its weekly ''DividendRank'' report. The report also cited the strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. The annualized dividend paid by Dominion Energy Inc is $3.76/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/03/2020.
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The report also cited the strong quarterly dividend history at Dominion Energy Inc , and favorable long-term multi-year growth rates in key fundamental data points. The report stated, ''Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. Below is a long-term dividend history chart for D, which Dividend Channel stressed as being of key importance.
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699030.0
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2020-08-10 00:00:00 UTC
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Duke takes $1.6 bln charge to exit Atlantic Coast natgas pipe
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https://www.nasdaq.com/articles/duke-takes-%241.6-bln-charge-to-exit-atlantic-coast-natgas-pipe-2020-08-10
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Aug 10 (Reuters) - U.S. energy company Duke Energy Corp DUK.N said Monday it took a $1.6-billion after-tax charge in the second quarter for the cancellation of the Atlantic Coast natural gas pipeline from West Virginia to North Carolina.
Atlantic Coast was the most expensive U.S. gas pipeline under construction when Duke and partner Dominion Energy Inc D.N exited the $8-billion project in July due to regulatory uncertainty following years of delays and billions of dollars of cost overruns.
Dominion already took a $2.8 billion charge related to the cancellation.
Atlantic Coast is just one of several U.S. oil and gas pipelines mired in legal and regulatory battles with local and environmental groups that have found problems with U.S. permits issued by Trump administration agencies.
When Dominion, which led the Atlantic Coast project, started work on the 600-mile (966-km) pipe in the spring of 2018, the company estimated it would cost $6.0-$6.5 billion and be completed in late 2019.
Weeks before canceling the project, however, Dominion said it could finish the project in early 2022 only if it received new federal permits soon that would survive court challenges.
In addition to regulatory delays, Atlantic Coast was also hurt by a short-term hit to gas demand from coronavirus and a longer-term hit from growing consumer interest in cleaner energy.
Even though gas is the cleanest fossil fuel and is considered to be the perfect bridge from dirty coal to clean renewables, it still produces carbon.
Duke said its five-year, $56-billion capital plan remains intact despite a reduction in sales and an increase in costs to keep employees safe from the virus.
"We have clear line of sight to critical infrastructure investments to improve the energy grid and generate cleaner energy – which support our 2050 net-zero carbon emissions target," said Duke Chief Executive Lynn Good.
Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion
Dominion Energy Announces Second-Quarter Earnings
Dominion seeks more time to complete U.S. Atlantic Coast natgas pipe
INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks
Virginia passes bill to achieve 100% carbon-free power by 2045
UPDATE 3-Dominion takes $2.8 bln charge to exit Atlantic Coast natgas pipe
(Reporting By Scott DiSavino Editing by Nick Zieminski)
((scott.disavino@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Atlantic Coast was the most expensive U.S. gas pipeline under construction when Duke and partner Dominion Energy Inc D.N exited the $8-billion project in July due to regulatory uncertainty following years of delays and billions of dollars of cost overruns. Atlantic Coast is just one of several U.S. oil and gas pipelines mired in legal and regulatory battles with local and environmental groups that have found problems with U.S. permits issued by Trump administration agencies. Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion Dominion Energy Announces Second-Quarter Earnings Dominion seeks more time to complete U.S. Atlantic Coast natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks Virginia passes bill to achieve 100% carbon-free power by 2045 UPDATE 3-Dominion takes $2.8 bln charge to exit Atlantic Coast natgas pipe (Reporting By Scott DiSavino Editing by Nick Zieminski) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - U.S. energy company Duke Energy Corp DUK.N said Monday it took a $1.6-billion after-tax charge in the second quarter for the cancellation of the Atlantic Coast natural gas pipeline from West Virginia to North Carolina. In addition to regulatory delays, Atlantic Coast was also hurt by a short-term hit to gas demand from coronavirus and a longer-term hit from growing consumer interest in cleaner energy. Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion Dominion Energy Announces Second-Quarter Earnings Dominion seeks more time to complete U.S. Atlantic Coast natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks Virginia passes bill to achieve 100% carbon-free power by 2045 UPDATE 3-Dominion takes $2.8 bln charge to exit Atlantic Coast natgas pipe (Reporting By Scott DiSavino Editing by Nick Zieminski) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - U.S. energy company Duke Energy Corp DUK.N said Monday it took a $1.6-billion after-tax charge in the second quarter for the cancellation of the Atlantic Coast natural gas pipeline from West Virginia to North Carolina. Atlantic Coast was the most expensive U.S. gas pipeline under construction when Duke and partner Dominion Energy Inc D.N exited the $8-billion project in July due to regulatory uncertainty following years of delays and billions of dollars of cost overruns. Atlantic Coast natgas pipe cancellation poses supply challenges -Dominion Dominion Energy Announces Second-Quarter Earnings Dominion seeks more time to complete U.S. Atlantic Coast natgas pipe INSIGHT-Trump's fast-tracking of oil pipelines hits legal roadblocks Virginia passes bill to achieve 100% carbon-free power by 2045 UPDATE 3-Dominion takes $2.8 bln charge to exit Atlantic Coast natgas pipe (Reporting By Scott DiSavino Editing by Nick Zieminski) ((scott.disavino@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Atlantic Coast was the most expensive U.S. gas pipeline under construction when Duke and partner Dominion Energy Inc D.N exited the $8-billion project in July due to regulatory uncertainty following years of delays and billions of dollars of cost overruns. Dominion already took a $2.8 billion charge related to the cancellation. When Dominion, which led the Atlantic Coast project, started work on the 600-mile (966-km) pipe in the spring of 2018, the company estimated it would cost $6.0-$6.5 billion and be completed in late 2019.
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699031.0
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2020-08-08 00:00:00 UTC
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Coronavirus punishes Warren Buffett, as Berkshire Hathaway takes big writedown
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https://www.nasdaq.com/articles/coronavirus-punishes-warren-buffett-as-berkshire-hathaway-takes-big-writedown-2020-08-08
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By Jonathan Stempel
Aug 8 (Reuters) - Berkshire Hathaway Inc BRKa.N on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett's conglomerate.
Despite the writedown, Berkshire said second-quarter net income surged 87% because of gains in stock investments such as Apple Inc AAPL.O as markets rebounded.
Operating profit fell 10%, cushioned by a temporary bump at the Geico auto insurer, as the pandemic caused "relatively minor to severe" damage to most of Berkshire's more than 90 operating businesses.
"The writedown was prudent," said Cathy Seifert, an equity analyst at CFRA Research. "It's a recognition of what the market has long believed, that the purchase price was rich, and the integration not as smooth as many would have hoped."
Berkshire, which paid $32.1 billion for Precision in 2016 in its largest acquisition, and which Buffett at the time called a steep price, said COVID-19 caused airlines to slash plane orders, significantly curbing demand for Precision's products.
Buffett himself soured on airlines during the quarter, selling $6 billion of their stock and telling shareholders on May 2 the industry's future had become "much less clear to me."
Berkshire said Precision, which also makes industrial parts, saw revenue fall by one-third and plans an "aggressive restructuring" to shrink operations. Precision ended 2019 with 33,417 employees, and has shed 30% of its workforce.
During the quarter, Buffett, who turns 90 on Aug. 30, also took advantage of Berkshire's underperforming shares by repurchasing $5.1 billion of stock, even as the pandemic reduced other companies' ability to buy back their own shares.
Berkshire's stock has significantly underperformed broader markets since the end of 2018, and Seifert said investors should welcome the buybacks.
"Berkshire tends to go against the grain, and when so many companies suspended buybacks, Berkshire did the opposite," she said. "The market should react positively, because it shows Berkshire is confident in its prospects."
Those repurchases confirmed Berkshire's hint in a July 8 regulatory filing it had become more aggressive with buybacks after loosening its buyback policy in 2018.
PANDEMIC DAMAGE
Berkshire businesses suffering from the pandemic also include the BNSF railroad, which saw lower shipping volumes, and retailers including See's candies that temporarily closed stores.
Companies in which Berkshire recently made large investments have also been struggling.
Berkshire recorded a $513 million loss on its 26.6% stake in Kraft Heinz Co >, after the food company took several writedowns including for Maxwell House and Oscar Mayer.
Meanwhile, Occidental Petroleum Corp OXY.N, where Berkshire invested $10 billion last August, has also pummeled by sinking oil prices.
Berkshire's overall quarterly net income rose to $26.3 billion, or $16,314 per Class A share, from $14.07 billion, or $8,608 per share, a year earlier. That followed a $49.75 billion first-quarter loss.
An accounting rule requires Berkshire to report unrealized stock gains and losses with net results, causing huge swings that Buffett considers meaningless.
Second-quarter operating profit fell to $5.53 billion, or about $3,463 per Class A share, from $6.14 billion, or $3,757 per share, a year earlier.
Revenue fell 11% to $56.8 billion, despite gains in some businesses including Duracell batteries, which rose 16%.
Geico's pretax underwriting profit increased fivefold to $2.06 billion because people drove less, resulting in significantly fewer accident claims.
But Berkshire said Geico could suffer underwriting losses for the rest of the year, as it awards drivers $2.5 billion of credits on auto and motorcycle policy renewals.
Berkshire ended June with a record $146.6 billion of cash and equivalents, and bought just $797 million of equities in the quarter.
Buffett has since deployed some cash, agreeing to buy some Dominion Energy D.N gas assets for $4 billion and adding more than $2 billion of Bank of America Corp BAC.N stock.
(Reporting by Jonathan Stempel in New York; Editing by Megan Davies, Hugh Lawson, Christina Fincher and Franklin Paul)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Jonathan Stempel Aug 8 (Reuters) - Berkshire Hathaway Inc BRKa.N on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett's conglomerate. Berkshire recorded a $513 million loss on its 26.6% stake in Kraft Heinz Co >, after the food company took several writedowns including for Maxwell House and Oscar Mayer. An accounting rule requires Berkshire to report unrealized stock gains and losses with net results, causing huge swings that Buffett considers meaningless.
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An accounting rule requires Berkshire to report unrealized stock gains and losses with net results, causing huge swings that Buffett considers meaningless. Second-quarter operating profit fell to $5.53 billion, or about $3,463 per Class A share, from $6.14 billion, or $3,757 per share, a year earlier. By Jonathan Stempel Aug 8 (Reuters) - Berkshire Hathaway Inc BRKa.N on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett's conglomerate.
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By Jonathan Stempel Aug 8 (Reuters) - Berkshire Hathaway Inc BRKa.N on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett's conglomerate. During the quarter, Buffett, who turns 90 on Aug. 30, also took advantage of Berkshire's underperforming shares by repurchasing $5.1 billion of stock, even as the pandemic reduced other companies' ability to buy back their own shares. Despite the writedown, Berkshire said second-quarter net income surged 87% because of gains in stock investments such as Apple Inc AAPL.O as markets rebounded.
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During the quarter, Buffett, who turns 90 on Aug. 30, also took advantage of Berkshire's underperforming shares by repurchasing $5.1 billion of stock, even as the pandemic reduced other companies' ability to buy back their own shares. Berkshire's stock has significantly underperformed broader markets since the end of 2018, and Seifert said investors should welcome the buybacks. But Berkshire said Geico could suffer underwriting losses for the rest of the year, as it awards drivers $2.5 billion of credits on auto and motorcycle policy renewals.
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699032.0
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2020-08-05 00:00:00 UTC
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Buffett's Berkshire bought $2.07 bln BofA stock since mid-July, has 11.9% stake
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https://www.nasdaq.com/articles/buffetts-berkshire-bought-%242.07-bln-bofa-stock-since-mid-july-has-11.9-stake-2020-08-05
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By Jonathan Stempel
Aug 5 (Reuters) - Warren Buffett's Berkshire Hathaway Inc BRKa.N has spent $2.07 billion on Bank of America Corp BAC.N shares since mid-July, after winning regulatory permission to increase what was already its largest common stock holding other than Apple Inc AAPL.O.
In a regulatory filing on Tuesday night, Berkshire said it paid $337 million for about 13.6 million Bank of America shares between July 31 and Aug. 4.
It has purchased about 85.1 million of the bank's shares since July 20, giving it a total of 1.03 billion shares, or 11.9%, worth $25.8 billion as of Tuesday's close.
Berkshire is the Charlotte, North Carolina-based lender's largest shareholder. It also invests in several other banks, including Wells Fargo & Co WFC.N and JPMorgan Chase & Co JPM.N
Buffett's assistant did not immediately respond on Wednesday to a request for comment. Bank of America did not immediately respond to similar requests.
In April, the Federal Reserve Bank of Richmond approved Berkshire's application to boost its Bank of America stake as high as 24.9%, more than twice the usual 10% limit for investors, according to a Richmond Fed spokesman.
Berkshire would have to file to become a bank holding company to increase its stake beyond 24.9%.
Buffett began investing in Bank of America in 2011, purchasing $5 billion of preferred stock plus warrants to buy 700 million common shares, at a time many investors worried about the bank's capital needs.
Berkshire exercised the warrants in 2017 and sold preferred stock to cover the cost.
Adding Bank of America shares helps Berkshire reduce its cash stake, which totaled $137.2 billion on March 31.
The Omaha, Nebraska-based conglomerate is also spending $4 billion to acquire some gas assets from Dominion Energy Inc D.N, and may have repurchased billions of dollars of its own stock.
Berkshire is expected to report second-quarter results on Saturday.
(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Jonathan Stempel Aug 5 (Reuters) - Warren Buffett's Berkshire Hathaway Inc BRKa.N has spent $2.07 billion on Bank of America Corp BAC.N shares since mid-July, after winning regulatory permission to increase what was already its largest common stock holding other than Apple Inc AAPL.O. It also invests in several other banks, including Wells Fargo & Co WFC.N and JPMorgan Chase & Co JPM.N Buffett's assistant did not immediately respond on Wednesday to a request for comment. Adding Bank of America shares helps Berkshire reduce its cash stake, which totaled $137.2 billion on March 31.
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In a regulatory filing on Tuesday night, Berkshire said it paid $337 million for about 13.6 million Bank of America shares between July 31 and Aug. 4. It has purchased about 85.1 million of the bank's shares since July 20, giving it a total of 1.03 billion shares, or 11.9%, worth $25.8 billion as of Tuesday's close. Buffett began investing in Bank of America in 2011, purchasing $5 billion of preferred stock plus warrants to buy 700 million common shares, at a time many investors worried about the bank's capital needs.
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By Jonathan Stempel Aug 5 (Reuters) - Warren Buffett's Berkshire Hathaway Inc BRKa.N has spent $2.07 billion on Bank of America Corp BAC.N shares since mid-July, after winning regulatory permission to increase what was already its largest common stock holding other than Apple Inc AAPL.O. In April, the Federal Reserve Bank of Richmond approved Berkshire's application to boost its Bank of America stake as high as 24.9%, more than twice the usual 10% limit for investors, according to a Richmond Fed spokesman. Buffett began investing in Bank of America in 2011, purchasing $5 billion of preferred stock plus warrants to buy 700 million common shares, at a time many investors worried about the bank's capital needs.
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By Jonathan Stempel Aug 5 (Reuters) - Warren Buffett's Berkshire Hathaway Inc BRKa.N has spent $2.07 billion on Bank of America Corp BAC.N shares since mid-July, after winning regulatory permission to increase what was already its largest common stock holding other than Apple Inc AAPL.O. In a regulatory filing on Tuesday night, Berkshire said it paid $337 million for about 13.6 million Bank of America shares between July 31 and Aug. 4. Buffett began investing in Bank of America in 2011, purchasing $5 billion of preferred stock plus warrants to buy 700 million common shares, at a time many investors worried about the bank's capital needs.
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2020-08-04 00:00:00 UTC
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Top 3 Natural Gas Stocks to Buy Today
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https://www.nasdaq.com/articles/top-3-natural-gas-stocks-to-buy-today-2020-08-04
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The fallout from the novel coronavirus pandemic left many industries across the globe reeling, specifically crude oil that saw prices go negative. However, the decline gave rise to natural gas stocks looking to take control of the energy market in coming years.
The decrease in demand for oil was a boon for other energy sources. This is because fuel like renewable natural gas comes at a lower production cost than traditional fossil fuels and has favorable regulatory rules.
But that’s not to say that natural gas companies were not impacted by the Covid-19 economy. Producers in the Appalachian region were especially hard-hit but natural gas companies were able to stay afloat despite the dim prices.
8 5G Stocks to Get Rich Off Our Information Addiction
Here are three natural gas stocks to put your money in:
NextEra Energy (NYSE:NEE)
Clean Energy Fuels (NASDAQ:CLNE)
Dominion Energy (NYSE:D)
Natural Gas Stocks: NextEra Energy (NEE)
Source: madamF / Shutterstock.com
In today’s uncertain environment, investors on the lookout for stocks that are a safe bet and provide long-term stability. NextEra Energy, a Florida-based energy company, provides this.
Next Era Energy is the largest generator of wind and solar power in the U.S. This accounts for 70% of the company’s revenue. However, it also operates a number of natural gas pipelines that served as a financial cushion. The pipelines generate steady income from long-term leases and contracts at fixed purchase rates.
As green energy powers on, NextEra Energy is fairly optimistic about its future growth. The company estimates that it can increase annual return by 10% to 12% by 2022. In addition to this, it believes that demand for renewable energy will increase by 80 GW in the next two years.
Although it fell back on analysts’ second-quarter revenue expectations with sales 21% below forecast, the earnings per share were better than expected at $2.59. Analysts remain bullish about NextEra Energy’s future earnings.
According to Yahoo Finance, growth is forecasted to accelerate at 9.5% along with a revenue increase of 3.1% in 2021. These predictions are much higher than the industry average. With optimistic Q2 results and rosy predictions, NextEra Energy is a natural gas stock that is worth investing in.
Clean Energy Fuels (CLNE)
Source: Shutterstock
Clean Energy had a rough couple of years and the natural gas stock was on many investors’ “no-buy” list. As a major producer, the fall in oil prices decimated revenue and pushed the company into major debt.
Clean Energy was forced to sell shares at throw-away prices to reduce the debt. This didn’t do much for the company’s growth prospects. However, it did increase the cash balance on the balance sheet and pulled Clean Energy out of the red.
Nevertheless, the Covid-19 pandemic was a major turning point as many investors turned to renewable energy companies in their hour of need. Thanks to low cost, zero-emission fuels, renewable sources gained momentum as demand for crude oil declines.
Clean Energy is a major producer of renewable natural gas and operates over 50 stations across the nation. As demand for natural gas increases, the company’s strong position makes this stock a buy.
8 5G Stocks to Get Rich Off Our Information Addiction
Clean Energy’s financials are not too shabby either. In the past quarter (reported end of March 2020), the company earned a net profit of $33.07 million and revenue increased by $86.01 million. Its EBITDA was well-above the industry average at $14.32 million.
Dominion Energy (D)
Source: Shutterstock
Like its counterparts, Dominion Energy strongly believes natural gas will help power the company’s future growth.
The Virginia-based energy company hopes to achieve net-zero emissions from its production plants by 2050. To accelerate its green footprint, Dominion Energy sold its natural gas transmission business to Berkshire Hathaway (NYSE:BRK.A,NYSE:BRK.B) for $10 billion.
The company hopes to continue the production of natural gas, which is the fossil fuel with the lowest carbon emission. According to the company’s CEO, Thomas Farrell, natural gas will serve as a fall-back source when wind and solar power don’t work. The sale of the pipeline business resulted from federal policy that impacted the financing of the operation.
Although Dominion Energy’s stock price fell when the sale was announced, the deal represents a step in the right direction. Natural gas production will remain in the company’s portfolio but a larger part of its operations will focus on renewable energy.
As oil and gas companies cut back production, the future of the energy industry is mostly green. Companies realize the importance of emissions and are pushing investments in renewable energy.
Dominion Energy’s green energy efforts will set the company up for long-term success. This natural gas stock is definitely a buy.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020. As of this writing, Divya Premkumar did not own any of the aforementioned stocks.
The post Top 3 Natural Gas Stocks to Buy Today appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Thanks to low cost, zero-emission fuels, renewable sources gained momentum as demand for crude oil declines. According to the company’s CEO, Thomas Farrell, natural gas will serve as a fall-back source when wind and solar power don’t work. Natural gas production will remain in the company’s portfolio but a larger part of its operations will focus on renewable energy.
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8 5G Stocks to Get Rich Off Our Information Addiction Here are three natural gas stocks to put your money in: NextEra Energy (NYSE:NEE) Clean Energy Fuels (NASDAQ:CLNE) Dominion Energy (NYSE:D) Natural Gas Stocks: NextEra Energy (NEE) Source: madamF / Shutterstock.com In today’s uncertain environment, investors on the lookout for stocks that are a safe bet and provide long-term stability. Clean Energy Fuels (CLNE) Source: Shutterstock Clean Energy had a rough couple of years and the natural gas stock was on many investors’ “no-buy” list. Dominion Energy (D) Source: Shutterstock Like its counterparts, Dominion Energy strongly believes natural gas will help power the company’s future growth.
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8 5G Stocks to Get Rich Off Our Information Addiction Here are three natural gas stocks to put your money in: NextEra Energy (NYSE:NEE) Clean Energy Fuels (NASDAQ:CLNE) Dominion Energy (NYSE:D) Natural Gas Stocks: NextEra Energy (NEE) Source: madamF / Shutterstock.com In today’s uncertain environment, investors on the lookout for stocks that are a safe bet and provide long-term stability. Clean Energy Fuels (CLNE) Source: Shutterstock Clean Energy had a rough couple of years and the natural gas stock was on many investors’ “no-buy” list. Dominion Energy (D) Source: Shutterstock Like its counterparts, Dominion Energy strongly believes natural gas will help power the company’s future growth.
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As a major producer, the fall in oil prices decimated revenue and pushed the company into major debt. Dominion Energy (D) Source: Shutterstock Like its counterparts, Dominion Energy strongly believes natural gas will help power the company’s future growth. As oil and gas companies cut back production, the future of the energy industry is mostly green.
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2020-08-01 00:00:00 UTC
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Dominion Energy, Inc (D) Q2 2020 Earnings Call Transcript
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https://www.nasdaq.com/articles/dominion-energy-inc-d-q2-2020-earnings-call-transcript-2020-08-01
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Image source: The Motley Fool.
Dominion Energy, Inc (NYSE: D)
Q2 2020 Earnings Call
Jul 31, 2020, 10:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to the Dominion Energy second-quarterearnings conference call [Operator instructions] I would now like to turn the call over to Steven Ridge, vice president, investor relations.
Steven Ridge -- Vice President, Investor Relations
Good morning, and thank you for joining our call. Earnings materials, including today's prepared remarks may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent annual reports on Form 10-K and our quarterly reports on Form 10-Q for a discussion of factors that may cause results to differ from management's estimates and expectations. This morning, we will discuss some measures of our company's performance that differ from those recognized by GAAP.
Reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures, which we are -- which we can calculate are contained in the earnings release kit. I encourage you to visit our investor relations website to review webcast lives as well as the earnings release kit. Joining today's call are Tom Farrell, chairman, president, and chief executive officer; Jim Chapman executive vice president, chief financial officer, and treasurer; as well as other members of the executive management team. I will now turn the call over to Jim.
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Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thank you, Steven, and good morning. Our second quarter 2020 operating earnings were $0.82 per share, which included a $0.03 hurt from worse than normal weather in our utility service territories. Weather-normalized results of $0.85 per share were at the top of our guidance range. And for the 18th consecutive quarter, we're at or above the quarterly guidance midpoint.
We expect a full-year financial impact of weather to be more balanced than during the first two quarters of the year. Preliminary data indicate that July was around $0.04 better than normal. And early predictions for August suggest potential for additional weather helps. Note that our second-quarter GAAP and operating earnings are not adjusted to account for discontinued operations, given the timing of our recent announcement, but will be reflected beginning with our third-quarter disclosures.
GAAP earnings for the quarter were negative $1.41 per share. This result was driven primarily by impairment-related charges associated with the Atlantic Coast Pipeline and supply header projects. We also had a positive impact attributable to net gains on our nuclear decommissioning trust funds. As a reminder, we report such gains and losses on these funds as nonoperating.
A summary of adjustments between operating and reported results is included in Schedule 2 of the earnings release kit. On Slide 4, we're initiating the third-quarter 2020 operating earnings guidance with a range of $0.85 to $1.05 per share. As mentioned, this range reflects the impact of recasting operating earnings to exclude discontinued operations. We're also affirming that 2020 annual guidance range provided on our July 6 investor call.
As usual, these ranges assume normal weather, variations from which could cause results to be toward the top or the bottom of these ranges. Typically, we provide year-ago actual results alongside our guidance. Given the need to adjust historic results for discontinued operations to provide a useful point of comparison, we plan to provide these figures when we report third-quarter and full-year results, respectively. I would also note that our 2020 10-K will include three full years of historic results that have been adjusted to reflect the impact of discontinued operations.
Finally, we're also affirming the long-term annual growth guidance we gave earlier this month for earnings and dividends per share. I'll now turn to discuss our observations on the financial impacts of COVID-19. The graph on Slide 5 represents daily and seven-day average weather-normalized load in the PJM dom zone as compared to the two-year historic weather-normal average. Strong residential and data center demand continues to support overall load levels that modestly exceed the historic average.
This is a continuation of the theme we've seen since the pandemic began. And looking forward, we expect this trend to continue. We provide corresponding data for Dominion Energy South Carolina on the next slide. Recall the story here diverged from DEV and that we did experience weather-normal load degradation earlier this year.
On the first-quarter call, we suggested that April could represent a bottoming out with gradual improvements through the summer. Fortunately, at least so far, that has been the case, with July demand only 1% off weather-normal historic averages. I would also point out that the higher volumes sold in the summer months, like July, tend to have a larger impact on our annual sales revenues than the lower-volume shoulder months. We currently expect this general recovery trend to continue in South Carolina through the remainder of the year.
We estimate that through the end of June, lower-than-budgeted sales associated with the impacts of COVID-19 across our electric utility operation has impacted operating income by approximately $0.04 per share, which, thus far, has been largely offset with corporate initiatives. The future remains difficult to predict, so we are reiterating the demand-related earnings sensitivities that we provided on the first quarter call and which can be found in the appendix of today's presentation. Consistent with our expectations, customer arrears have increased modestly to date. We continue to work carefully with our customers to provide options and tools to assist them in returning their accounts to current.
Our GAAP results for the quarter reflect the recognition of a COVID-related reserve of around $20 million, representing our current expectation for incremental expense associated with future uncollectible accounts. Turning now to a financing update, as shown on Slide 7. We provide detailed guidance on our equity capital-raising plans. First, we are ceasing the issuance of new shares under the DRIP program with immediate effect, resulting in a total of about $160 million of new share issuance under the program in 2020, roughly half of our prior estimate.
In 2021 and beyond, we'll return to our historic norm of around $300 million of new share issuance per year. Second, starting in 2022, we expect to see our at-the-market program begin to ramp up such that by 2024, our first big year of offshore wind investment, we're back to the $300 million to $500 million per-year range that we previously articulated at investor day. And third, we continue to target year-end completion of the share repurchase we announced earlier this month. Recall that the board's authorization for the announced $3 billion buyback was with immediate effect.
We currently expect that there may be some modest upward bias to this figure based on additional refinement of our overall tax analysis. We'll provide additional details around share repurchases next quarter, but would note that we have not yet repurchased any shares. We have an exciting opportunity to deploy significant amounts of capital directed at sustainable energy and related projects. These projected modest equity financing activities will support these EPS-accretive capital investments.
Turning to fixed income, we've included in slide in the appendix detailing our very modest remaining issuance for the year. Overall, we view the debt capital markets as healthy and liquid across the spectrum of term. And we currently have nearly $7 billion in available liquidity. Our credit rating agencies responded positively to the announcements we made earlier this month.
S&P revised their outlook to positive, while Moody's and Fitch affirmed our ratings. In all cases, the agencies remarked on the credit-positive aspects of our strategic repositioning. We expect that successful execution of our financial plan will further demonstrate the clear and positive reduction of our overall business risk profile. Finally, before I summarize my remarks, let me give some insight into our investor relations strategy over the next several months, as shown on Slide 8.
We are increasing our proactive outreach using virtual tools to interact with both existing and prospective shareholders throughout the world, including geographies where ESG-related factors are playing an increasingly prominent role in investment decisions. We are ramping up our investor-targeting efforts to identify prospective shareholders for which our compelling, clean energy, operating, and financial profile will resonate. We plan to use our fourth quarterearnings callto provide something of an investor day-style refresh with supplementary appendix disclosures aimed at providing projected capex, rate base, and other inputs, which we hope will assist investors in their financial evaluation of our company. It's our responsibility to get our repositioning story into the market.
We, therefore, look forward to connecting with many of you for discussions on these topics during the next several months. So, to summarize my remarks, we remain focused on extending our track record of delivering financial results that meet or exceed our public commitments. We feel that our businesses are well-positioned with regard to COVID-related demand impacts, but we are monitoring that situation carefully. We are affirming our updated 2020 operating earnings guidance as well as the long-term operating earnings and dividend growth outlooks provided earlier this month.
And finally, we look forward to increasing engagement with existing and prospective investors in the months to come. I'll now turn the call over to Tom.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Thank you, Jim, and good morning, everyone. I would like to start by again expressing our gratitude for the medical and other frontline healthcare professionals who are engaged in a courageous effort to assist those who have been impacted by the COVID-19 pandemic. We salute their efforts, just as we salute the efforts of our employees who continue to perform a vital public service by literally keeping the lights on and critical energy flowing. We continue to evolve our COVID response to incorporate the most up-to-date guidance from the medical and public health community, social distancing, proper PPE and where practical remote work have become the expectation for all employees.
We're also mindful of our customers and the difficult time this has been for them. We have worked closely with regulators to take steps, including the voluntary suspension of nonpayment service disconnections and the offering of flexible payment plans to assist our customers in addressing the financial challenges they may be facing. Turning to safety, which is our first core value on Slide 9. Our year-to-date results put us on track to make 2020 the safest year of operation in the company's more than 100-year history.
As an organization with nearly 20,000 employees and 7 million customers, our safety performance matters to thousands of families and communities, which is why it matters so much to us. The ability to impact lives on a broader scale is also why when we see an issue that deeply impacts our employees, customers and communities we get involved. Recent social unrest, partly caused by the murder in Minneapolis, has led us to question what more we can do to assist in the cause of social justice and racial equality. Early last month, we publicly committed $5 million to social justice and community rebuilding efforts.
The funds will support nonprofit organizations advocating for social justice and equality. Grants will also be designated to help minority-owned and small businesses recover from recent disruptions to their businesses. Words can evoke sympathy, empathy, compassion, and understanding. But at Dominion Energy, we believe that actions speak louder.
So, we're investing in recovery and reconciliation and in the vital work of overcoming years of debilitating actions, attitudes, and abuses of authority that have traumatized our country. This month, we followed up on that commitment with an additional pledge of $35 million that will support 11 historically black colleges and universities, representing 35,000 students across Virginia, Ohio, North and South Carolina, as well as the scholarship fund focused on African-American and underrepresented minority students across all of our service territories. These institutions have been foundational in the struggle to improve the lives of African-Americans and in the fight for social justice. We are pleased and humbled to build on our company's nearly 40-year history of supporting historically black colleges and universities.
These initiatives are a recognition of the importance of education as an equalizer in society. Across our company, we are engaging these issues like never before, listening and being heard. We are committed in taking major steps to increase the diversity of our workforce. And in recent years, we have meaningfully improved our supplier diversity.
Embracing diversity inclusion is not only the right thing to do. It is imperative to our long-term success as a company. And we're changing the way that long-term success will look, operationally and financially. Slide 11 summarizes the highlights of our strategic repositioning, which include a narrowed focus to our premier state-regulated utility operations, which will account for approximately 85% to 90% of our operating earnings, an industry-leading clean energy profile, best-in-class long-term earnings and dividend per share growth, and a low-risk business profile and healthy balance sheet.
We have a vision for the future. And we are preparing our company to be at the vanguard of the energy transition that is accelerating across our country. We are investing billions of dollars in a transition that will make zero and low-emitting resources accountable for around 95% of our companywide electric generation by the end of 2035. As shown on Slide 12, we have a plan described in our integrated resource plan filings to grow our renewable energy capacity on average over 15% per year for the next 15 years.
We have successfully achieved our 3,000-megawatt target for renewable generation in service or under-development in the State of Virginia, a year and a half ahead of schedule. And we are now the third-largest owner of solar capacity among utility companies in the country. Our pilot offshore wind project, depicted on the cover of these materials, is the only project to have successfully completed the BOEM permitting process and will begin to generate electricity this quarter. Our $8 billion, 2.6-gigawatt full-scale offshore wind deployment continues on schedule.
Recent permitting recommendations for Northeast wind projects are not expected to alter materially our project plans and will be accounted for when we submit our construction and operation plan later this year. Finally, earlier this month, Virginia State Corporation Commission approved our renewable energy tariff, which enables us to offer an exciting 100% renewable energy product to our customers. We are equally focused on emission reductions at our Gas Distribution utilities. Pipeline and other aging infrastructure replacement, extensive leak detection and repair efforts and modified operational procedures designed to capture gas that used to be ventilated -- vented during maintenance.
We'll reduce the methane emissions of our natural gas utility operations 65% by the end of this decade and 80% by the end of the next. We are also finding innovative ways to help our customers improve their sustainability. As one of the country's largest investors in renewable natural gas, we are at the forefront of the intersection of agricultural emission reductions and offering natural gas customers a green option that is actually carbon negative. Meaning that it takes more greenhouse gases out of the atmosphere than it creates when it is used by the customer.
In coming months, we will share additional insights into our expanding vision for a sustainable energy future for our company and the country. Next, let me address the upcoming Dominion Energy South Carolina rate case. Earlier this month, we made a preliminary filing that formally signaled our intent to file a general rate case proceeding next month, the first for the base electric business in South Carolina since 2012. We expect new rates based on a typical procedural schedule to be effective in March of 2021.
Since the last rate case eight years ago, Dominion Energy South Carolina has connected over 80,000 new electric customers, representing a 12% increase, and invested over $2 billion net of retirements in electric generation, transmission, and distribution systems that serve customers every day. Despite prudent cost management, the resulting earned return does not measure up to the cost of capital we must employ to maintain excellent reliability and service that our customers rely on. We estimate that our filing will imply a single-digit percentage rate increase, which will be significantly lower than the compounded rate of inflation of nearly 14% since the end of the last test year of 2011. Customers count on us to keep the lights on and to deliver affordable and increasingly sustainable electricity.
We are as committed to that ideal in South Carolina today as we were when we closed the merger. With that, I will summarize today's call as follows: our safety performance is on track to set a new company record. We are making important financial commitments to address social justice and support African-American and other representative minority students. We achieved weather-normalized operating earnings that exceeded the midpoint of our guidance range for the 18th consecutive quarter.
We affirmed our enhanced long-term earnings and dividends per share growth guidance. Our transaction with Berkshire Hathaway is on schedule for our fourth-quarter closing. And we are aggressively pursuing our vision to be the most sustainable energy company in the country. Before we turn to your questions, I want to discuss our announcement this morning about my change in role from president and CEO to executive chairman of Dominion, effective at the end of this quarter.
I'm in my 25th year at the company, 15th year as CEO, and turned 65 last December. Three years ago, the board began to consider various alternatives to my eventual retirement. We have undertaken a series of steps over these years. Last September, we took an important step in that process by creating the co-chief operating officer role.
Today's announcement is another step in a long-designed succession process. I'm pleased to say that Bob Blue will become president and CEO on October 1, reporting to me as executive chair. Diane Leopold is being promoted to chief operating officer, reporting to Blue and will be responsible for all of the company's operations across our multistate footprint. Jim Chapman, our CFO, will report to Blue, as will Carter Reid, president of our services company; Carlos Brown, our general counsel; Bill Murray, our head of corporate affairs and public policy; Corynne Arnett, our head of regulation and customer experience; and Tanya Ross, our chief auditor.
Carter Reid will also report to me in her role as chief of staff of Dominion. I provide you with this detail to underscore that the team we have assembled at Dominion over the past 15 years will be the same team that carries us into the future. It is this group that has taken Dominion to the top ranks among American utilities in safety, operational excellence, and compliance. It is also this team that has supported and expanded our steadfast commitment to sustainability, diversity and community engagement.
These individuals, of course, did not achieve these results on their own. They were supported by thousands of others at our company who share and live our company's values. As you know, over the years, we have made significant and, in some cases, transformative changes to Dominion, like our succession process, we have taken a deliberate strategic approach to repositioning Dominion for the future. We are now largely state-regulated, multi-utility company with a growth profile for both earnings per share and dividends among the highest in our industry.
We also have one of the strongest ESG stories in this sector. From exiting oil and gas production and merchant fossil generation to emerging with Questar and SCANA, to embracing solar power, advanced storage and grid modernization, to relicensing our nuclear fleet as well as the development of the largest offshore wind farm in the Americas, it has been this team of individuals leading the way. With our most recent strategic alignment in selling our gas storage and pipeline segment and embracing a clear path to net 0 by 2050, the board and I thought it would be an appropriate time to take the next step in our management transition at the end of this quarter. There is no established time frame for my role as executive chair, and I look forward to continue to serve the company on behalf of our shareholders, customers and communities.
The primary goal of our succession planning process has been to ensure continuity of our strategy, public policy, corporate values and operational excellence. This change is a step in carrying out that goal. I will also continue to serve as chairman of the board of directors of the company. As executive chair, I will continue to represent the company engaging with key stakeholders, industry groups and others.
I will be particularly focused on continuing to develop our strategic plan and Dominion's leadership in the new clean energy economy. And with that, we will be happy to answer your questions.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question will come from James Thalacker with BMO Capital Markets.
James Thalacker -- BMO Capital Markets -- Analyst
Good morning. Can everybody hear me?
Tom Farrell -- Chairman, President, and Chief Executive Officer
Yes, we can. Good morning.
James Thalacker -- BMO Capital Markets -- Analyst
Well, thanks for taking my questions. And before we start, congratulations to both you, Tom, Bob, and Dianem for the announcements today. I'm glad to say that.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Thanks you.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thank you.
James Thalacker -- BMO Capital Markets -- Analyst
Just two real quick questions. On Slide 8, you discussed in investor day-style financial update, which will include a rolling forward of the capital plan and the rate base estimates. Would this include a year-by-year and -- or a segment-by-segment program breakdown of the capital spend as well as the associated rate base by year and segment?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Hey, James. Good morning. It's Jim. Yes.
So, we're in the planning stages for that for the fourth quarter rollout of that analyst day investor-day-style refresh. And we hope to do at least the kinds of things we did last time around -- last March, where we did provide by segment and mostly by year rate base and other growth data. So if we can improve on that a little bit, we're thinking through how to do that. We welcome feedback.
But we do expect to provide kind of everything you just mentioned on the fourth quarter call.
James Thalacker -- BMO Capital Markets -- Analyst
OK. And I mean -- and just staying in that vein, since you've already given sort of some of the financing through 2024, we're going to be looking forward a year. Will we probably roll this out to -- will this be like 2021 through 2025? How are you thinking about that?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah. I haven't decided that yet, but that's a possibility for sure. And I would say, let me add to that, our existing disclosure is not so up to date. Last March, we set out $26 billion of growth capital spending from '19 to '23.
We updated some of that on the first-quarter call this year for three programs under the BCA in Virginia. Obviously, longer term, our gas transmission storage capital spend, which is about $3.5 billion, comes out of that. But our existing guidance is still largely intact and relevant. But we will be providing that roll forward with some more granular updates on the fourth quarter call.
James Thalacker -- BMO Capital Markets -- Analyst
And then just last question on this part of it is, and really just kind of sticking to the 2025 sort of time frame. You've given a lot of line of sight on the financing through 2024. But your capex, really, as you start to do the offshore wind starts really building up in '23, '24. Just wondering if you are looking to sort of move your capex forecast out a little bit farther to kind of talk about, you know, the financing plan as we move into '24 through '26 and the offshore wind starts coming online?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah. Fair enough. I mean, those numbers do get big, and there's a lot of visibility around that offshore wind spend. But I would say that on an overall basis, the cadence of that $26 billion build number in the updated number, I mean, it's pretty much a run rate.
So yes, there's a slight increase there. So, you know, if we -- as we provide additional detail or an additional year of capital spend, we'll also support that with information on our financing plan. But I wouldn't expect a drastic departure from our kind of run rate numbers that we've talked about today.
James Thalacker -- BMO Capital Markets -- Analyst
[Technical difficulty]
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah, James, you're cutting out there a little bit, but, yes, that kind of run rate again. We'll provide an update on the fourth-quarter call. But it's not going to be a drastic departure from that, if that was your question.
James Thalacker -- BMO Capital Markets -- Analyst
Yeah, yeah. No, that's perfect. And then the last question, I apologize. But clearly, there's been a lot of press in the last week surrounding political spending practices and vehicles.
On Slide 20, you briefly addressed your rankings in the CPA-Zicklin Index, which highlights user trends that are under their methodology, but I was wondering if you could speak a little bit more of your past and current use of social welfare organizations like the 501 (c) (4). And do you plan to modify your political strategies at all in light of the recent investigations?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Sure. Thanks for asking. First, we have fully disclosed 501(c)(4) contributions for many years. Zicklin Center, you referenced, is an independent organization that works with The Wharton school of the University of Pennsylvania to look at a huge, very wide variety of factors, and they rank all these companies on their disclosure practices.
And our disclosure is -- ranks among the highest in the country, certainly among the highest in utilities for its transparency. And like I said, we've disclosed all of them. And over the last last years, I think our contributions have been under $500,000, 70% of which went to an organization that associated with American Petroleum Institute supporting pipeline projects. So, we are fully disclosed everything.
It's not a -- it's a very small part of what we do, under $500,000 over five years. And we have no intention of changing our practices because they are perfectly appropriate, completely compliant with every state in federal law by wide margins. We are -- we have nothing to be concerned about with respect to any of our political giving or giving to these so called 501(C)(4)s.
James Thalacker -- BMO Capital Markets -- Analyst
Great. Thanks for all the time. And sorry for the phone breaking there in the middle. Have a good weekend.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
That's OK. We heard you. Thanks, James.
Operator
Our next question will come from Shar Pourreza with Guggenheim Partners.
Shar Pourreza -- Guggenheim Partners -- Analyst
Hey. Good morning, guys.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Good morning.
Shar Pourreza -- Guggenheim Partners -- Analyst
Just on the equity guide, some people may be struggling with it, buying back this year and starting to issue next year. Can you touch on this thought and why not decide to delever and further sort of improve the credit metrics versus buying back, which could be sort of multiple accretive in and of itself. So -- and I just have a quick follow-up.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yes, Shar. Let me start there. So, look, our balance sheet is already in the right place. And I don't want to take time to go through all the history.
But I think as you know, we've made just a ton of progress in that area over the last several years. And it's even better pro forma for the sale of the T&S business. So, in that sale, almost $6 billion of the $10 billion transaction value is really, from our perspective, debt retirement. So, I think the agencies have recognized that also in their commentary, as I just talked about positive outlook from S&P, etc.
So, given that, the status of our balance sheet and the related improvements from this transaction, we feel pretty good about our plan to provide the net proceeds back to our shareholders in this buyback, which we're -- as I mentioned, we're targeting for completion by the end of the year. But that said, we do have a sizable clean energy and related capital spend program. I just talked about that with James. And it's only increasing as we go through the year slowly.
So therefore, we do -- even though we're doing the buyback and we're giving the net proceeds back to our shareholders, we think it's prudent with that strong balance sheet position we're in. We do plan to recommence some equity issuance, even if it's just in this form of DRIP in 2021 and beyond. But I think the perspective is important. I mean, for spending programs of the size what we're doing, to be starting out with DRIP, less than half a percentage point of our market cap a year in a pretty efficient program like DRIP.
And later, just with other efficient programs, all in our ATM, we think it's overall pretty modest, and we think it's the best way to go.
Shar Pourreza -- Guggenheim Partners -- Analyst
Got it. And then just honing in on the buyback, what's specifically, again, driving the upsizing, can you kind of sort of quantify? And then on the timing, it seems that 4Q purchases could be a little bit conservative on your viewpoint. Can you buy back sooner even if you don't have the proceeds in the door, you know? And can you potentially close this transaction sooner than 4Q? So what's driving the upsizing? And can you start to buy back sooner than 4Q even if the proceeds are mandatory? Thanks.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah. So, we have a couple of things there. We have Board authority to commence our buybacks with immediate effect. We do not need to wait until the transaction closes.
But we haven't bought any yet. And we retain kind of full flexibility. We can do that with open market purchases. We can do it with accelerated share repurchases, tender, Dutch auction, so more guidance to come on that through the fall as we go.
We do expect still to complete that by the end of the year, even if we start sooner. We're not guiding to any different closing time line than the kind of early fourth quarter, although that all remains on track. But then as it relates to the amount, the quantum, yeah, we mentioned there's upward bias. Where is that coming from? And we'll provide more detail on that too as we go.
But that comes from, first of all, just a conservative first cut on what the tax -- cash taxes would be on this sale? We indicated about $700 million. So, there's interplay there between the tax aspect of the sale and the tax aspect of the Atlantic Coast Pipeline abandonment, an impairment of Supply Header, and the interplay of our sizable tax credit position. So as we continue to do more work on that, we see probably, if anything, a downward bias in the taxes payable from $700 million and, therefore, an upper bias in the size of the buyback. And it's not huge.
I mean, again, we'll come to that guidance. Is it somewhere between 0 and $200 million kind of that magnitude? And we'll provide more guidance. But again, conservative first cut, probably improving from there modestly, and we'll provide more detail on all of that as we go through the fall.
Shar Pourreza -- Guggenheim Partners -- Analyst
Got it. Thanks, Jim. And Tom, congrats on Phase 2 of your career.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Thank you, Shar. Appreciate it.
Operator
Thank you. Our next question will come from Durgesh Chopra with Evercore ISI.
Durgesh Chopra -- Evercore ISI -- Analyst
Hey. Good morning, team. Thank you for taking my questions. And congratulations to you, Tom, as well.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Thank you.
Durgesh Chopra -- Evercore ISI -- Analyst
So maybe just starting off, I actually have one question only. Just -- the other questions have been answered. Jim, has -- so the credit rating agencies opposed the transaction, obviously, came out with a positive view. I didn't see, but is there a chance that your FFO-to-debt metrics get adjusted here going forward now that the business mix is very different?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thanks, Durgesh. By that, do you mean kind of the downgrade or upgrade thresholds from the agencies?
Durgesh Chopra -- Evercore ISI -- Analyst
Exactly. Yes.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
I think there -- I can't speak for the agencies there. On the downgrade side, there hasn't been done any action yet. I would think that as we continue to execute on this plan and improve on our business risk profile, derisk our profile, that that would be a logical thing to discuss. But we're not guiding folks to expect that in the near term.
But I understand the question, and we'll see what happens.
Durgesh Chopra -- Evercore ISI -- Analyst
Understood. Thanks, guys. Ang great quarter again. Thank you.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thank you.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Thanks, Durgesh.
Operator
Thank you. Our next question will come from Michael Weinstein with Credit Suisse.
Michael Weinstein -- Credit Suisse -- Analyst
Good morning, guys.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Good morning.
Tom Farrell -- Chairman, President, and Chief Executive Officer
Good morning.
Michael Weinstein -- Credit Suisse -- Analyst
Congratulations, Tom, Bob and Diane, all three of you. I just want an to ask about the -- as we get closer to the triennial review, I think you're going to -- you should be filing it pretty soon, if not already. What should we be looking for there in terms of timeline and dates and hearings and things like that?
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Hey, Michael. It's Bob Blue. So obviously, we're focused on that triennial. We will file it in March of next year, and it will be litigated over the course of that year with a decision by the end of November.
So that's the cadence for that.
Michael Weinstein -- Credit Suisse -- Analyst
OK. Great. And in terms of the offshore wind project, it wasn't really much mentioned in the presentation this time around. But I'm just wondering if you can give us an update on, I guess, the filing, which I think you're still planning toward the end of the year, right, with the OEM?
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Right. We expect to file the COP with them at the end of this year. And it's progressing well. The survey and geotechnical work and the preparation of that are going very well.
So, we're pleased, just as we were pleased with construction on test turbines.
Michael Weinstein -- Credit Suisse -- Analyst
And is that project included on that slide that shows the 15 -- over 15% increase in renewable generation over the, say, 2035?
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Yes.
Michael Weinstein -- Credit Suisse -- Analyst
OK. So -- and just a relatively small part of it, it looks like solar is the vast majority of it, right?
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
That's correct. It's large solar builds. I don't really think of the commercial project is small, however. It's the largest in the Americas.
Michael Weinstein -- Credit Suisse -- Analyst
It looks like it's going to get dwarfed by solar. Is that all in the state of Virginia and South Carolina, I suppose?
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
It's within the PJM footprint. But we're talking mostly in Virginia, yes.
Michael Weinstein -- Credit Suisse -- Analyst
Great. All right. Thank you very much, guys. And congratulations, again.
Have a great weekend.
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Thanks, Michael.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thanks, Michael. You too.
Operator
Thank you. Our next question will come from Steve Fleishman with Wolfe Research.
Steven Fleishman -- Wolfe Research -- Analyst
Hi. Good morning. First, Tom, congrats to you. It's been a long time.
And also, congrats to Bob and to Diane, well-deserved.
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Thank you, Steve.
Steven Fleishman -- Wolfe Research -- Analyst
So -- in good hands. So, I guess, just -- could you just remind us what you need to do to actually get the transaction closed in terms of approvals, just so we're tracking that?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
We just have HSR, really. And that's progressing along just fine.
Steven Fleishman -- Wolfe Research -- Analyst
OK. Great. And then, I mean, there's not going to be a lot of time to actually execute on the buyback in Q4. It's a decent amount of stock.
So, could you just talk about kind of how you are thinking about doing it?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah. Let me go there, Steve. So again, we don't have specific guidance on that yet, and we'll provide more through the fall. But I just mentioned all the kind of options we have at our disposal to get that done, but we don't necessarily need to wait until the fourth quarter to start.
And we probably won't. So, it could be -- it very well could be a mix of approaches of market purchases and other approaches in addition to or in place of fourth-quarter tender-style event. So, I know that's pretty broad. But we don't need to compress that into just a month or two in the fourth quarter.
We have the authority to start now.
Steven Fleishman -- Wolfe Research -- Analyst
OK. And then maybe just when you look at -- I guess, that -- I know you said you're going to be doing a lot of continued marketing on the company and story and the kind of new clean energy further refocus there. Just maybe you could give a little color on what kind of feedback you've gotten so far because, obviously, there was, you know, big news with the financial changes and then this refocus. What kind of investor feedback you've gotten so far?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Yeah. Let me start there. And that was just three weeks ago or so when we made those announcements. And we did get quite a bit of feedback from across the spectrum, different types of investors.
And we took it all to heart. We sat around and considered a lot of that pretty carefully, including, notably, the feedback from retail investors who are very focused on the dividend and income fund investors. So, we get that and took that to heart. But the feedback from, I guess, maybe longer-term investors, institutional investors and those investors, as I mentioned in my prepared remarks, that or North America or elsewhere, that increasingly are thinking about their investment decisions through the lens of ESG topics.
That feedback was pretty positive on the long-term prospects of this transaction, repositioning the company in this way, strengthening the balance sheet, increasing the growth rate, highlighting all the already-under way ESG, spending programs, clean energy and related. So that feedback has been pretty good. But it is a change -- a material change for Dominion. So we have been already and we highlighted here that we're going to spend a lot of time in the next few months, just reconnecting with people, existing investors, prospective investors are walking through that story, making sure everyone gets it, not only what we've done, but exactly what we're doing under the spending programs and the size and scale and cadence and the financing.
So, there's a lot to talk about. And one thing that's been consistent in all of our interactions with investors, existing perspectives in the last three weeks is everyone really wants to spend more time to make sure they get it and they're understanding all the dynamics. But overall, it's been pretty positive.
Steven Fleishman -- Wolfe Research -- Analyst
OK. Great. Thank you.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thanks, Steve.
Operator
Thank you. And our last question will come from Jeremy Tonet with JP Morgan.
Jeremy Tonet -- J.P. Morgan -- Analyst
Hi. Good morning. Thanks for fitting me in here.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Good morning.
Jeremy Tonet -- J.P. Morgan -- Analyst
Good morning. Just a multipronged question on natural gas, if I could hear. Just wondering how you think the needs in your service territories have changed over time since you first announced ACP. And with the ACP cancellation, what are your expectations for gas distribution capex into the fourth quarter refresh here? Is there an upward bias especially without competing for capital? And finally, if I could, just how do you think hydrogen could fit into the picture over time here?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thanks for the question. I'm just -- on the -- let me -- I'm going to answer the very first part of it and then turn it over to Diane. The need for the Atlantic Coast Pipeline in our service territory. Of course, the service territory for us was Virginia and North Carolina, and potentially South Carolina.
Well, the need has not changed at all. The result of it is that need will go unmet as a result of the cancellation of the Atlantic Coast pipeline. The pipeline was over 90% subscribed for 15 years by utility companies that we're going to use it to serve gas distribution customers and convert coal plants through natural gas facilities over the years to come. That need will now go unmet.
So, with respect to that one project, no change. The balance of the question, I'll turn over to Diane.
Diane Leopold -- Executive Vice President and Co-Chief Operating Officer
OK. Good morning. So, with respect to the LDC capital spend and -- certainly, we'll give a refreshed look in the Q4 call. But we really don't see any change there.
So, we really have jurisdictions that are in very supportive states for our programs. And they're in high-growth areas. So, we have North Carolina, Utah, Ohio, West Virginia in the key jurisdictions. We have pipeline replacement programs in essentially all of those areas.
That are significant, and our commissions recognize the long-term nature of those programs and the need to have that infrastructure replacement for safety, reliability, and sustainability. So, I really don't see anything there as well as the continued growth projects to meet the increasing demand in these high-growth areas. So really no change on the LDC side. With respect to hydrogen, we do see that there will be an increase in hydrogen utilization in the energy mix over the next several decades.
And we've certainly spent a lot of time studying it. At the moment, at least to our knowledge, no continental U.S. LDC is blending hydrogen into its supply mix today. We committed, a couple of years ago, to making sure our LDC system is ready to accept up to 5% hydrogen by 2030, so just in the next decade.
And our initial pilot is in advanced planning stages in Utah. So high level, we think there's going to be a lot of activity in this area. But for the most part, it's still in that study and preparatory planning stage. But expect it to be ramping up, and look forward to sharing updates.
Jeremy Tonet -- J.P. Morgan -- Analyst
That's very helpful. And just going back to the gas situation real quick. With MVP, do you think that there's any role for that to play, I guess, in, you know, meeting some of those needs that are going to go unmet without ACP?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Not that we can see.
Jeremy Tonet -- J.P. Morgan -- Analyst
Got it. And just one last one, if I could. With regards to the upcoming election here, just wondering if you had any preliminary thoughts on potential impacts at the federal or state level for Dominion overall?
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
I have no intention whatsoever of commenting on the upcoming elections in any respect.
Jeremy Tonet -- J.P. Morgan -- Analyst
Then I'll leave it there. Thank you.
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Thank you.
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Thank you. Thanks a lot.
Operator
[Operator signoff]
Duration: 49 minutes
Call participants:
Steven Ridge -- Vice President, Investor Relations
Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer
Tom Farrell -- Chairman, President, and Chief Executive Officer
James Thalacker -- BMO Capital Markets -- Analyst
Shar Pourreza -- Guggenheim Partners -- Analyst
Durgesh Chopra -- Evercore ISI -- Analyst
Michael Weinstein -- Credit Suisse -- Analyst
Bob Blue -- Executive Vice President and Co-Chief Operating Officer
Steven Fleishman -- Wolfe Research -- Analyst
Jeremy Tonet -- J.P. Morgan -- Analyst
Diane Leopold -- Executive Vice President and Co-Chief Operating Officer
More D analysis
All earnings call transcripts
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
Motley Fool Transcribing has no position in any of the stocks mentioned. The Motley Fool recommends Dominion Energy, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Yeah. Good morning. Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Thank you.
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Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Yeah. Good morning. Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Thank you.
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Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Yeah. Good morning. Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Thank you.
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Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Yeah. Good morning. Jim Chapman -- Executive Vice President, Chief Financial Officer, and Treasurer Thank you.
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699035.0
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2020-07-31 00:00:00 UTC
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3 Top Renewable Energy Stocks to Buy in August
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https://www.nasdaq.com/articles/3-top-renewable-energy-stocks-to-buy-in-august-2020-07-31
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Renewable energy as an asset class is booming around the world, as wind and solar power plants become more competitive against fossil fuels. But renewable-energy stocks haven't been guaranteed winners because cost pressure has hampered investment returns.
Given the competitive landscape, three of our Foolish contributors scoured the industry for their best renewable-energy stock picks. And Bloom Energy (NYSE: BE), NextEra Energy (NYSE: NEE), and Clean Energy Fuels (NASDAQ: CLNE) made it to the top of the list -- for very different reasons.
Image source: Getty Images.
Upending energy
Travis Hoium (Bloom Energy): If renewable energy is going to be a mainstay on the grid, there needs to be a way to store energy made by solar and wind farms for later use. I'm not talking about a battery that charges during the day and discharges at night. I'm talking about a solar power plant in the Mojave Desert generating extremely low-cost summer electricity that can be stored and used in the Midwest or Northeast in winter months when demand rises and solar production is low. Bloom Energy may have cracked the code on this energy storage.
Bloom Energy recently announced a solid oxide electrolyzer that will convert electricity and water into hydrogen fuel, which is usable in electricity-generating fuel cells. This could make hydrogen a viable fuel for shipping, long-haul trucking, and even grid applications. It's even possible that hydrogen fuel could be pumped around the country using pipelines, much like oil and natural gas is transported around the country.
BE Revenue (TTM) data by YCharts.
Bloom Energy isn't yet profitable, but it has the chance to upend fossil fuel energy as we know it. And that's worth buying a starter position in this disruptive renewable-energy stock.
Not just a utility
Howard Smith (NextEra Energy): NextEra Energy is a Florida-based company that owns Florida Power & Light, the largest regulated electric utility in the U.S. by retail megawatt-hour sales, as well as Gulf Power, which serves the northwest part of the state. Its other subsidiary is NextEra Energy Resources. This segment, along with its affiliates, is the world's largest generator of wind and solar power, and invests in battery storage.
NextEra estimates it can provide investors an annual total return of 10% to 12% through 2022 with earnings growth and dividends, in large part due to growth in the renewables segment. It estimates growth in the wind and solar market will average about 15% annually through 2022. The additional returns from NextEra Energy Resources have helped create a track record of earnings-per-share (EPS) and market capitalization notably higher than more traditional utilities like Consolidated Edison (NYSE: ED), Duke Energy (NYSE: DUK), and Dominion Energy (NYSE: D):
NEE EPS Diluted (TTM) data by YCharts. TTM = trailing 12 months.
The International Energy Agency (IEA) supports the company's growth estimates for renewables. In its 2020 and 2021 market-outlook update, the organization predicts that additions to global renewable-energy capacity will resume growth to new highs of almost 200 gigawatts (GW) in 2021. That forecast accounts for a pandemic-related dip in 2020, though as of May 2020, the agency still expected capacity-addition growth in the U.S. for 2020.
NextEra believes the U.S. will see about 80 GW of renewable demand through 2022. In its recent second-quarter 2020 earnings report, the company showed it is managing the impacts of the pandemic, maintaining its guidance for the full year. It reported strong results for the period ending June 30, with adjusted EPS growth of over 11% compared to the year-ago period. Adjusted earnings exclude acquisition-related expenses and disposal-related gains, the effects of hedges, and other items not directly related to the core business.
NextEra pays investors a respectable dividend (currently yielding about 2%) and expects that to grow by 12% in 2020. While its share price has rebounded to pre-pandemic levels, the recently announced results should bolster the confidence of investors considering an investment now.
The under-the-radar transportation fuel
Jason Hall (Clean Energy Fuels Corp): Clean Energy Fuels hasn't been a good investment over the past seven or eight years. Management made a leveraged bet that trucking would shift quickly from diesel to natural gas. But the bet backfired during the last oil collapse when growth slowed to a crawl, and the company was left with a balance sheet drowning in expensive debt and limited resources to deal with it.
As a result, investors took a bath as the company issued stock at super-low prices to convert much of the debt. This meant essentially none of the company's growth has added any per-share value.
Instead of focusing on those past mistakes, investors would do well to take a hard look at the company. The biggest past risk -- the balance sheet -- is now a strength, with more cash than debt and a plan to pay off all debt before year end. The company is cash-flow positive and still growing fuel volumes at a steady (and high) rate.
Here's the major reason it's a buy-now stock: For all the press that electric and hydrogen trucks get, renewable natural gas is the leader in zero-emissions fuels for trucking and is likely to remain so for years to come. Clean Energy Fuels is the dominant supplier of renewable natural gas, with some 50 refueling stations. No electric or hydrogen-powered trucks are commercially available yet, and they're likely to cost more than double a natural gas-fueled truck but with similar net emissions profiles.
Instead of chasing the next shiny object, investors would do well to consider this under-the-radar leader that's already dominating the alt-fuel trucking market.
Betting on a renewable-energy future
These are three great ways to bet on the future of renewable energy and its continued growth. And as the fossil fuel industry's financial fortunes decline, we could see a flood of investment in renewable energy, helping everything from electricity-generation assets to renewable fuels.
10 stocks we like better than Clean Energy Fuels
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Clean Energy Fuels wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Howard Smith owns shares of NextEra Energy. Jason Hall owns shares of Clean Energy Fuels. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Dominion Energy, Duke Energy, and NextEra Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Renewable energy as an asset class is booming around the world, as wind and solar power plants become more competitive against fossil fuels. Adjusted earnings exclude acquisition-related expenses and disposal-related gains, the effects of hedges, and other items not directly related to the core business. But the bet backfired during the last oil collapse when growth slowed to a crawl, and the company was left with a balance sheet drowning in expensive debt and limited resources to deal with it.
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And Bloom Energy (NYSE: BE), NextEra Energy (NYSE: NEE), and Clean Energy Fuels (NASDAQ: CLNE) made it to the top of the list -- for very different reasons. The under-the-radar transportation fuel Jason Hall (Clean Energy Fuels Corp): Clean Energy Fuels hasn't been a good investment over the past seven or eight years. The Motley Fool recommends Clean Energy Fuels, Dominion Energy, Duke Energy, and NextEra Energy.
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Upending energy Travis Hoium (Bloom Energy): If renewable energy is going to be a mainstay on the grid, there needs to be a way to store energy made by solar and wind farms for later use. The under-the-radar transportation fuel Jason Hall (Clean Energy Fuels Corp): Clean Energy Fuels hasn't been a good investment over the past seven or eight years. The Motley Fool recommends Clean Energy Fuels, Dominion Energy, Duke Energy, and NextEra Energy.
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The under-the-radar transportation fuel Jason Hall (Clean Energy Fuels Corp): Clean Energy Fuels hasn't been a good investment over the past seven or eight years. Here's the major reason it's a buy-now stock: For all the press that electric and hydrogen trucks get, renewable natural gas is the leader in zero-emissions fuels for trucking and is likely to remain so for years to come. The Motley Fool recommends Clean Energy Fuels, Dominion Energy, Duke Energy, and NextEra Energy.
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699036.0
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2020-07-31 00:00:00 UTC
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Daily Dividend Report: AAPL,HON,VNO,D,UNP
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https://www.nasdaq.com/articles/daily-dividend-report%3A-aaplhonvnodunp-2020-07-31
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Apple's Board of Directors has declared a cash dividend of $0.82 per share of the Company's common stock. The dividend is payable on August 13, 2020 to shareholders of record as of the close of business on August 10, 2020.
The Board of Directors has also approved a four-for-one stock split to make the stock more accessible to a broader base of investors. Each Apple shareholder of record at the close of business on August 24, 2020 will receive three additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on August 31, 2020.
Honeywell International announced today that its Board of Directors has declared a regular quarterly dividend payment of $0.90 per share on the Company's outstanding common stock. The dividend is payable on September 4, 2020, out of surplus to shareowners of record at the close of business on August 14, 2020.
VORNADO REALTY TRUST announced today that in recognition of the uncertain and rapidly changing environment caused by the COVID-19 pandemic, its Board of Trustees has declared a decreased quarterly dividend of $.53 per share, an annual dividend rate of $2.12. The decrease is consistent with Vornado's policy of paying out 100% of taxable income. The dividend will be payable on August 21, 2020 to shareholders of record on August 10, 2020.
The board of directors of Dominion Energy has declared a quarterly dividend of 94 cents per share of common stock. Dividends are payable on Sept. 20, 2020, to shareholders of record at the close of business Sept. 4, 2020. This is the 370th consecutive dividend that Dominion Energy or its predecessor company has paid holders of common stock. The company's last quarterly dividend was declared May 6, 2020.
The Board of Directors of Union Pacific has declared a quarterly dividend of 97 cents per share on the company's common stock, payable September 30, 2020, to shareholders of record August 31, 2020. Union Pacific has paid dividends on its common stock for 121 consecutive years.
VIDEO: Daily Dividend Report: AAPL,HON,VNO,D,UNP
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Honeywell International announced today that its Board of Directors has declared a regular quarterly dividend payment of $0.90 per share on the Company's outstanding common stock. The board of directors of Dominion Energy has declared a quarterly dividend of 94 cents per share of common stock. The Board of Directors of Union Pacific has declared a quarterly dividend of 97 cents per share on the company's common stock, payable September 30, 2020, to shareholders of record August 31, 2020.
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Honeywell International announced today that its Board of Directors has declared a regular quarterly dividend payment of $0.90 per share on the Company's outstanding common stock. The board of directors of Dominion Energy has declared a quarterly dividend of 94 cents per share of common stock. The Board of Directors of Union Pacific has declared a quarterly dividend of 97 cents per share on the company's common stock, payable September 30, 2020, to shareholders of record August 31, 2020.
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Honeywell International announced today that its Board of Directors has declared a regular quarterly dividend payment of $0.90 per share on the Company's outstanding common stock. VORNADO REALTY TRUST announced today that in recognition of the uncertain and rapidly changing environment caused by the COVID-19 pandemic, its Board of Trustees has declared a decreased quarterly dividend of $.53 per share, an annual dividend rate of $2.12. The Board of Directors of Union Pacific has declared a quarterly dividend of 97 cents per share on the company's common stock, payable September 30, 2020, to shareholders of record August 31, 2020.
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Apple's Board of Directors has declared a cash dividend of $0.82 per share of the Company's common stock. The board of directors of Dominion Energy has declared a quarterly dividend of 94 cents per share of common stock. The Board of Directors of Union Pacific has declared a quarterly dividend of 97 cents per share on the company's common stock, payable September 30, 2020, to shareholders of record August 31, 2020.
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699037.0
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2020-07-31 00:00:00 UTC
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Are Energy Stocks Ready for a Comeback?
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https://www.nasdaq.com/articles/are-energy-stocks-ready-for-a-comeback-2020-07-31
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Warren Buffett's recent purchase of Dominion Energy's (NYSE: D) natural gas assets surely managed to stir up some investor interest in the lackluster energy stocks. As always, the legendary investor managed to acquire Dominion assets at an attractive price, thanks to the challenging energy market conditions. But is the deal an indication of attractive valuations of energy stocks in general? And more importantly, is the longer-term outlook for oil and gas indeed positive?
Are energy stocks trading at attractive valuations?
Dominion Energy sold its gas assets at an earnings before interest, taxation, depreciation, and amortization (EBITDA) multiple of around 10 times. That's derived from the company's expected 2020 EBITDA of around $1 billion from the assets and the deal amount of roughly $10 billion. Dominion Energy stated on its recent conference call that it viewed this as an attractive multiple, considering that other publicly traded companies involved in natural gas transmission are currently trading at slightly lower valuations. However, the multiple is, in fact, attractive for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). That's because crushed energy stock prices have resulted in cheaper valuations of most of the oil and gas stocks.
KMI EV to EBITDA (Forward) data by YCharts
Consider the examples of three midstream stocks with strong fundamentals and diversified businesses: Kinder Morgan (NYSE: KMI), Enterprise Products Partners (NYSE: EPD), and ONEOK (NYSE: OKE). These companies are involved in gas transportation in addition to other midstream operations. As the above graph shows, all three stocks are trading at a lower EBITDA multiple compared to that at the start of the year. Indeed, Buffett managed to acquire Dominion's steady cash-generating gas assets at an attractive price. As economic activity and demand for oil and gas products recover, energy stocks should recover too.
The longer-term outlook for oil and gas
Apart from commodity prices, one of the factors that has pressured oil and gas stocks in recent years is the belief that fossil fuels are eventually going to be replaced by renewable sources of energy. While this could be true, it will take time for this transition to happen. According to the U.S. Energy Information Administration's (EIA's) annual energy outlook, U.S. natural gas production through 2050 is expected to increase in most cases. It projects 1.9% per year growth in dry natural gas production from 2020 to 2025.
Image source: Getty images.
The EIA expects that higher exports, mainly to developing economies, will partly drive the increase in gas production. Energy demand from developing economies is expected to continue rising for the next several years. Key factors driving this trend are rising population, higher income levels, and improved life expectancies. Basically, natural gas as a source of energy will stay here for years to come.
Having seen coal replaced as an energy source by cheaper, environment-friendly alternatives, investors' fear of natural gas meeting the same fate are not unfounded. However, this will happen only when the new source is cheaper than gas, in addition to being steady and environment friendly. Though some renewable sources are already cost-effective, they may not always be steady and their effectiveness varies geographically. Overall, a combination of all the different sources of energy will be needed to meet the rising global energy demand. Fossil fuels will continue to be a key energy source for the next several years.
Additionally, areas such as heavy-duty transportation, industrial manufacturing, plastics, and aviation provide oil and gas with avenues of growth not yet penetrated by renewable sources.
Three stocks offering attractive yields
Beaten-down valuations combined with positive long-term outlook make energy stocks enticing currently. Kinder Morgan, Enterprise Products Partners, and ONEOK are all trading at alluring yields. Despite headwinds, the three companies kept their second-quarter dividends unchanged over the first quarter.
KMI Dividend Yield data by YCharts
As expected, Kinder Morgan's Q2 earnings were negatively impacted by coronavirus. It has also lowered its adjusted EBITDA guidance for 2020 by around 8%. However, despite that, the company is optimistic about being able to raise dividends in the first quarter of 2021. If the demand for oil and gas products continues to recover, this looks achievable.
ONEOK raised funds, both debt and equity, to help it manage during the challenging coronavirus period. It has already completed a major portion of its 2020 planned capital expenditure, which makes its earnings available for dividend payments.
With a debt-to-EBITDA ratio of around 3.6 times, Enterprise Products Partners is the most conservatively managed of the three stocks. The master limited partnership's diversified operations and fee-based earnings make it an attractive pick for income investors.
10 stocks we like better than Enterprise Products Partners
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Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Kinder Morgan. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and ONEOK and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dominion Energy sold its gas assets at an earnings before interest, taxation, depreciation, and amortization (EBITDA) multiple of around 10 times. Having seen coal replaced as an energy source by cheaper, environment-friendly alternatives, investors' fear of natural gas meeting the same fate are not unfounded. Additionally, areas such as heavy-duty transportation, industrial manufacturing, plastics, and aviation provide oil and gas with avenues of growth not yet penetrated by renewable sources.
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KMI EV to EBITDA (Forward) data by YCharts Consider the examples of three midstream stocks with strong fundamentals and diversified businesses: Kinder Morgan (NYSE: KMI), Enterprise Products Partners (NYSE: EPD), and ONEOK (NYSE: OKE). KMI Dividend Yield data by YCharts As expected, Kinder Morgan's Q2 earnings were negatively impacted by coronavirus. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and ONEOK and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Warren Buffett's recent purchase of Dominion Energy's (NYSE: D) natural gas assets surely managed to stir up some investor interest in the lackluster energy stocks. The longer-term outlook for oil and gas Apart from commodity prices, one of the factors that has pressured oil and gas stocks in recent years is the belief that fossil fuels are eventually going to be replaced by renewable sources of energy. The Motley Fool recommends Dominion Energy, Inc, Enterprise Products Partners, and ONEOK and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Are energy stocks trading at attractive valuations? That's because crushed energy stock prices have resulted in cheaper valuations of most of the oil and gas stocks. Kinder Morgan, Enterprise Products Partners, and ONEOK are all trading at alluring yields.
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699038.0
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2020-07-31 00:00:00 UTC
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Dominion Energy Promotes Co-COO Robert Blue To President And CEO - Quick Facts
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https://www.nasdaq.com/articles/dominion-energy-promotes-co-coo-robert-blue-to-president-and-ceo-quick-facts-2020-07-31
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(RTTNews) - Dominion Energy (D) announced Friday that Thomas Farrell, II, chairman, president and chief executive officer, will become the company's executive chair, effective Oct. 1, 2020. In that role, Farrell will continue to serve as chair of the Board of Directors.
The company also promoted Robert Blue, executive vice president and co-chief operating officer, president and chief executive officer, effective the same date. Blue will report to Farrell.
Diane Leopold, executive vice president and co-chief operating officer, will be promoted to Dominion Energy's sole chief operating officer, responsible for all the company's operating segments, reporting to Blue. Edward Baine will be promoted to president-Dominion Energy Virginia. He will report to Leopold.
Farrell joined Dominion Energy in 1995, was promoted to president and CEO in 2006 and added the role of chairman in 2007.
Blue joined Dominion Energy in 2005 and has held a succession of services and operational executive roles since his promotion to officer in 2007. Prior to joining Dominion Energy, Blue served as counselor to the Governor and director of policy for Virginia Governor Mark Warner, as an attorney and partner at then-Hogan & Hartson.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Farrell joined Dominion Energy in 1995, was promoted to president and CEO in 2006 and added the role of chairman in 2007. Blue joined Dominion Energy in 2005 and has held a succession of services and operational executive roles since his promotion to officer in 2007. Prior to joining Dominion Energy, Blue served as counselor to the Governor and director of policy for Virginia Governor Mark Warner, as an attorney and partner at then-Hogan & Hartson.
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(RTTNews) - Dominion Energy (D) announced Friday that Thomas Farrell, II, chairman, president and chief executive officer, will become the company's executive chair, effective Oct. 1, 2020. The company also promoted Robert Blue, executive vice president and co-chief operating officer, president and chief executive officer, effective the same date. Diane Leopold, executive vice president and co-chief operating officer, will be promoted to Dominion Energy's sole chief operating officer, responsible for all the company's operating segments, reporting to Blue.
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(RTTNews) - Dominion Energy (D) announced Friday that Thomas Farrell, II, chairman, president and chief executive officer, will become the company's executive chair, effective Oct. 1, 2020. The company also promoted Robert Blue, executive vice president and co-chief operating officer, president and chief executive officer, effective the same date. Diane Leopold, executive vice president and co-chief operating officer, will be promoted to Dominion Energy's sole chief operating officer, responsible for all the company's operating segments, reporting to Blue.
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(RTTNews) - Dominion Energy (D) announced Friday that Thomas Farrell, II, chairman, president and chief executive officer, will become the company's executive chair, effective Oct. 1, 2020. In that role, Farrell will continue to serve as chair of the Board of Directors. Diane Leopold, executive vice president and co-chief operating officer, will be promoted to Dominion Energy's sole chief operating officer, responsible for all the company's operating segments, reporting to Blue.
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699039.0
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2020-07-31 00:00:00 UTC
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Dominion Energy Affirms FY20 Operating Earnings Outlook - Quick Facts
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https://www.nasdaq.com/articles/dominion-energy-affirms-fy20-operating-earnings-outlook-quick-facts-2020-07-31
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(RTTNews) - While reporting financial results for the second quarter on Friday, Dominion Energy, Inc. (D) affirmed its operating earnings guidance for the full-year 2020, and provided operating earnings outlook for the third quarter.
For fiscal 2020, the company continues to project operating earnings in a range of $3.37 to $3.63 per share. On average, analysts polled by Thomson Reuters expected the company to report earnings of $3.54 per share for the year. Analysts' estimates typically exclude special items.
Dominion Energy also expects third quarter operating earnings in the range of $0.85 to $1.05 per share, while the Street is looking for earnings of $0.98 per share for the quarter.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - While reporting financial results for the second quarter on Friday, Dominion Energy, Inc. (D) affirmed its operating earnings guidance for the full-year 2020, and provided operating earnings outlook for the third quarter. On average, analysts polled by Thomson Reuters expected the company to report earnings of $3.54 per share for the year. Analysts' estimates typically exclude special items.
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(RTTNews) - While reporting financial results for the second quarter on Friday, Dominion Energy, Inc. (D) affirmed its operating earnings guidance for the full-year 2020, and provided operating earnings outlook for the third quarter. On average, analysts polled by Thomson Reuters expected the company to report earnings of $3.54 per share for the year. Dominion Energy also expects third quarter operating earnings in the range of $0.85 to $1.05 per share, while the Street is looking for earnings of $0.98 per share for the quarter.
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(RTTNews) - While reporting financial results for the second quarter on Friday, Dominion Energy, Inc. (D) affirmed its operating earnings guidance for the full-year 2020, and provided operating earnings outlook for the third quarter. Dominion Energy also expects third quarter operating earnings in the range of $0.85 to $1.05 per share, while the Street is looking for earnings of $0.98 per share for the quarter. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Analysts' estimates typically exclude special items. Dominion Energy also expects third quarter operating earnings in the range of $0.85 to $1.05 per share, while the Street is looking for earnings of $0.98 per share for the quarter. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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699040.0
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2020-07-31 00:00:00 UTC
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Dominion Energy Q2 20 Earnings Conference Call At 10:00 AM ET
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https://www.nasdaq.com/articles/dominion-energy-q2-20-earnings-conference-call-at-10%3A00-am-et-2020-07-31
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(RTTNews) - Dominion Energy, Inc. (D) will host a conference call at 10:00 AM ET on July 31, 2020, to discuss Q2 20 earnings results.
To access the live webcast, log on to http://investors.dominionenergy.com
To listen to the call, dial 1-800-341-6228 (US) or 1-334-777-6993 (International), Passcode 69931782#.
For a replay call, dial 1-877-919-4059 (US) or 1-334-323-0140 (International), PIN 10013356.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Dominion Energy, Inc. (D) will host a conference call at 10:00 AM ET on July 31, 2020, to discuss Q2 20 earnings results. To access the live webcast, log on to http://investors.dominionenergy.com To listen to the call, dial 1-800-341-6228 (US) or 1-334-777-6993 (International), Passcode 69931782#. For a replay call, dial 1-877-919-4059 (US) or 1-334-323-0140 (International), PIN 10013356.
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To access the live webcast, log on to http://investors.dominionenergy.com To listen to the call, dial 1-800-341-6228 (US) or 1-334-777-6993 (International), Passcode 69931782#. For a replay call, dial 1-877-919-4059 (US) or 1-334-323-0140 (International), PIN 10013356. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Dominion Energy, Inc. (D) will host a conference call at 10:00 AM ET on July 31, 2020, to discuss Q2 20 earnings results. To access the live webcast, log on to http://investors.dominionenergy.com To listen to the call, dial 1-800-341-6228 (US) or 1-334-777-6993 (International), Passcode 69931782#. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Dominion Energy, Inc. (D) will host a conference call at 10:00 AM ET on July 31, 2020, to discuss Q2 20 earnings results. To access the live webcast, log on to http://investors.dominionenergy.com To listen to the call, dial 1-800-341-6228 (US) or 1-334-777-6993 (International), Passcode 69931782#. For a replay call, dial 1-877-919-4059 (US) or 1-334-323-0140 (International), PIN 10013356.
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699041.0
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2020-07-30 00:00:00 UTC
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Pre-Market Earnings Report for July 31, 2020 : MRK, XOM, CVX, ABBV, CHTR, CAT, D, CL, ITW, AON, LHX, IDXX
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https://www.nasdaq.com/articles/pre-market-earnings-report-for-july-31-2020-%3A-mrk-xom-cvx-abbv-chtr-cat-d-cl-itw-aon-lhx
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The following companies are expected to report earnings prior to market open on 07/31/2020. Visit our Earnings Calendar for a full list of expected earnings releases.
Merck & Company, Inc. (MRK) is reporting for the quarter ending June 30, 2020. The large cap pharmaceutical company's consensus earnings per share forecast from the 4 analysts that follow the stock is $1.14. This value represents a 12.31% decrease compared to the same quarter last year. In the past year MRK has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 7.91%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for MRK is 14.92 vs. an industry ratio of 16.40.
Exxon Mobil Corporation (XOM) is reporting for the quarter ending June 30, 2020. The oil company's consensus earnings per share forecast from the 8 analysts that follow the stock is $-0.63. This value represents a 186.30% decrease compared to the same quarter last year. XOM missed the consensus earnings per share in the 4th calendar quarter of 2019 by -6.82%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for XOM is -115.87 vs. an industry ratio of 1.30.
Chevron Corporation (CVX) is reporting for the quarter ending June 30, 2020. The oil company's consensus earnings per share forecast from the 7 analysts that follow the stock is $-0.93. This value represents a 140.97% decrease compared to the same quarter last year. In the past year CVX has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 101.56%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for CVX is 112.59 vs. an industry ratio of 1.30, implying that they will have a higher earnings growth than their competitors in the same industry.
AbbVie Inc. (ABBV) is reporting for the quarter ending June 30, 2020. The large cap pharmaceutical company's consensus earnings per share forecast from the 5 analysts that follow the stock is $2.24. This value represents a 0.88% decrease compared to the same quarter last year. In the past year ABBV has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 6.61%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for ABBV is 9.28 vs. an industry ratio of 16.40.
Charter Communications, Inc. (CHTR) is reporting for the quarter ending June 30, 2020. The cable tv company's consensus earnings per share forecast from the 14 analysts that follow the stock is $2.53. This value represents a 82.01% increase compared to the same quarter last year. The "days to cover" for this stock exceeds 11 days. Zacks Investment Research reports that the 2020 Price to Earnings ratio for CHTR is 50.39 vs. an industry ratio of 23.30, implying that they will have a higher earnings growth than their competitors in the same industry.
Caterpillar, Inc. (CAT) is reporting for the quarter ending June 30, 2020. The machinery company's consensus earnings per share forecast from the 9 analysts that follow the stock is $0.66. This value represents a 76.68% decrease compared to the same quarter last year. Zacks Investment Research reports that the 2020 Price to Earnings ratio for CAT is 27.08 vs. an industry ratio of 23.10, implying that they will have a higher earnings growth than their competitors in the same industry.
Dominion Energy, Inc. (D) is reporting for the quarter ending June 30, 2020. The electric power utilities company's consensus earnings per share forecast from the 5 analysts that follow the stock is $0.77. This value represents a no change for the same quarter last year. D missed the consensus earnings per share in the 1st calendar quarter of 2020 by -0.91%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for D is 22.66 vs. an industry ratio of 18.20, implying that they will have a higher earnings growth than their competitors in the same industry.
Colgate-Palmolive Company (CL) is reporting for the quarter ending June 30, 2020. The cleaning company's consensus earnings per share forecast from the 7 analysts that follow the stock is $0.71. This value represents a 1.39% decrease compared to the same quarter last year. CL missed the consensus earnings per share in the 2nd calendar quarter of 2019 by -1.37%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for CL is 26.28 vs. an industry ratio of 26.00, implying that they will have a higher earnings growth than their competitors in the same industry.
Illinois Tool Works Inc. (ITW) is reporting for the quarter ending June 30, 2020. The machinery company's consensus earnings per share forecast from the 8 analysts that follow the stock is $0.72. This value represents a 64.00% decrease compared to the same quarter last year. In the past year ITW has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 3.51%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for ITW is 35.58 vs. an industry ratio of 68.30.
Aon plc (AON) is reporting for the quarter ending June 30, 2020. The insurance brokers company's consensus earnings per share forecast from the 7 analysts that follow the stock is $1.92. This value represents a 2.67% increase compared to the same quarter last year. Zacks Investment Research reports that the 2020 Price to Earnings ratio for AON is 21.09 vs. an industry ratio of 25.40.
L3Harris Technologies, Inc. (LHX) is reporting for the quarter ending June 30, 2020. The aerospace and defense company's consensus earnings per share forecast from the 7 analysts that follow the stock is $2.62. This value represents a 7.38% increase compared to the same quarter last year. In the past year LHX has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 7.28%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for LHX is 15.34 vs. an industry ratio of 8.10, implying that they will have a higher earnings growth than their competitors in the same industry.
IDEXX Laboratories, Inc. (IDXX) is reporting for the quarter ending June 30, 2020. The medical instruments company's consensus earnings per share forecast from the 4 analysts that follow the stock is $1.19. This value represents a 16.78% decrease compared to the same quarter last year. In the past year IDXX has beat the expectations every quarter. The highest one was in the 1st calendar quarter where they beat the consensus by 4.88%. Zacks Investment Research reports that the 2020 Price to Earnings ratio for IDXX is 73.68 vs. an industry ratio of -26.10, implying that they will have a higher earnings growth than their competitors in the same industry.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The following companies are expected to report earnings prior to market open on 07/31/2020. Visit our Earnings Calendar for a full list of expected earnings releases. Merck & Company, Inc. (MRK) is reporting for the quarter ending June 30, 2020.
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Zacks Investment Research reports that the 2020 Price to Earnings ratio for CVX is 112.59 vs. an industry ratio of 1.30, implying that they will have a higher earnings growth than their competitors in the same industry. The following companies are expected to report earnings prior to market open on 07/31/2020. Visit our Earnings Calendar for a full list of expected earnings releases.
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Zacks Investment Research reports that the 2020 Price to Earnings ratio for CVX is 112.59 vs. an industry ratio of 1.30, implying that they will have a higher earnings growth than their competitors in the same industry. Zacks Investment Research reports that the 2020 Price to Earnings ratio for LHX is 15.34 vs. an industry ratio of 8.10, implying that they will have a higher earnings growth than their competitors in the same industry. Zacks Investment Research reports that the 2020 Price to Earnings ratio for IDXX is 73.68 vs. an industry ratio of -26.10, implying that they will have a higher earnings growth than their competitors in the same industry.
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The following companies are expected to report earnings prior to market open on 07/31/2020. Visit our Earnings Calendar for a full list of expected earnings releases. Merck & Company, Inc. (MRK) is reporting for the quarter ending June 30, 2020.
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699042.0
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2020-07-30 00:00:00 UTC
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3 Natural Gas Stocks Worth Your Time Today
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https://www.nasdaq.com/articles/3-natural-gas-stocks-worth-your-time-today-2020-07-30
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The U.S. has been using natural gas for two centuries, making natural gas stocks a source of profits for a long time.
Prices of energy commodities like natural gas are important for consumers and investors alike. Earlier in the year, natural gas prices in the U.S. dropped to 25-year lows. As a result, in early spring, shares in many players in the sector hit 52-week lows.
Most natural gas stocks have staged a remarkable comeback in price since then, there may still be further upside left for long-term investors. At present, the price of natural gas is around $1.8 per MMBtu.
10 Gaming Stocks That Will Power Through the New Normal
The American Public Gas Association says that natural gas supplies more than half of the energy consumed by residential and commercial customers, and more than 40% of the energy used by industry. The commodity is essential in our daily lives.
In July, legendary investor Warren Buffett took a bet on natural gas. Dominion Energy (NYSE:D) sold its natural gas assets to Buffett’s Berkshire Hathaway (NYSE:BRK.A,NYSE:BRK.B). The deal was valued close to $10 billion.
With all that in mind, here are three natural gas stocks that are worth your time today:
Apache Corporation (NASDAQ:APA)
Kinder Morgan (NYSE:KMI)
Magellan Midstream Partners (NYSE:MMP)
Natural Gas Stocks: Apache Corporation (APA)
Source: Shutterstock
52-week range: $3.80-$33.77
Dividend yield: 0.7%
Houston-based Apache’s history goes back to the 1950s. In 1955, its first wells were drilled in the Cushing Field in Oklahoma. Its shares were listed on the New York Stock Exchange in 1969. Today, it is a major exploration & production (E&P) group, boasting geographically diversified reserves with established operations in the U.S., U.K., and Egypt.
In January, Apache and its partner Total S.A. (NYSE:TOT) announced a significant oil discovery offshore Suriname. Apache is also No. 411 on the Fortune 500 list.
Earlier in the year, management reduced its dividend and put debt reduction high on the agenda. First-quarter earnings released in May included revenues of $1.28 billion, which were down 22% from a year ago. The company posted a loss of $51 million, or 13 cents per share, on an adjusted basis. Management did not provide production guidance for the second quarter.
CEO John Christmann highlighted the effect of the pandemic on the company.
“We have taken several decisive actions … including reducing our planned 2020 capital program, reducing our dividend, initiating a hedge position to protect from further near-term downside oil price exposure and increasing the cost-saving measures of the organizational redesign that we began last year.”
These steps are likely to help the company conserve cash flows in Q2.
Year-to-date, APA stock is down around 45%. I’d look to buy the dips.
Kinder Morgan (KMI)
Source: JHVEPhoto/Shutterstock.com
52-week range: $9.42-$22.58
Dividend yield: 7%
Midstream industry giant Kinder Morgan owns and operates gas pipelines and terminals. So, the company moves gas from the shale basins where it’s produced to cities, neighborhoods, businesses where it’s consumed. Midstream operators typically charge gas producers a fee based on the amount of gas that goes through the pipeline.
On July 22, the company released Q2 earnings that included adjusted earnings per share of 17 cents, 5 cents below from the year-ago quarter’s 22 cents. Lower contributions from the Tennessee gas pipeline was part of the decline in revenue.
The company has a relatively strong balance sheet and asset base. Investors may see potential acquisitions form management in the coming quarters, especially if energy prices stay depressed.
7 Cybersecurity Stocks Hard At Work While We Work From Home
Since the release of second-quarter results, KMI stock fell from about $15 to $14. Year to date, the shares are down around 33%. In case of further falls in the coming weeks, investors may consider buying into the company as a long-term play on natural gas.
Magellan Midstream Partners (MMP)
Source: Shutterstock
52-week range: $22.02-$67.76
Distribution yield: 9.8%
Magellan Midstream Partners is one of the largest operators of refined product pipelines in the U.S. It concentrates on the storage, transportation and distribution of petroleum products and ammonia.
The company can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. MMP’s large network of crude oil pipelines provide a steady source of cash flow.
In early May, it reported first-quarter results. Net income was $287.6 million, compared to $207.7 million for first quarter 2019. The increase was primarily due to mark-to-market (MTM) adjustments for hedge positions in commodity-related activities. Diluted net income per common unit was $1.26, compared to 91 cents in first quarter 2019. Lower operating expenses, higher gas liquids blending margins contributed to the positive results.
The company declares distributions and not dividends because it is a master limited partnership (MLP). MLPs get tax-advantaged status for paying out almost all of their operating cash flow as distributions to its unitholders (i.e., shareholders). The yield currently stands at 9.8%.
The group will announce second-quarter 2020 financial results on July 30. So far in the year, MMP stock is down over 33%. Long-term investors may consider buying into the share price, especially if there is a decline toward the $62.50 level in the coming weeks.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, including a Ph.D. degree, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan did not hold a position in any of the aforementioned securities.
The post 3 Natural Gas Stocks Worth Your Time Today appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Today, it is a major exploration & production (E&P) group, boasting geographically diversified reserves with established operations in the U.S., U.K., and Egypt. In January, Apache and its partner Total S.A. (NYSE:TOT) announced a significant oil discovery offshore Suriname. In addition to formal higher education in the field, including a Ph.D. degree, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination.
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With all that in mind, here are three natural gas stocks that are worth your time today: Apache Corporation (NASDAQ:APA) Kinder Morgan (NYSE:KMI) Magellan Midstream Partners (NYSE:MMP) Natural Gas Stocks: Apache Corporation (APA) Source: Shutterstock 52-week range: $3.80-$33.77 Dividend yield: 0.7% Houston-based Apache’s history goes back to the 1950s. Kinder Morgan (KMI) Source: JHVEPhoto/Shutterstock.com 52-week range: $9.42-$22.58 Dividend yield: 7% Midstream industry giant Kinder Morgan owns and operates gas pipelines and terminals. Magellan Midstream Partners (MMP) Source: Shutterstock 52-week range: $22.02-$67.76 Distribution yield: 9.8% Magellan Midstream Partners is one of the largest operators of refined product pipelines in the U.S.
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips The U.S. has been using natural gas for two centuries, making natural gas stocks a source of profits for a long time. 10 Gaming Stocks That Will Power Through the New Normal The American Public Gas Association says that natural gas supplies more than half of the energy consumed by residential and commercial customers, and more than 40% of the energy used by industry. With all that in mind, here are three natural gas stocks that are worth your time today: Apache Corporation (NASDAQ:APA) Kinder Morgan (NYSE:KMI) Magellan Midstream Partners (NYSE:MMP) Natural Gas Stocks: Apache Corporation (APA) Source: Shutterstock 52-week range: $3.80-$33.77 Dividend yield: 0.7% Houston-based Apache’s history goes back to the 1950s.
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Prices of energy commodities like natural gas are important for consumers and investors alike. With all that in mind, here are three natural gas stocks that are worth your time today: Apache Corporation (NASDAQ:APA) Kinder Morgan (NYSE:KMI) Magellan Midstream Partners (NYSE:MMP) Natural Gas Stocks: Apache Corporation (APA) Source: Shutterstock 52-week range: $3.80-$33.77 Dividend yield: 0.7% Houston-based Apache’s history goes back to the 1950s. So far in the year, MMP stock is down over 33%.
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699043.0
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2020-07-28 00:00:00 UTC
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Warren Buffett Invests Almost $400 Million More in Bank of America
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The Oracle of Omaha is bullish on Bank of America (NYSE: BAC). That much is clear.
Days after revealing that he had invested another $813 million in one of the country's largest banks, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) wheeled around and invested almost $400 million more in it.
Buffett bought that earlier Bank of America stake between July 20 and July 22 at share prices ranging from $23.50 to $24.20. He added the next batch between July 23 and July 27 at share prices ranging from roughly $24.10 to roughly $24.30.
Image Source: Getty
Those recent buys bring Berkshire Hathaway's total ownership stake in Bank of America to about $24.2 billion and more than 998 million shares -- roughly 11.4% of its shares outstanding.
Many market observers have wondered if Buffett was being too conservative in the wake of the sharp decrease in equities that occurred this spring as a result of the coronavirus pandemic -- especially given that Berkshire Hathaway had in prior years built up a cash hoard of $128 billion.
Berkshire began to deploy some of that capital earlier this month when it purchased the natural gas assets of Dominion Energy (NYSE: D) for $9.7 billion.
Bank of America delivered its second-quarter earnings results on July 16, reporting a profit of roughly $3.5 billion. That was down from $4 billion in the first quarter of the year, and well off the $7.3 billion it earned in Q2 2019, declines largely driven by its moves to bolster its loan-loss provisioning in light of the U.S. recession.
Buffett and Berkshire have taken a somewhat mixed approach to bank stocks this year. The conglomerate decreased its position in Wells Fargo (NYSE: WFC), and dumped most of its stake in Goldman Sachs (NYSE: GS), but increased its stake in PNC Financial Services Group (NYSE: PNC) and now Bank of America.
10 stocks we like better than Berkshire Hathaway (A shares)
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool recommends Dominion Energy, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Many market observers have wondered if Buffett was being too conservative in the wake of the sharp decrease in equities that occurred this spring as a result of the coronavirus pandemic -- especially given that Berkshire Hathaway had in prior years built up a cash hoard of $128 billion. Berkshire began to deploy some of that capital earlier this month when it purchased the natural gas assets of Dominion Energy (NYSE: D) for $9.7 billion. Bank of America delivered its second-quarter earnings results on July 16, reporting a profit of roughly $3.5 billion.
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Buffett bought that earlier Bank of America stake between July 20 and July 22 at share prices ranging from $23.50 to $24.20. He added the next batch between July 23 and July 27 at share prices ranging from roughly $24.10 to roughly $24.30. Image Source: Getty Those recent buys bring Berkshire Hathaway's total ownership stake in Bank of America to about $24.2 billion and more than 998 million shares -- roughly 11.4% of its shares outstanding.
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Image Source: Getty Those recent buys bring Berkshire Hathaway's total ownership stake in Bank of America to about $24.2 billion and more than 998 million shares -- roughly 11.4% of its shares outstanding. The conglomerate decreased its position in Wells Fargo (NYSE: WFC), and dumped most of its stake in Goldman Sachs (NYSE: GS), but increased its stake in PNC Financial Services Group (NYSE: PNC) and now Bank of America. 10 stocks we like better than Berkshire Hathaway (A shares) When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.
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Image Source: Getty Those recent buys bring Berkshire Hathaway's total ownership stake in Bank of America to about $24.2 billion and more than 998 million shares -- roughly 11.4% of its shares outstanding. Buffett and Berkshire have taken a somewhat mixed approach to bank stocks this year. The Motley Fool recommends Dominion Energy, Inc.
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699044.0
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2020-07-28 00:00:00 UTC
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Good News: Buffett Has Deployed Over $10 Billion in 3 Weeks
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https://www.nasdaq.com/articles/good-news%3A-buffett-has-deployed-over-%2410-billion-in-3-weeks-2020-07-28
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For the past couple of years, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has taken heat for his company's underperformance relative to the benchmark S&P 500. But the fact remains that Buffett is one of the best investors of all time, if you look beyond just his recent performance.
According to Berkshire Hathaway's 2019 shareholder letter, Buffett has led his company to an average annual return of 20.3% over the past 55 years. That compares to a 10% compound annual return for the S&P 500, inclusive of dividends, over the same time frame. This 10.3% annual gap might not seem like much nominally, but it's led to Berkshire Hathaway's stock outperforming the benchmark index by more than 2,700,000% since 1965.
Suffice it to say that when Warren Buffett buys or sells a stock, Wall Street and retail investors tend to play very close attention. That's what makes the past three weeks so exciting.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Buffett just went on a $10.5 billion buying spree
Between July 5 and July 22, Warren Buffett and his team deployed over $10 billion of the company's capital.
During the first week of July, Berkshire Hathaway announced that it would be acquiring an assortment of natural gas transmission pipelines and storage assets from Dominion Energy (NYSE: D) for $9.7 billion. This effectively includes paying $4 billion for the assets and assuming $5.7 billion in debt from Dominion tied to these assets.
For Dominion, the disposition of these transmission and storage assets will allow it to focus almost exclusively on its utility operations. The roughly $3 billion in cash received from Berkshire Hathaway, after taxes, will be used repurchase shares of the company's common stock, which may have a positive impact on earnings per share and perceived attractiveness by investors.
As for Berkshire Hathaway, it more than doubled its share of interstate natural gas transmission in the U.S. from 8% to 18% and landed itself a cash cow in the process. It also doesn't hurt that Berkshire nabbed a 25% stake in liquid natural gas (LNG) export, import and storage facility in Cove Point, Maryland. This is one of only six LNG import/export points in the U.S.
Image source: Getty Images.
But that's not all.
This past week, a Securities and Exchange Commission filing shows that Buffett's company acquired just over 33.9 million additional shares of Bank of America (NYSE: BAC) between July 20 and July 22. The cost of these purchases comes to $813.3 million, and it upped Berkshire's ownership in BofA to almost 982 million shares (11.3% of all outstanding shares). BofA is Berkshire's second-largest holding behind Apple, in terms of market value.
It's no secret that the Oracle of Omaha loves bank stocks, and Bank of America certainly looks to be his favorite. It's possibly the most interest-sensitive of the big banks, which sets BofA up to be a big-time beneficiary once the Federal Reserve begins raising rates in 2023.
Furthermore, Bank of America has done an incredible job of controlling its noninterest expenses in the past half-decade. By emphasizing its digital banking and mobile apps, BofA has seen a steady uptick in retail banking transactions completed online, which has allowed it to close some of its physical branches and reduce its expenditures.
Image source: Getty Images.
The bad news: It took Buffett 4.5 years before he finally pulled the trigger
While it's great news to see Buffett deploying his company's war chest, it's equally disturbing to point out that it took the Oracle of Omaha approximately 4.5 years to put some of Berkshire's capital to work.
Following the acquisition of Precision Castparts in January 2016, Berkshire Hathaway took until July 5, 2020 to announce another decent-sized acquisition. By sitting idle, Buffett's company has seen its cash hoard grow to $137 billion, as of the end of March 2020. Though having cash isn't inherently bad, it isn't good news for a conglomerate like Berkshire Hathaway, which has historically made a living by investing its capital and acquiring attractive businesses.
Even after deploying $10.5 billion over the past three weeks, there's still no guarantee that Berkshire Hathaway's cash pile will have shrunk. Buffett noted during the company's virtual annual shareholder meeting in early May that it had disposed of more than $6 billion worth of stock in April, and may have sold additional positions since then. Coupled with the cash flow generated from the company's roughly five dozen owned businesses, Berkshire could still have close to $137 billion in cash and marketable securities when the dust settles.
Buffett's unwillingness to pull the trigger on a larger deal or get more aggressive on the investment front looks to be a silent warning to Wall Street and investors. Buffett may not believe in market timing, and he certainly wouldn't bet against the American economy over the long run. But his inaction over the past four-plus years plainly suggests that he doesn't view equities as attractively valued.
Image source: Getty Images.
It also doesn't help that Buffett has a very limited scope of research to work with. To be clear, what Buffett does, he does exceptionally well. But his focus has always been on the financial sector and consumer staples. With technology and biotech outperforming in recent years, and Buffett having little to no expertise in these areas, he's been left to remain idle on the sidelines.
Perhaps the only true value that Buffett sees right now is his own company. Over a seven-quarter stretch, beginning at the midpoint of 2018, Buffett and his team repurchased in excess of $7 billion worth of Berkshire Hathaway stock. As long as Buffett and right-hand man Charlie Munger view Berkshire as trading at a sizable discount to its intrinsic value (with this being a somewhat arbitrary term), perhaps the only guarantee is that Buffett will continue to spend to repurchase his own company's stock.
That's decent news for Berkshire Hathaway shareholders, but not a very warm outlook for U.S. equities.
10 stocks we like better than Berkshire Hathaway (B shares)
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*Stock Advisor returns as of June 2, 2020
Sean Williams owns shares of Bank of America. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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During the first week of July, Berkshire Hathaway announced that it would be acquiring an assortment of natural gas transmission pipelines and storage assets from Dominion Energy (NYSE: D) for $9.7 billion. It also doesn't hurt that Berkshire nabbed a 25% stake in liquid natural gas (LNG) export, import and storage facility in Cove Point, Maryland. Buffett noted during the company's virtual annual shareholder meeting in early May that it had disposed of more than $6 billion worth of stock in April, and may have sold additional positions since then.
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For the past couple of years, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has taken heat for his company's underperformance relative to the benchmark S&P 500. This past week, a Securities and Exchange Commission filing shows that Buffett's company acquired just over 33.9 million additional shares of Bank of America (NYSE: BAC) between July 20 and July 22. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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The roughly $3 billion in cash received from Berkshire Hathaway, after taxes, will be used repurchase shares of the company's common stock, which may have a positive impact on earnings per share and perceived attractiveness by investors. The bad news: It took Buffett 4.5 years before he finally pulled the trigger While it's great news to see Buffett deploying his company's war chest, it's equally disturbing to point out that it took the Oracle of Omaha approximately 4.5 years to put some of Berkshire's capital to work. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Buffett just went on a $10.5 billion buying spree Between July 5 and July 22, Warren Buffett and his team deployed over $10 billion of the company's capital. The bad news: It took Buffett 4.5 years before he finally pulled the trigger While it's great news to see Buffett deploying his company's war chest, it's equally disturbing to point out that it took the Oracle of Omaha approximately 4.5 years to put some of Berkshire's capital to work. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares).
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699045.0
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2020-07-27 00:00:00 UTC
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XLU, PSCD: Big ETF Outflows
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the The Utilities Select Sector SPDR Fund, where 11,900,000 units were destroyed, or a 5.9% decrease week over week. Among the largest underlying components of XLU, in morning trading today Nextera Energy is off about 0.9%, and Dominion Energy is lower by about 0.5%.
And on a percentage change basis, the ETF with the biggest outflow was the Invesco S&P SmallCap Consumer Discretionary ETF, which lost 150,000 of its units, representing a 33.3% decline in outstanding units compared to the week prior. Among the largest underlying components of PSCD, in morning trading today Wingstop is off about 0.8%, and Lithia Motors is lower by about 3%.
VIDEO: XLU, PSCD: Big ETF Outflows
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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And on a percentage change basis, the ETF with the biggest outflow was the Invesco S&P SmallCap Consumer Discretionary ETF, which lost 150,000 of its units, representing a 33.3% decline in outstanding units compared to the week prior. Among the largest underlying components of PSCD, in morning trading today Wingstop is off about 0.8%, and Lithia Motors is lower by about 3%. VIDEO: XLU, PSCD: Big ETF Outflows The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Among the largest underlying components of XLU, in morning trading today Nextera Energy is off about 0.9%, and Dominion Energy is lower by about 0.5%. Among the largest underlying components of PSCD, in morning trading today Wingstop is off about 0.8%, and Lithia Motors is lower by about 3%. VIDEO: XLU, PSCD: Big ETF Outflows The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the The Utilities Select Sector SPDR Fund, where 11,900,000 units were destroyed, or a 5.9% decrease week over week. Among the largest underlying components of XLU, in morning trading today Nextera Energy is off about 0.9%, and Dominion Energy is lower by about 0.5%. And on a percentage change basis, the ETF with the biggest outflow was the Invesco S&P SmallCap Consumer Discretionary ETF, which lost 150,000 of its units, representing a 33.3% decline in outstanding units compared to the week prior.
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the The Utilities Select Sector SPDR Fund, where 11,900,000 units were destroyed, or a 5.9% decrease week over week. Among the largest underlying components of XLU, in morning trading today Nextera Energy is off about 0.9%, and Dominion Energy is lower by about 0.5%. And on a percentage change basis, the ETF with the biggest outflow was the Invesco S&P SmallCap Consumer Discretionary ETF, which lost 150,000 of its units, representing a 33.3% decline in outstanding units compared to the week prior.
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699046.0
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2020-07-26 00:00:00 UTC
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Worried About Another Crash? NextEra Energy is a Stock to Consider
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As long-term investors, we want to be in the market through the ups and downs, but that can be difficult emotionally. So it makes sense to own stocks that will help you not to panic when market turbulence hits, as it did this past spring when the Dow Jones Industrial Average experienced routine daily swings of 5% or more in both directions.
One way to avoid that uneasy feeling is to be invested in equities that offer stability in the long term. That should accomplish two things: create a lower propensity to fall as much as other stocks, and provide an emotional crutch through the volatility. But with that first one, you likely will also give up the potential for outsize growth.
NextEra Energy (NYSE: NEE), though, can bring investors the best of both worlds. If you're worried about another market crash, here's why NextEra should be on your radar.
Image source: Getty Images.
A utility, but with growth
NextEra is a Florida-based company that owns Florida Power & Light, the largest regulated electric utility in the U.S. by retail megawatt-hour sales, as well as Gulf Power, which serves the northwest part of the state. Its other subsidiary is NextEra Energy Resources. This segment, along with its affiliates, is the world's largest generator of wind and solar power. It also has been investing in battery storage. This renewable energy segment differentiates it from other utilities, and helps support NextEra's estimate of 10% to 12% annual total-return potential through 2022 with earnings growth and dividends.
Proof of that growth stands out when comparing its earnings per share and its historical market capitalization growth against fellow utilities Consolidated Edison (NYSE: ED), Duke Energy (NYSE: DUK), and Dominion Energy (NYSE: D).
NEE EPS Diluted (TTM) data by YCharts. TTM = trailing 12 months.
More opportunity
NextEra's energy resources segment currently operates about 24 gigawatts (GW) of energy generation, mostly in wind and solar, and has another 13 GW from renewables projects in its backlog. The company thinks there's plenty of room to grow, as it sees about 80 GW of renewables demand in the U.S. alone through 2022.
The International Energy Agency (IEA) backs up those predictions. In its renewable energy market-outlook update for 2020 and 2021, the organization forecasts that additions to global renewable energy capacity will resume growth to new highs of almost 200 GW in 2021. That forecast also accounts for a pandemic-related dip in 2020. Importantly for NextEra, in the May 2020 IEA report, the agency said that the U.S. will still see capacity-addition growth in 2020.
More stability
The growth component that differentiates NextEra from other utilities also means that the share price could be more affected by a market crash in the short term. Investors should be prepared for that, and should note that it did drop by about 35% from its March 2020 highs before recovering.
NEE data by YCharts.
But the stability that comes with the regulated utility business can help investors by providing income through the market cycles. Customers need electricity regardless of the economic environment. Additionally, the company says it will increase its dividend by 11% per year through 2022. And over the longer term, the share price has remained less volatile than the market. The company notes it has a beta for the past five years of less than 0.7. This means it theoretically is only 70% as volatile as the S&P 500 Index (NYSEMKT: IVV).
NextEra Energy might not be the right stock for a retiree who seeks income from the high dividend yields that most utilities are known for (it currently yields just under 2%). But with prospects for continued dividend growth, along with a long runway for increases in its renewables generation capacity, longer-term investors who hold the stock should feel all right about riding it through the next market crash.
10 stocks we like better than NextEra Energy
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and NextEra Energy wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 2, 2020
Howard Smith owns shares of NextEra Energy. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and NextEra Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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So it makes sense to own stocks that will help you not to panic when market turbulence hits, as it did this past spring when the Dow Jones Industrial Average experienced routine daily swings of 5% or more in both directions. This renewable energy segment differentiates it from other utilities, and helps support NextEra's estimate of 10% to 12% annual total-return potential through 2022 with earnings growth and dividends. But with prospects for continued dividend growth, along with a long runway for increases in its renewables generation capacity, longer-term investors who hold the stock should feel all right about riding it through the next market crash.
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A utility, but with growth NextEra is a Florida-based company that owns Florida Power & Light, the largest regulated electric utility in the U.S. by retail megawatt-hour sales, as well as Gulf Power, which serves the northwest part of the state. Proof of that growth stands out when comparing its earnings per share and its historical market capitalization growth against fellow utilities Consolidated Edison (NYSE: ED), Duke Energy (NYSE: DUK), and Dominion Energy (NYSE: D). The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and NextEra Energy.
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Proof of that growth stands out when comparing its earnings per share and its historical market capitalization growth against fellow utilities Consolidated Edison (NYSE: ED), Duke Energy (NYSE: DUK), and Dominion Energy (NYSE: D). More opportunity NextEra's energy resources segment currently operates about 24 gigawatts (GW) of energy generation, mostly in wind and solar, and has another 13 GW from renewables projects in its backlog. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and NextEra Energy.
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In its renewable energy market-outlook update for 2020 and 2021, the organization forecasts that additions to global renewable energy capacity will resume growth to new highs of almost 200 GW in 2021. More stability The growth component that differentiates NextEra from other utilities also means that the share price could be more affected by a market crash in the short term. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and NextEra Energy.
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699047.0
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2020-07-24 00:00:00 UTC
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D Crosses Above Average Analyst Target
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https://www.nasdaq.com/articles/d-crosses-above-average-analyst-target-2020-07-24
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In recent trading, shares of Dominion Energy Inc (Symbol: D) have crossed above the average analyst 12-month target price of $80.55, changing hands for $80.59/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised.
There are 11 different analyst targets contributing to that average for Dominion Energy Inc , but the average is just that — a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $68.00. And then on the other side of the spectrum one analyst has a target as high as $92.00. The standard deviation is $8.489.
But the whole reason to look at the average D price target in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with D crossing above that average target price of $80.55/share, investors in D have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $80.55 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Dominion Energy Inc :
RECENT D ANALYST RATINGS BREAKDOWN
» Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 3 3 2 2
Buy ratings: 0 0 0 0
Hold ratings: 7 8 9 9
Sell ratings: 0 0 0 0
Strong sell ratings: 2 0 0 0
Average rating: 2.83 2.45 2.64 2.64
The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on D — FREE.
10 ETFs With Most Upside To Analyst Targets »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In recent trading, shares of Dominion Energy Inc (Symbol: D) have crossed above the average analyst 12-month target price of $80.55, changing hands for $80.59/share. And so with D crossing above that average target price of $80.55/share, investors in D have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $80.55 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Dominion Energy Inc :
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In recent trading, shares of Dominion Energy Inc (Symbol: D) have crossed above the average analyst 12-month target price of $80.55, changing hands for $80.59/share. There are 11 different analyst targets contributing to that average for Dominion Energy Inc , but the average is just that — a mathematical average. » Current 1 Month Ago 2 Month Ago 3 Month Ago Strong buy ratings: 3 3 2 2 Buy ratings: 0 0 0 0 Hold ratings: 7 8 9 9 Sell ratings: 0 0 0 0 Strong sell ratings: 2 0 0 0 Average rating: 2.83 2.45 2.64 2.64 The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell.
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When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. There are 11 different analyst targets contributing to that average for Dominion Energy Inc , but the average is just that — a mathematical average. » Current 1 Month Ago 2 Month Ago 3 Month Ago Strong buy ratings: 3 3 2 2 Buy ratings: 0 0 0 0 Hold ratings: 7 8 9 9 Sell ratings: 0 0 0 0 Strong sell ratings: 2 0 0 0 Average rating: 2.83 2.45 2.64 2.64 The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell.
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Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised. There are 11 different analyst targets contributing to that average for Dominion Energy Inc , but the average is just that — a mathematical average. And then on the other side of the spectrum one analyst has a target as high as $92.00.
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699048.0
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2020-07-24 00:00:00 UTC
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Dominion Energy Gives Up on Atlantic Coast Pipeline in the Face of Rising Legal Costs
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https://www.nasdaq.com/articles/dominion-energy-gives-up-on-atlantic-coast-pipeline-in-the-face-of-rising-legal-costs-2020
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Dominion Energy (NYSE: D) operates a largely boring, regulated business. That's exactly what you expect from a large U.S. utility. But it set off some fireworks recently when it changed direction on a big capital investment project. Here's what happened, why it happened, and what it could mean for investors.
Giving up after a big win
Several years ago, Dominion Energy set up a master limited partnership to own midstream assets it controlled. The idea was to use the partnership as a source of funding by selling its assets (known as "dropping down" in the industry) and then reinvesting the cash in growth projects. At the time it was a common business model, with many utilities using a similar setup. However, the government changed tax rules in 2018 that reduced the value of this approach, and Dominion ended up buying back the partnership. It also had to resort to using more debt and asset sales to come up with the cash it needed to support its capital spending plans.
Image source: Getty Images
One of the big projects on its plate was the Atlantic Coast Pipeline, which was meant to carry natural gas from areas where the fuel was more abundant to areas where it could be used to power electric generators. It would have eventually been sold to the partnership, as noted above. All along the way, however, there was material legal pushback that ultimately resulted in a court case going all the way up to the Supreme Court. Dominion and partner Duke Energy (NYSE: DUK) won that case earlier this year. It was a major win for the multi-billion dollar project.
And then, just weeks later, Duke announced that it was scrapping the Atlantic Coast Pipeline and getting out of the pipeline business by selling most of its midstream assets to Berkshire Hathaway. Investors weren't too pleased with the change, which will be accompanied by a dividend cut (set for later in the year, after the deal closes).
Too much uncertainty
The biggest issue for Dominion was that even after a major court win, it still had to navigate an uncertain legal and regulatory landscape. For example, at just about the same time that the utility was announcing its plans to stop construction on the Atlantic Coast Pipeline, a U.S. court ordered the shut down of the Dakota Access pipeline, owned and operated by Energy Transfer, over environmental concerns.
Meanwhile, Dominion faced a number of important and time-sensitive deadlines that it wasn't confident it would meet because of heightened pipeline scrutiny. Most notably, it feared it would miss a key tree-cutting season that could further delay construction and increase costs. And that comes atop the change in the funding process that was originally envisioned for the pipeline. Killing the Atlantic Coast Pipeline obviously seemed like the best course of action to Dominion, despite the material investments that had already been made.
But the legal and regulatory uncertainty around the pipeline space also soured Dominion on the entire midstream business. Although its assets are well positioned and stable operations, the fact that even a currently operating pipeline could be shuttered shows just how unpredictable the pipeline space has become. For more than a decade Dominion has been working to reduce risk, notably getting out of the oil exploration and production space. It kept the midstream business because it was fee-based, regulated at the federal level, and very similar to the stable, regulated utility business it owns. But that has clearly changed, with the growing midstream risks increasing the chance of a material business disruption. Getting out of the midstream sector is largely a continuation of Dominion's effort to simplify its business and become a more stable company.
At this point, or at least after the midstream transaction closes, it is essentially just a boring old utility, selling electricity and natural gas. The problem for investors is that Dominion is selling a big chunk of the company and that will result in a dividend cut once the deal is finally consummated, something that no dividend investor likes to hear. There's really no choice, given the size of the sale. The proceeds, meanwhile, are expected to be used to reduce debt and buy back stock, both net positives.
D Dividend Yield data by YCharts
That said, the company plans to trim the dividend a little more than necessary (33% in total) to free up extra cash for its capital spending plans. This will reduce the payout ratio as well to around 65% -- in line with some of the company's best-positioned industry peers. It is something of a business reset that will allow Dominion to focus on its core utility operations, where it believes it can invest in stable, higher-growth projects. Management expects these moves to allow it to grow earnings as much as 30% faster than it had previously outlined, which in turn will lead to more rapid dividend growth (though obviously from a lower base after the cut).
While that's good news, it's still difficult to swallow if you were counting on the current dividend to cover living expenses. Using the recent stock price and the expected dividend after the cut, Dominion's yield will drop from around 4.7% today to roughly 3.1%. That's a pretty big change.
A new Dominion
Although it would be hard to suggest that the utility is a completely new company, Dominion has certainly made a big directional shift with the cancellation of the Atlantic Coast Pipeline and the sale of its midstream operations. If you own the stock you need to reevaluate it, taking a fresh look at what it is set to become. For some investors, trimming down to just the utility business will be a welcome event, even with a dividend cut. For others, the loss of the midstream business and the diversification it offered may lead to a decision to sell Dominion's stock. That is not an unreasonable choice -- there are other large utilities offering material dividends that, at this point anyway, aren't being cut, like Southern Company and Duke Energy. They could easily replace Dominion in your dividend portfolio if current income is your core focus.
10 stocks we like better than Dominion Energy, Inc
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Reuben Gregg Brewer owns shares of Dominion Energy, Inc and Southern Company. The Motley Fool recommends Dominion Energy, Inc and Duke Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Giving up after a big win Several years ago, Dominion Energy set up a master limited partnership to own midstream assets it controlled. Management expects these moves to allow it to grow earnings as much as 30% faster than it had previously outlined, which in turn will lead to more rapid dividend growth (though obviously from a lower base after the cut). That is not an unreasonable choice -- there are other large utilities offering material dividends that, at this point anyway, aren't being cut, like Southern Company and Duke Energy.
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Dominion Energy (NYSE: D) operates a largely boring, regulated business. That is not an unreasonable choice -- there are other large utilities offering material dividends that, at this point anyway, aren't being cut, like Southern Company and Duke Energy. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.
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For example, at just about the same time that the utility was announcing its plans to stop construction on the Atlantic Coast Pipeline, a U.S. court ordered the shut down of the Dakota Access pipeline, owned and operated by Energy Transfer, over environmental concerns. The problem for investors is that Dominion is selling a big chunk of the company and that will result in a dividend cut once the deal is finally consummated, something that no dividend investor likes to hear. A new Dominion Although it would be hard to suggest that the utility is a completely new company, Dominion has certainly made a big directional shift with the cancellation of the Atlantic Coast Pipeline and the sale of its midstream operations.
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For some investors, trimming down to just the utility business will be a welcome event, even with a dividend cut. That is not an unreasonable choice -- there are other large utilities offering material dividends that, at this point anyway, aren't being cut, like Southern Company and Duke Energy. Dominion Energy (NYSE: D) operates a largely boring, regulated business.
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699049.0
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2020-07-23 00:00:00 UTC
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Dominion Energy Shares Cross Above 200 DMA
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D
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https://www.nasdaq.com/articles/dominion-energy-shares-cross-above-200-dma-2020-07-23
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In trading on Thursday, shares of Dominion Energy Inc (Symbol: D) crossed above their 200 day moving average of $80.86, changing hands as high as $81.23 per share. Dominion Energy Inc shares are currently trading up about 0.9% on the day. The chart below shows the one year performance of D shares, versus its 200 day moving average:
Looking at the chart above, D's low point in its 52 week range is $57.79 per share, with $90.89 as the 52 week high point — that compares with a last trade of $80.20. The D DMA information above was sourced from TechnicalAnalysisChannel.com
Click here to find out which 9 other energy stocks recently crossed above their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Thursday, shares of Dominion Energy Inc (Symbol: D) crossed above their 200 day moving average of $80.86, changing hands as high as $81.23 per share. The chart below shows the one year performance of D shares, versus its 200 day moving average: Looking at the chart above, D's low point in its 52 week range is $57.79 per share, with $90.89 as the 52 week high point — that compares with a last trade of $80.20. The D DMA information above was sourced from TechnicalAnalysisChannel.com Click here to find out which 9 other energy stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Thursday, shares of Dominion Energy Inc (Symbol: D) crossed above their 200 day moving average of $80.86, changing hands as high as $81.23 per share. The chart below shows the one year performance of D shares, versus its 200 day moving average: Looking at the chart above, D's low point in its 52 week range is $57.79 per share, with $90.89 as the 52 week high point — that compares with a last trade of $80.20. The D DMA information above was sourced from TechnicalAnalysisChannel.com Click here to find out which 9 other energy stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Thursday, shares of Dominion Energy Inc (Symbol: D) crossed above their 200 day moving average of $80.86, changing hands as high as $81.23 per share. The chart below shows the one year performance of D shares, versus its 200 day moving average: Looking at the chart above, D's low point in its 52 week range is $57.79 per share, with $90.89 as the 52 week high point — that compares with a last trade of $80.20. The D DMA information above was sourced from TechnicalAnalysisChannel.com Click here to find out which 9 other energy stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Thursday, shares of Dominion Energy Inc (Symbol: D) crossed above their 200 day moving average of $80.86, changing hands as high as $81.23 per share. Dominion Energy Inc shares are currently trading up about 0.9% on the day. The chart below shows the one year performance of D shares, versus its 200 day moving average: Looking at the chart above, D's low point in its 52 week range is $57.79 per share, with $90.89 as the 52 week high point — that compares with a last trade of $80.20.
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699050.0
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2020-07-23 00:00:00 UTC
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Warren Buffett Just Spent Another $800 Million on This Bank Stock
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https://www.nasdaq.com/articles/warren-buffett-just-spent-another-%24800-million-on-this-bank-stock-2020-07-23
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by CEO Warren Buffett, just bought another 34 million shares of Bank of America (NYSE: BAC) stock.
Buffett and his team bought the shares for an average price of just under $24 earlier this week, which translates to more than $800 million invested. This brings Berkshire's stake in Buffett's largest bank stock holding to 11.3% of the company. Bank of America is Berkshire's second-largest stock position, with a total market value of $23.9 billion.
Warren Buffett. Image source: The Motley Fool.
Is Buffett buying other bank stocks right now?
One important thing to know is that the only reason we know about the recent Bank of America purchases is that Berkshire's stake is over 10% of the company, an ownership threshold that comes with increased reporting requirements.
Berkshire owns shares of several other large banks, but most are well below the 10% threshold. The company owns just 1.9% of JPMorgan Chase (NYSE: JPM), 8.4% of Wells Fargo (NYSE: WFC), and 2.2% of PNC Financial (NYSE: PNC). And we won't get a comprehensive look at Berkshire's stock portfolio for some time. We'll get a snapshot of what Buffett and his stock pickers did in the second quarter in mid-August, but as far as any investments made in July go, we'll have to wait for the third-quarter SEC filings, which won't be released until November.
Even so, this week's Bank of America investment is likely to be taken as a positive sign by investors in the bank -- as well as Berkshire. In the case of Bank of America, it appears to still be Buffett's favorite bank stock. And for Berkshire, investors have been patiently waiting for Buffett to start deploying the $137 billion on its balance sheet, and between this and the recent Dominion (NYSE: D) natural gas asset acquisition, it looks like it could finally be happening.
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*Stock Advisor returns as of June 2, 2020
Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short October 2020 $20 puts on Wells Fargo. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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One important thing to know is that the only reason we know about the recent Bank of America purchases is that Berkshire's stake is over 10% of the company, an ownership threshold that comes with increased reporting requirements. We'll get a snapshot of what Buffett and his stock pickers did in the second quarter in mid-August, but as far as any investments made in July go, we'll have to wait for the third-quarter SEC filings, which won't be released until November. And for Berkshire, investors have been patiently waiting for Buffett to start deploying the $137 billion on its balance sheet, and between this and the recent Dominion (NYSE: D) natural gas asset acquisition, it looks like it could finally be happening.
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by CEO Warren Buffett, just bought another 34 million shares of Bank of America (NYSE: BAC) stock. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by CEO Warren Buffett, just bought another 34 million shares of Bank of America (NYSE: BAC) stock. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Matthew Frankel, CFP owns shares of Bank of America and Berkshire Hathaway (B shares) and has the following options: short October 2020 $20 puts on Wells Fargo. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate led by CEO Warren Buffett, just bought another 34 million shares of Bank of America (NYSE: BAC) stock. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). Buffett and his team bought the shares for an average price of just under $24 earlier this week, which translates to more than $800 million invested.
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699051.0
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2020-07-21 00:00:00 UTC
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Is Dominion Energy Stock A Buy After Its $9.7 Billion Pipeline Sale to Warren Buffett?
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https://www.nasdaq.com/articles/is-dominion-energy-stock-a-buy-after-its-%249.7-billion-pipeline-sale-to-warren-buffett-2020
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After six years of planning, negotiations, and setback after setback, Dominion Energy (NYSE: D) has given up on the Atlantic Coast Pipeline (ACP) and decided to sell $9.7 billion of energy transmission assets to Berkshire Hathaway Energy, which is 90% owned by Warren Buffett-led Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).
Although Dominion has lost the future earnings of the pipeline, there are several reasons why the asset sale is probably the right decision for the utility giant.
Image Source: Getty Images.
More than just a pipeline
For Berkshire, this deal isn't just about a potential pipeline, it's about acquiring a sizable amount of energy transmission assets. In fact, Berkshire is receiving assets that aren't even related to the ACP, such as the Questar Pipeline, which is a 1,888-mile interstate pipeline that delivers natural gas throughout the Rocky Mountains.
ASSET
BERKSHIRE HATHAWAY ENERGY NEWLY OBTAINED INTEREST
Dominion Energy Transmission
100%
Questar Pipelines
100%
Carolina Gas Transmission
100%
Iroquois Gas Transmission
50%
Cove Point LNG Terminal
25%
Data Source: Dominion Energy
Together, these assets, as well as other legacy gathering and process assets and farm out acreage, represent 10% of the total interstate natural gas transmission in the United States. The acquisition more than doubles Berkshire's share of U.S. interstate natural gas transmission, bringing its new total to 18%.
Berkshire will pay $4 billion in cash to Dominion Energy in addition to assuming $5.7 billion of Dominion's debt, valuing the real cost of the deal at $9.7 billion. Once approved by regulators, the deal is estimated to be finalized in the fourth quarter of this year.
Too much risk, too little reward
The decision came less than a month after the U.S. Supreme Court voted 7-2 in favor of the construction of the ACP 600 ft. below the Appalachian Trail. Although this was good news for Dominion, who had a 53% interest in the ACP, and Duke Energy, which had a 47% interest in the ACP, Dominion cited several reasons why "recent developments have created an unacceptable layer of uncertainty and anticipated delays for ACP."
For starters, Dominion believes that the real cost of the project is now around $8 billion instead of the originally estimated $4.5 to $5 billion. As of May, the company estimated that the project would be in service, at the earliest, in 2022, which would be nearly 3.5 years later than original estimates. The total capital expenditures of the project to date are $3.6 billion, with Dominion's project-level debt amounting to $1.8 billion.
Dominion estimated that the Atlantic Coast pipeline would contribute 20 to 25 cents of earnings per share (EPS) once fully in service for the entirety of 2022. For context, the company expects operating EPS of $4.25 to $4.60 per share this year. Therefore, although the ACP was one of Dominion's major growth projects, it actually represented a relatively minor contribution to earnings over the next few years.
Dominion plans to use $3 billion of the $4 billion in cash from the deal to buy back common stock in late 2020. The rest of the money will go toward taxes and adjustments (transaction costs) related to the deal, as well as pension fund contributions.
A renewable future
The Atlantic Coast Pipeline has been a money-losing venture and a big headache for Dominion Energy. The sale is in line with Dominion's broader initiative to have 85% to 90% of its future operating earnings come from predictable state-regulated utility operations -- a large part of which will focus on renewable energy.
Dominion estimates that it will have 5.2 GW of up to 100% utility-owned offshore wind production by 2035, 16.1 GW of up to 65% utility-owned solar or onshore wind production by 2036, and 2.7 GW of up to 65% utility-owned energy storage by 2035. It currently has 27.1 GW of electric generation capacity, of which 40% is natural gas, 22% is nuclear, 20% is coal, 10% is renewables, and 8% is petroleum.
A profitable future?
Dominion's transition to renewables sounds good on paper, but the better question is whether its a sustainable decision for its business. Dominion originally estimated that its gas transmission and storage segment would contribute 24% of its estimated 2020 operating earnings of $4.25 to $4.60 per share.
Considering the company is now eliminating this segment, it's no surprise that its new operating EPS guidance is $3.37 to $3.63, or about 20% lower than its original estimates. However, the catch is that Dominion now expects 2021 operating earnings to grow between 10% and 11% and then grow annually at 6.5% from that 2021 base. Its initial guidance suggested a 5% annual earnings growth rate.
While the decrease in earnings sounds bad in the short-term, a little math tells us that it ends up paying off right around the same time as its 2035 and 2036 goals (discussed earlier).
YEAR PRE-SALE EPS GUIDANCE POST-SALE EPS GUIDANCE
2020 $4.42 $3.50
2021 $4.64 $3.87
2022 $4.87 $4.12
2023 $5.12 $4.39
2024 $5.37 $4.67
2025 $5.64 $4.98
2026 $5.92 $5.30
2027 $6.22 $5.64
2028 $6.53 $6.01
2029 $6.86 $6.40
2030 $7.20 $6.82
2031 $7.56 $7.26
2032 $7.94 $7.73
2033 $8.33 $8.23
2034 $8.75 $8.77
2035 $9.19 $9.34
2036 $9.65 $9.95
Data Source: Dominion Energy Presentations. Chart By Author.
Waiting nearly 15 years for the EPS change to pay off is a long time -- and it's only an estimate at this point -- but keep in mind that Dominion also gets more cash to buy back shares, an estimated increase from 70% regulated asset earnings to 85% to 90% in 2020 and even higher down the road, and of course, the positive press that comes with ESG investing.
A step in the right direction
After six years on the front lines of slugging it out with regulators and authorities, it's time for Dominion to move on from the ACP. The sale aligns with Dominion's long-term goals and gives the company a chance to buy back some stock and rebase its dividend.
Dominion Energy's stock price has fallen as a result of the deal, but considering the ACP would have likely cost the company more money in the short-term -- and future earnings remain uncertain -- I think Dominion is a buy at this price. The company has come a long way since 2005, and could go even further over the next 15 years as it charts a course toward its renewable future.
10 stocks we like better than Berkshire Hathaway (A shares)
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dominion estimated that the Atlantic Coast pipeline would contribute 20 to 25 cents of earnings per share (EPS) once fully in service for the entirety of 2022. While the decrease in earnings sounds bad in the short-term, a little math tells us that it ends up paying off right around the same time as its 2035 and 2036 goals (discussed earlier). * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (A shares) wasn't one of them!
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After six years of planning, negotiations, and setback after setback, Dominion Energy (NYSE: D) has given up on the Atlantic Coast Pipeline (ACP) and decided to sell $9.7 billion of energy transmission assets to Berkshire Hathaway Energy, which is 90% owned by Warren Buffett-led Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Dominion Energy Transmission 100% Questar Pipelines 100% Carolina Gas Transmission 100% Iroquois Gas Transmission 50% Cove Point LNG Terminal 25% Data Source: Dominion Energy Together, these assets, as well as other legacy gathering and process assets and farm out acreage, represent 10% of the total interstate natural gas transmission in the United States. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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After six years of planning, negotiations, and setback after setback, Dominion Energy (NYSE: D) has given up on the Atlantic Coast Pipeline (ACP) and decided to sell $9.7 billion of energy transmission assets to Berkshire Hathaway Energy, which is 90% owned by Warren Buffett-led Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Dominion Energy Transmission 100% Questar Pipelines 100% Carolina Gas Transmission 100% Iroquois Gas Transmission 50% Cove Point LNG Terminal 25% Data Source: Dominion Energy Together, these assets, as well as other legacy gathering and process assets and farm out acreage, represent 10% of the total interstate natural gas transmission in the United States. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Dominion plans to use $3 billion of the $4 billion in cash from the deal to buy back common stock in late 2020. Dominion originally estimated that its gas transmission and storage segment would contribute 24% of its estimated 2020 operating earnings of $4.25 to $4.60 per share. Waiting nearly 15 years for the EPS change to pay off is a long time -- and it's only an estimate at this point -- but keep in mind that Dominion also gets more cash to buy back shares, an estimated increase from 70% regulated asset earnings to 85% to 90% in 2020 and even higher down the road, and of course, the positive press that comes with ESG investing.
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699052.0
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2020-07-20 00:00:00 UTC
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Delivery of Crude Oil From Bakken Shale at Risk From Pipeline Shutdown Orders
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D
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https://www.nasdaq.com/articles/delivery-of-crude-oil-from-bakken-shale-at-risk-from-pipeline-shutdown-orders-2020-07-20
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Earlier this month, a U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, when a federal judge found that the U.S. Army Corps of Engineers violated the National Environmental Policy Act. But the pipeline operator, Energy Transfer (NYSE: ET), won a temporary reprieve from the shutdown before a yearlong environmental review was to take place.
Another Bakken pipeline, operated by Marathon Petroleum's (NYSE: MPC) MPLX Limited Partnership (NYSE: MPLX), was also ordered shut down in early July. The Tesoro High Plains pipeline was deemed by the U.S. Department of the Interior's Bureau of Indian Affairs to be trespassing on Native American land.
Image source: Getty Images.
In addition to the shutdown order of the High Plains, the Interior Department also ordered Marathon to pay $187 million in damages, should it hold through an appeal. The Bakken shale supplies approximately 10% of the 11 million barrels per day currently being produced in the United States, so there are critical delivery implications if both pipelines remain shut.
The High Plains line, which was shut for the first time in 67 years of operation after the order, delivers oil to Marathon Petroleum's 74,000 barrels-per-day Mandan refinery. Marathon's MPLX Limited Partnership acquired Andeavor Logistics in 2019, which owned the pipeline. Andeavor had been negotiating with Indian tribes since 2013 on pipeline disputes. Marathon has not said whether it will appeal the ruling, according to BNN Bloomberg.
Both pipeline shutdown decisions come at a time when the Atlantic Coast Pipeline project has been canceled after Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) said it was buying the natural gas assets from Dominion Energy (NYSE: D). The utility, and its partner Duke Energy (NYSE: DUK), then canceled that project.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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The Tesoro High Plains pipeline was deemed by the U.S. Department of the Interior's Bureau of Indian Affairs to be trespassing on Native American land. The Bakken shale supplies approximately 10% of the 11 million barrels per day currently being produced in the United States, so there are critical delivery implications if both pipelines remain shut. The High Plains line, which was shut for the first time in 67 years of operation after the order, delivers oil to Marathon Petroleum's 74,000 barrels-per-day Mandan refinery.
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Another Bakken pipeline, operated by Marathon Petroleum's (NYSE: MPC) MPLX Limited Partnership (NYSE: MPLX), was also ordered shut down in early July. In addition to the shutdown order of the High Plains, the Interior Department also ordered Marathon to pay $187 million in damages, should it hold through an appeal. Marathon's MPLX Limited Partnership acquired Andeavor Logistics in 2019, which owned the pipeline.
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Another Bakken pipeline, operated by Marathon Petroleum's (NYSE: MPC) MPLX Limited Partnership (NYSE: MPLX), was also ordered shut down in early July. Both pipeline shutdown decisions come at a time when the Atlantic Coast Pipeline project has been canceled after Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) said it was buying the natural gas assets from Dominion Energy (NYSE: D). See the 10 stocks *Stock Advisor returns as of June 2, 2020 Howard Smith has no position in any of the stocks mentioned.
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Another Bakken pipeline, operated by Marathon Petroleum's (NYSE: MPC) MPLX Limited Partnership (NYSE: MPLX), was also ordered shut down in early July. In addition to the shutdown order of the High Plains, the Interior Department also ordered Marathon to pay $187 million in damages, should it hold through an appeal. Earlier this month, a U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, when a federal judge found that the U.S. Army Corps of Engineers violated the National Environmental Policy Act.
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699053.0
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2020-07-20 00:00:00 UTC
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Can Berkshire Hathaway Join the $1 Trillion Club?
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In the 56 years since Warren Buffett took over a struggling textile manufacturer called Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), the company has been one of the biggest investment success stories of all time, averaging returns of more than 20% per year for investors.
Now a conglomerate with more than 60 subsidiary businesses in a variety of industries and a diverse stock portfolio worth more than $200 billion, Berkshire has a market capitalization of about $464 billion as I write this. However, Berkshire's stock performance has been lackluster over the past few years, so what would have to happen for it to reach a trillion dollar market capitalization.
Image source: Getty Images.
Investors would need to get excited
One of the biggest reasons Berkshire's market cap isn't closer to $1 trillion is that investors simply don't seem too excited about the company's future potential.
This can be seen plain as day in Berkshire's current price-to-book multiple of less than 1.25, which is historically low for the company. Just before the COVID-19 pandemic hit, Berkshire's P/B was about 1.3 and has spent much of the past three years between 1.4 and 1.5.
While the company certainly hasn't been completely immune to the pandemic, most of its larger business segments have been largely unaffected. Insurance premiums are still being paid and so are utility bills, just to name a couple. Instead, a big part of the depressed valuation is likely because investors are having a tough time getting excited about Berkshire's potential.
One big reason is because of the lack of investment activity we've been seeing lately. Since buying Precision Castparts in 2015, Berkshire hasn't made any major acquisitions and activity in its stock portfolio has been rather low. As a result, Berkshire's cash stockpile has swelled to $137 billion at the end of the first quarter – its highest level ever. And to the disappointment of many shareholders, Berkshire was actually a net seller of stocks during the first quarter of 2020 when the market plunged.
Plus, while I wholeheartedly believe that Warren Buffet is one of the greatest investors who ever lived, the Oracle of Omaha has certainly picked some duds in recent years when he has chosen to put money to work. The company's investments in the four major U.S. airlines that were sold at a loss once the COVID-19 pandemic hit were the most recent example, but Buffett's massive Kraft Heinz (NASDAQ: KHC) stake has been an absolute bust as well. And recall that aside from the huge Apple (NASDAQ: AAPL) investment, Berkshire's stock portfolio is highly concentrated in the financial sector, which has been one of the worst-performing parts of the stock market in 2020.
Small investments in relatively boring industries like Berkshire's recent purchase of Dominion's (NYSE: D) natural gas assets aren't going to do it. But if Berkshire can get investors exciting by aggressively deploying its massive stockpile of cash in undervalued stocks and businesses with potential for growth, I wouldn't be surprised to see Berkshire's valuation shoot higher.
Strong stock performance would help get Berkshire to $1 trillion
It's also worth pointing out that much of Berkshire's performance is out of its hands, thanks to its massive portfolio of common stocks. In other words, if Berkshire's stock portfolio were to rise in value by 50%, it would (theoretically) add more than $100 billion to the company's market cap all by itself.
Berkshire's Apple (NASDAQ: AAPL) investment has been a big help, but many of the other large stock investments, especially financials such as Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and American Express (NYSE: AXP) are significantly lower than their pre-pandemic prices. So, if Berkshire's stock portfolio performs strongly over the next year or two as the pandemic (hopefully) winds down, it could be a major catalyst that drives Berkshire's market cap closer to the trillion-dollar mark.
It's likely a "when," not an "if"
To be clear, Berkshire Hathaway will almost certainly join the $1 trillion club eventually – it's just a question of when. Even if Berkshire's stock simply matches the S&P 500's historic rate of return, it would take less than eight years to reach a trillion-dollar market cap.
Having said that, under the right circumstances (strong portfolio performance and able to find attractive ways to deploy capital), Berkshire could reach the $1 trillion club much sooner.
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Matthew Frankel, CFP owns shares of American Express, Apple, Bank of America, and Berkshire Hathaway (B shares) and has the following options: short October 2020 $20 puts on Wells Fargo. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Plus, while I wholeheartedly believe that Warren Buffet is one of the greatest investors who ever lived, the Oracle of Omaha has certainly picked some duds in recent years when he has chosen to put money to work. The company's investments in the four major U.S. airlines that were sold at a loss once the COVID-19 pandemic hit were the most recent example, but Buffett's massive Kraft Heinz (NASDAQ: KHC) stake has been an absolute bust as well. Having said that, under the right circumstances (strong portfolio performance and able to find attractive ways to deploy capital), Berkshire could reach the $1 trillion club much sooner.
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Investors would need to get excited One of the biggest reasons Berkshire's market cap isn't closer to $1 trillion is that investors simply don't seem too excited about the company's future potential. Berkshire's Apple (NASDAQ: AAPL) investment has been a big help, but many of the other large stock investments, especially financials such as Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and American Express (NYSE: AXP) are significantly lower than their pre-pandemic prices. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Strong stock performance would help get Berkshire to $1 trillion It's also worth pointing out that much of Berkshire's performance is out of its hands, thanks to its massive portfolio of common stocks. So, if Berkshire's stock portfolio performs strongly over the next year or two as the pandemic (hopefully) winds down, it could be a major catalyst that drives Berkshire's market cap closer to the trillion-dollar mark. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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In the 56 years since Warren Buffett took over a struggling textile manufacturer called Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), the company has been one of the biggest investment success stories of all time, averaging returns of more than 20% per year for investors. Investors would need to get excited One of the biggest reasons Berkshire's market cap isn't closer to $1 trillion is that investors simply don't seem too excited about the company's future potential. So, if Berkshire's stock portfolio performs strongly over the next year or two as the pandemic (hopefully) winds down, it could be a major catalyst that drives Berkshire's market cap closer to the trillion-dollar mark.
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699054.0
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2020-07-17 00:00:00 UTC
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1 Number I'm Watching in Berkshire Hathaway's Earnings
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https://www.nasdaq.com/articles/1-number-im-watching-in-berkshire-hathaways-earnings-2020-07-17
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As second-quarter earnings season gets underway, there are quite a few questions that are about to be answered in the investing world. One company whose latest results I'm particularly interested in seeing is Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), but not to find out how much its earnings were or how the COVID-19 pandemic impacted its business. Here's why.
Berkshire's operating businesses are largely recession-resistant, and most of the larger subsidiaries (like insurance companies and utilities) provide services that were necessary throughout the economic shutdowns of the second quarter. In short, that's not where I'm expecting any surprises.
However, there is one number in Berkshire's earnings report that I'll be paying very close attention to. Here's what it is and why it matters so much.
Image source: The Motley Fool.
The number to not care about
First of all, the number investors shouldn't pay much attention to is the headline earnings per share (EPS) number because it counts unrealized gains in Berkshire's investment portfolio. During the second quarter, the S&P 500 rose by 25%, and some of Berkshire's holdings did even better -- notably Apple, which soared by more than 51%. This performance will be reflected in Berkshire's earnings number but doesn't represent an actual gain.
There are some important figures in Berkshire's numbers, such as its operating income and the combined ratios from its insurance operations. But investors shouldn't pay much attention to Berkshire's per-share earnings.
The most important number in Berkshire's earnings report
By far, the number I'm most interested in seeing when Berkshire reports its earnings in early August is the amount of cash and short-term investments on its balance sheet. We won't find out what stocks Berkshire bought or sold until mid-August, but the cash number will let us know if it was an active quarter.
Berkshire has had a cash problem for several years, but not the kind that many other companies have. Berkshire has too much cash, and its operating businesses generate billions more every quarter. Warren Buffett and Berkshire's management team haven't been able to find many attractive opportunities -- either in the stock market or in acquiring entire businesses -- to deploy its capital. As a result, cash keeps accumulating and sat at a record $137 billion at the end of the first quarter.
To put this into perspective, consider that without borrowing any money, Berkshire could theoretically buy Texas Instruments, Shopify, Lowes, or Boeing and still have cash left over.
We also know that Berkshire sold its stakes in all four major U.S. airlines after the quarter ended, which added a few billion dollars to the pot.
Recently, we learned that Berkshire acquired the natural gas assets of Dominion (NYSE: D). However, it's important to mention that not only was the size of this deal relatively small by Berkshire's standards (just $4 billion of the purchase is cash, the rest is debt), but it took place in July after the second quarter ended, so it won't be reflected in the upcoming earnings report.
Did Warren Buffett finally start putting money to work?
To be perfectly clear, when Berkshire reports earnings, I want to see that the cash hoard has decreased. And preferably by a significant amount.
Many investors (myself included) weren't thrilled to see the lack of action in Berkshire's stock portfolio in the first quarter, but I understand CEO Warren Buffett's logic. The pandemic had only just begun in March, and the plunge in the market was caused by extreme uncertainty, which Buffett tries to avoid at all costs. There was no end to the exponential growth in COVID-19 cases, and until a few days prior to the end of the quarter, there was no agreement on any type of financial relief for affected Americans.
However, the second quarter was a different animal entirely. The CARES Act was signed into law just before the second quarter began and gave some much needed clarity on the economic-relief efforts that were to be undertaken. Plus, COVID-19 case numbers leveled off in early April and were on the decline until mid-June, and the economy started to reopen in many areas in May.
The bottom line is that, while it's understandable why Buffett didn't pull the trigger on many stock purchases in the first quarter and hasn't yet made an "elephant-sized" acquisition (Dominion's natural gas business is not one), I wouldn't be surprised if Berkshire put significant cash to work in the stock market in the second quarter as the economy began to stabilize.
10 stocks we like better than Berkshire Hathaway (A shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 2, 2020
Matthew Frankel, CFP owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Shopify. The Motley Fool owns shares of Texas Instruments. The Motley Fool recommends Dominion Energy, Inc and Lowe's and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Berkshire's operating businesses are largely recession-resistant, and most of the larger subsidiaries (like insurance companies and utilities) provide services that were necessary throughout the economic shutdowns of the second quarter. Warren Buffett and Berkshire's management team haven't been able to find many attractive opportunities -- either in the stock market or in acquiring entire businesses -- to deploy its capital. However, it's important to mention that not only was the size of this deal relatively small by Berkshire's standards (just $4 billion of the purchase is cash, the rest is debt), but it took place in July after the second quarter ended, so it won't be reflected in the upcoming earnings report.
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The most important number in Berkshire's earnings report By far, the number I'm most interested in seeing when Berkshire reports its earnings in early August is the amount of cash and short-term investments on its balance sheet. The bottom line is that, while it's understandable why Buffett didn't pull the trigger on many stock purchases in the first quarter and hasn't yet made an "elephant-sized" acquisition (Dominion's natural gas business is not one), I wouldn't be surprised if Berkshire put significant cash to work in the stock market in the second quarter as the economy began to stabilize. The Motley Fool recommends Dominion Energy, Inc and Lowe's and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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The most important number in Berkshire's earnings report By far, the number I'm most interested in seeing when Berkshire reports its earnings in early August is the amount of cash and short-term investments on its balance sheet. The bottom line is that, while it's understandable why Buffett didn't pull the trigger on many stock purchases in the first quarter and hasn't yet made an "elephant-sized" acquisition (Dominion's natural gas business is not one), I wouldn't be surprised if Berkshire put significant cash to work in the stock market in the second quarter as the economy began to stabilize. The Motley Fool recommends Dominion Energy, Inc and Lowe's and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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The most important number in Berkshire's earnings report By far, the number I'm most interested in seeing when Berkshire reports its earnings in early August is the amount of cash and short-term investments on its balance sheet. The bottom line is that, while it's understandable why Buffett didn't pull the trigger on many stock purchases in the first quarter and hasn't yet made an "elephant-sized" acquisition (Dominion's natural gas business is not one), I wouldn't be surprised if Berkshire put significant cash to work in the stock market in the second quarter as the economy began to stabilize. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Shopify.
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699055.0
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2020-07-16 00:00:00 UTC
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6 Utility Stocks to Buy Now for Dividends and Stability
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https://www.nasdaq.com/articles/6-utility-stocks-to-buy-now-for-dividends-and-stability-2020-07-16
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Utility stocks are among the most defensive of defensive stocks. One reason for this is that utility companies are highly regulated, so they have limited pricing power. That means that they are not poised for big gains, and despite (perhaps even because of) the pandemic, many investors have been looking for growth stocks.
However, with market volatility expected to be the new normal until at least after the election, is it time for investors to reconsider utility stocks? More analysts are becoming concerned that another market crash may be imminent.
Speaking with InvestorPlace via email, Laura Gonzalez, Ph.D., associate Professor of Finance at California State University, Long Beach, described some of the qualities that make utilities excellent stocks to buy when the market is in a downturn:
“Utility stocks become particularly attractive during recessions because they benefit from the steady demand of essential products and services. Even though they are heavily regulated, and some operate in highly competitive markets, many offer dividends.”
So if growth is what you’re after, there are certainly better options. However, the reason utility stocks should get your attention is for the way they provide stability in volatile markets.
10 Work-From-Home Stocks That Are Beating the Pandemic
Here are six utility stocks that can provide reliable income and maybe a little growth as well:
NextEra Energy (NYSE:NEE)
Duke Energy (NYSE:DUK)
Dominion Energy (NYSE:D)
American Electric Power (NYSE:AEP)
American Water Works Company (NYSE:AWK)
Brookfield Infrastructure Partners (NYSE:BIP)
While many investors are chasing growth, the continued uncertainty in the market may make it time to look at utility stocks because of the value they provide.
NextEra Energy (NEE)
Source: madamF / Shutterstock.com
When you look at utility stocks, the smartest plays are companies generating revenue from renewal energy as well as traditional utility services. And that’s the allure of NextEra Energy.
Based solely on market cap, NextEra is the largest electric utility in the United States. One reason for that is the company’s two distinct business units. The first unit operates as a traditional utility, Florida Power & Light. The utility services south Florida, which continues to be one of the fastest growing population centers in the country.
But what generally gets investors excited is NextEra Energy Resources, the subsidiary that builds and operates solar energy and wind farms. NextEra Energy Resources accounts for nearly 50% of the company’s overall business. And more states are beginning to mandate more of their power come from renewable sources.
NEE stock is up just under 10% in 2020 and its P/E ratio sits at 36.20. This is consistent with NextEra’s position as a sector leader. The dividend yield is currently around 2.15%, but this is an example where yield is a deceiving metric. The stock has increased its dividend every year for the past 26 years, putting it in the elite Dividend Aristocrat category.
Duke Energy (DUK)
Source: jadimages / Shutterstock.com
Duke is a tortoise among utility stocks. This company won’t dazzle investors who are looking for growth. In fact, DUK stock is down about 10% in 2020. But it pays a reliable dividend that the company has increased for 15 consecutive years.
Duke Energy is primarily a traditional utility company. That means it derives the bulk of its revenue from “traditional” electric and natural gas. But these are highly regulated industries. This means the company has a cap on the rates it can charge, and therefore, a cap on growth.
In 2017, Duke initiated a 10-year plan to invest $42 billion to improve its electrical grid and natural gas infrastructure. This may be a case of the short-term pain of adding debt to its balance sheet leading to long-term gain in the form of investments that will support earnings growth. Plus, Duke is planning to use some of this investment to support its renewable energy business.
10 Work-From-Home Stocks That Are Beating the Pandemic
Duke Energy’s primary markets are Central Florida and the Carolinas, both of which show strong continued residential customer growth.
Dominion Energy Inc. (D)
Source: ying / Shutterstock.com
Dominion Energy is making investments to become a significant player in the renewable energy market. And it just received a cool $10 billion from Warren Buffett’s Berkshire Hathaway (NYSE:BRK:A,BRK:B) to assist with that effort. The company is partnering with Smithfield Foods to repurpose methane gas emitted by pigs from its industrial farms.
You heard that right: Dominion is working to find a way to repurpose pig manure. That’s a bold proposal. And over the next decade, Dominion plans to invest $650 million into agriculture-derived gas projects. The company plans to pay for this, in part, with the $10 billion ($4 billion in cash and $6 billion in assumed debt) that Berkshire is giving Dominion for its 7,700 miles of gas pipelines.
But the company’s regulated utility businesses make it a powerhouse in its own right. Dominion is one of the biggest utilities on the East Coast, sporting a market cap just under $62 billion.
D stock is down about 10% for the year. But it has a generous and rock-solid 5.11% dividend.
American Electric Power (AEP)
Source: Casimiro PT / Shutterstock.com
When it comes to utility stocks, bigger is typically better. And that’s one of the best reasons to buy American Electric Power. The company services five million customers across eleven states.
American Electric Power derives most of its revenue from its core business of generating power. But AEP continues to look for ways to adapt to the changing industry. For example, the company is reducing its reliance on coal.
And like many utilities, AEP is making a focused effort to increase its renewable energy base: since 2005, they have more than tripled their renewable base.
AEP stock is down almost 10% for the year, but up nearly 5% in the past month. The stock currently sports a dividend yield of 3.27%. While not as large as other utility stocks, it is on the rise. And in any event, when you compare it to the 10-year Treasury yield, investors won’t find much to complain about.
10 Work-From-Home Stocks That Are Beating the Pandemic
This is particularly the case when the company has increased its dividend in each of the last six years. In that time, the dividend has increased 100%.
American Water Works Company (AWK)
Source: Shutterstock
American Water Works Company is one of the utility stocks actually positive for the year. AWK stock is up nearly 10% and has increased more than 30% since the March selloff. And there’s good reason for the surge. American Water Works is one of the largest water utilities in the world. And water is becoming an increasingly important commodity.
American Water Works provides drinking water and wastewater services to 1,600 communities in the United States and parts of Canada, making them the largest and most diverse publicly traded water company. However, the company only operates in 16 states right now, so there is a large opportunity to expand.
One of AWK’s subsidiaries, West Virginia American, recently filed paperwork seeking approval for its infrastructure replacement plan. This will help reduce long-term customer costs and improve reliability.
Does the long-term potential for growth make up for a dividend that is currently below 2% (1.63%)? That’s for you to decide. But with its dominant footprint in this highly fragmented category, AWK stock looks like a solid investment.
Brookfield Infrastructure Partners (BIP)
Source: Shutterstock
Rounding out our list of utility stocks is Brookfield Infrastructure Partners. Infrastructure is always a go-to investment in volatile markets. And Brookfield is one of the best infrastructure stocks available. The company has a diverse portfolio of infrastructure businesses, including regulated utilities, transports, energy, and data infrastructure. The company’s assets range from cell towers and data centers to railroads and ports.
Plus the company has the “traditional” infrastructure items such as natural gas pipelines and electric transmission lines.
This combination of traditional utility businesses, and businesses that act like utilities, generates predictable cash flow. In fact, almost 95% of Brookfield’s cash flow is regulated or contracted. And the company is looking to grow through acquisitions, which should give earnings an additional boost.
10 Work-From-Home Stocks That Are Beating the Pandemic
BIP stock is down nearly 5% in 2020, but has climbed nearly 70% off the March lows. The company also pays out a reliable dividend, with a current yield of 4.64% despite a reduction back in May.
Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019. As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
The post 6 Utility Stocks to Buy Now for Dividends and Stability appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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This may be a case of the short-term pain of adding debt to its balance sheet leading to long-term gain in the form of investments that will support earnings growth. 10 Work-From-Home Stocks That Are Beating the Pandemic Duke Energy’s primary markets are Central Florida and the Carolinas, both of which show strong continued residential customer growth. One of AWK’s subsidiaries, West Virginia American, recently filed paperwork seeking approval for its infrastructure replacement plan.
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10 Work-From-Home Stocks That Are Beating the Pandemic Here are six utility stocks that can provide reliable income and maybe a little growth as well: NextEra Energy (NYSE:NEE) Duke Energy (NYSE:DUK) Dominion Energy (NYSE:D) American Electric Power (NYSE:AEP) American Water Works Company (NYSE:AWK) Brookfield Infrastructure Partners (NYSE:BIP) While many investors are chasing growth, the continued uncertainty in the market may make it time to look at utility stocks because of the value they provide. The company plans to pay for this, in part, with the $10 billion ($4 billion in cash and $6 billion in assumed debt) that Berkshire is giving Dominion for its 7,700 miles of gas pipelines. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Utility stocks are among the most defensive of defensive stocks.
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips Utility stocks are among the most defensive of defensive stocks. 10 Work-From-Home Stocks That Are Beating the Pandemic Here are six utility stocks that can provide reliable income and maybe a little growth as well: NextEra Energy (NYSE:NEE) Duke Energy (NYSE:DUK) Dominion Energy (NYSE:D) American Electric Power (NYSE:AEP) American Water Works Company (NYSE:AWK) Brookfield Infrastructure Partners (NYSE:BIP) While many investors are chasing growth, the continued uncertainty in the market may make it time to look at utility stocks because of the value they provide. One reason for this is that utility companies are highly regulated, so they have limited pricing power.
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10 Work-From-Home Stocks That Are Beating the Pandemic Here are six utility stocks that can provide reliable income and maybe a little growth as well: NextEra Energy (NYSE:NEE) Duke Energy (NYSE:DUK) Dominion Energy (NYSE:D) American Electric Power (NYSE:AEP) American Water Works Company (NYSE:AWK) Brookfield Infrastructure Partners (NYSE:BIP) While many investors are chasing growth, the continued uncertainty in the market may make it time to look at utility stocks because of the value they provide. NextEra Energy (NEE) Source: madamF / Shutterstock.com When you look at utility stocks, the smartest plays are companies generating revenue from renewal energy as well as traditional utility services. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Utility stocks are among the most defensive of defensive stocks.
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699056.0
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2020-07-15 00:00:00 UTC
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Renewable Energy Is the New Growth Driver for Dominion Energy
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https://www.nasdaq.com/articles/renewable-energy-is-the-new-growth-driver-for-dominion-energy-2020-07-15
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The Atlantic Coast Pipeline is no more. When the United States District Court for the District of Montana overturned a federal permit authority, Dominion Energy (NYSE: D) and Duke Energy decided to scrap their $8 billion natural gas pipeline stretching from West Virginia to North Carolina.
An argument can be made that the decision will delay American climate progress given the energy insecurity of the mid-Atlantic and Southeast regions. In fact, those regions are home to 46% of the nation's coal-fired power plant capacity and 40% of the national coal fleet's electricity output. Removing the ability of West Virginia, Virginia, and North Carolina to more fully utilize natural gas could slow the region's transition to a low-carbon future, as there's now one fewer tool in the toolbox.
The future of Dominion Energy looks quite a bit different, too. The company announced the cancellation of the Atlantic Coast Pipeline, the sale of its gas transmission and storage operations for $9.7 billion, and a significant reduction in the annual dividend per share. While Wall Street hammered the stock shortly after the news barrage, the long-term future of the business remains healthy. It's a lot greener as well, as renewable energy is now the primary driver of earnings and dividend growth.
Image source: Getty Images.
Natural gas is out, regulated assets are in
Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. The transaction comprises $5.7 billion in debt and $4 billion in cash. The energy giant intends to use $3 billion of the cash proceeds to repurchase shares, with the remainder being applied to transaction costs and a pension fund contribution.
On the one hand, the expected use of proceeds might be a bit disappointing to investors hoping the asset sale would accelerate the transition to a greener Dominion Energy. On the other hand, it's a reminder that renewable energy can only be added so quickly to regional grids.
Nothing has changed for Dominion Energy's ambitious renewable energy portfolio in the immediate aftermath of the asset sale. Not directly, anyway. The company still expects to add 5,200 megawatts of offshore wind and 2,700 megawatts of energy storage by 2035, and own up to 16,100 megawatts of onshore wind and utility-scale solar by 2036 -- all the same as before. The business estimates those efforts will require up to $47 billion in capital investment.
What has changed is the proportional value of regulated utility operations, and therefore renewable power assets, to the business. Before the sale, regulated assets were expected to contribute about 70% of full-year 2020 earnings. After the sale, regulated assets are expected to contribute 85% to 90% of full-year 2020 earnings, including the effects of share repurchases.
BUSINESS SEGMENT
PRE-SALE 2020 EARNINGS CONTRIBUTION (ESTIMATE)
POST-SALE 2020 EARNINGS CONTRIBUTION (ESTIMATE)
Dominion Energy Virginia (regulated)
45%
55% to 60%
Gas transmission and storage (unregulated)
25%
N/A
Gas distribution (regulated)
15%
15%
Dominion Energy South Carolina (regulated)
10%
15%
Contracted generation (unregulated)
5%
10% to 15%
Data source: Dominion Energy presentation.
The increased importance of Dominion Energy Virginia is no minor detail. Most of the renewable energy projects in the pipeline will belong to the subsidiary, which provides multiple advantages. It protects future earnings growth inside regulated businesses and aligns the company's power asset investments with the goals of the state of Virginia. But there's one short-term trade off: a reduced dividend beginning in the fourth quarter of 2020.
Freeing up capital for renewable energy investments
A major selling point of the natural gas transmission and storage sale is that the transaction significantly lowers the company's risk profile while freeing up capital to invest in renewable energy assets.
The increasing dependence on regulated assets simplifies overall operations for Dominion Energy and makes long-term earnings and dividend growth more sustainable. The business expects full-year 2021 earnings to grow at least 10% from this year, after which annual earnings will grow at a 6.5% clip. Similarly, the dividend is expected to grow 6% per year from a 2021 base of $2.50 per share.
Investors might have been disappointed by the reduced dividend. Dominion Energy sported a payout ratio of over 80% and an annual dividend per share of $3.76 prior to the sale, but expects to "rebase" that to roughly 65% and $2.50, respectively, in 2021. In other words, the annual dividend yield of the current share price is only 3.4% when factoring in the rebasing, compared to about 4.4% prior to the sale.
Dominion Energy's payout ratio of 85% in 2020 was well above the industry average of 64%, so the rebasing makes fiscal sense. It provides a greater cushion against economic uncertainty and frees considerable cash flow to invest in the business, namely toward the $47 billion price tag of the company's renewable energy ambitions through 2035.
Simply put, Dominion Energy is transitioning to a more economically sustainable business that's more dependent on renewable energy assets for growth. The initial reaction to the sale of natural gas transmission and storage assets and rebased dividend evoked a predictable gasp from Wall Street, but investors with a long-term mindset might be pleased with the reduced risk profile -- spanning financial, political, and social risks -- of the energy giant.
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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The company announced the cancellation of the Atlantic Coast Pipeline, the sale of its gas transmission and storage operations for $9.7 billion, and a significant reduction in the annual dividend per share. The energy giant intends to use $3 billion of the cash proceeds to repurchase shares, with the remainder being applied to transaction costs and a pension fund contribution. It provides a greater cushion against economic uncertainty and frees considerable cash flow to invest in the business, namely toward the $47 billion price tag of the company's renewable energy ambitions through 2035.
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Natural gas is out, regulated assets are in Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. Freeing up capital for renewable energy investments A major selling point of the natural gas transmission and storage sale is that the transaction significantly lowers the company's risk profile while freeing up capital to invest in renewable energy assets. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Natural gas is out, regulated assets are in Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. Freeing up capital for renewable energy investments A major selling point of the natural gas transmission and storage sale is that the transaction significantly lowers the company's risk profile while freeing up capital to invest in renewable energy assets. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Natural gas is out, regulated assets are in Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. It protects future earnings growth inside regulated businesses and aligns the company's power asset investments with the goals of the state of Virginia. The increasing dependence on regulated assets simplifies overall operations for Dominion Energy and makes long-term earnings and dividend growth more sustainable.
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699057.0
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2020-07-13 00:00:00 UTC
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How COVID-19 Is Permanently Changing Restaurants
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https://www.nasdaq.com/articles/how-covid-19-is-permanently-changing-restaurants-2020-07-13
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In this episode of Motley Fool Money, Chris Hill and Motley Fool analysts Jason Moser and Ron Gross go through the latest headlines from Wall Street. They discuss the wave of store closures and bankruptcies taking place in the retail space; also, Warren Buffett makes his biggest acquisition in years. They also share some stocks to put on your watch list and much more.
Finally, Chris chats with David Henkes, senior principal at Technomic, to get some insight into the state of the restaurant industry during the pandemic and into the future.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on July 10, 2020.
Chris Hill: In 2018, there were 5,700 store closings in America. This week, we got even more evidence that 2020 will be much worse. Bed Bath & Beyond (NASDAQ: BBBY) announced they'll be closing more than 20% of their namesake stores in the next two years. Ascena Retail, the parent company of Ann Taylor and other fashion brands, is likely to close 1,200 locations as it prepares to file for bankruptcy. This will only add to the already 8,700 store closings announced so far this year.
And, Ron Gross, I'll start with you. We keep seeing e-commerce sales rise, but in some cases, it's just not enough to offset the loss of those in-store purchases.
Ron Gross: No, if you're not filing bankruptcy, like JCPenney or Lucky, as we said, Brooks Brothers, J. Crew, Neiman Marcus, you're closing stores, and you're trying to stave off bankruptcy. And so your Macy's and your Nordstroms and your Children's Place and your Tuesday Morning, just a tremendous amount of closings in this industry.
I think we had too much retail in the first place, and sometimes it takes a shock to the system to recognize that there has been an excess. Sorry to say, obviously, because there are folks employed at all these places and a lot of investment dollars went into building up these establishments, but I just think, you know, certainly we're a consumer economy, but it got overextended -- I would say the same thing with restaurants -- it got overextended just a bit. Too much excess, shock to the system comes, it kind of thins things out a bit, and hopefully, the survivors can then resume growth and get back to maybe then expanding down the road if demand warrants it. Sometimes we build ahead of demand, and that can be a mistake.
Hill: Jason, what do you think?
Jason Moser: Yeah, on the one hand, I'm really actually curious to see the innovation that comes from all of this. I mean, we have seen, really, an amazing amount of closures in what seems like a very short period of time. And you feel like, even in retail, I mean, there's got to be some innovation or some new way of doing things that comes from this. Certainly seeing a lot of retailers, a lot of fashion retailers bringing more immersive technology into their worlds, bringing augmented reality into their apps, digital dressing rooms where you can [laughs] try clothes on virtually as opposed to having to go to the stores. So I mean, it'll be interesting to see how fashion retail shapes out that way.
But, you know, as bad as things are on the closure side there, and they're not good... Matt Frankel and I talk a lot about Simon Property Group on the Monday Industry Focus shows, and that's a really interesting story right there, because this is a real estate investment trust and they're the biggest mall operator in the country. And so, they basically -- all of their malls back open, and even in the face of these stores closing, you look at their longer-term strategy with these properties, it's actually to bring more uses into the properties, whether it's entertainment venues or office space or even apartments.
So you see, certainly, on one side, the real estate market is a bit tricky, the retail market is a bit tricky, but you look on the other side, and you see the companies that are innovating, thinking about it a little bit differently. Something like a Simon Property Group, for example, they could actually come out of this being even more productive with real estate that right now looks like it might not be all that attractive.
Gross: You know, before the pandemic, you know, for the last couple of years, companies have been moving to what we call this multichannel distribution strategy, which basically is in-store, online, what have you. And what I think the pandemic has done, it has served to accelerate that move significantly, because if you don't innovate in those regards, you die. So things like the buy online, pick up in the store, curbside pickup, all of these things have become so increasingly important that those folks that have been able to move to that more quickly than others are seeing this big bump in their online sales revenue and the revenue in general. Certainly, kind of, mitigating what could have been this incredible disaster.
Those folks who couldn't move, whether they don't have the investment or they're not innovative, are really just feeling the pinch in a double-whammy kind of way, having store closures as well as not being innovative.
Hill: Well, and, Ron, you look at a business like Bed Bath & Beyond, we were talking before the show started about CEO transitions, and I think you and I were both pretty excited, at the end of 2019, when Mark Tritton, who had a lot of success as an executive at Target, took over Bed Bath & Beyond. Cleaned house in the executive ranks. You know, part of their report this week -- and it was a brutal report -- but part of it was, the store closings -- I mean, he's trying to pull every lever he can, but in the midst of a pandemic, it makes the odds of success even tougher.
Gross: Yeah. I'm a big fan of Mark Tritton, and I will acknowledge that not every chief merchandise manager can make the transition to CEO, it's a different job, but I continue to have faith in what he can do. I think the pandemic has certainly -- [laughs] to say "muddied the waters" would be an understatement, to put this turnaround a bit into the longer tail, longer time horizon than we would have hoped. But as you say, he's doing the right things. He cleared out the executive suite, brought on new folks, he's closing 200 of the 950 Bed Bath stores, which was absolutely essential. The footprint was way too big, we've said it for a long time. He needs to remerchandise those stores; that's what he does best, so I can't wait to see what he does there.
This quarter, despite the fact that sales were down 49%, because the stores were closed, nothing much you can do about that, we did see sales from the digital platform increased by 82%. Actually, 100% sales growth in April and May. Online sales accounted for two-thirds of total sales. Again, not surprising [laughs] because the stores were closed. But what we talked about, those innovations, the buying online and picking up in stores and the curbside pickup services, really serving to help this business, and Tritton is doing what he did for Target now at Bed Bath. So let's wait and see, let's let the economy firm up a bit, retail firm up a little bit, and then let Tritton do his thing.
Hill: Jason, kind of a similar story with Levi's this week, in the sense that, you know, online sales look great, but that couldn't make up for the fact that the bulk of their stores were closed for more than a couple of months.
Moser: Yeah. I mean, it's a really difficult time to be a fashion retailer today. I mean, it's really difficult to be a fashion retailer in good times. And this has, obviously, been a tough stretch for everyone, Levi no exception. It's not had the greatest life [laughs] as a publicly traded company. I think the stock has been cut in half essentially. You know, it's one that tugs at my heartstrings a little bit, Chris. I mean, I still wear Levi's jeans and I don't what is -- am I just an old guy? Does Levi still have that, sort of, brand [laughs] cachet? I don't know. But clearly the business is suffering, revenue was down 62%, that translated to big losses on the earning side.
Now, you did mention direct-to-consumer and online. They do have a few different levers in their wholesale and direct-to-consumer e-commerce business. Direct-to-consumer is now more than 40% of their total business; that's up from under 30% just five years ago. And e-commerce has seen that same type of growth more than doubling over the last five years.
Management is doing what they can. They've certainly got the company in a good liquidity position, they're back to about 90% of the stores open. Last quarter, they were keeping the dividend; this quarter they went ahead and acknowledged that they're not going to pay a dividend for the third quarter. They'll reassess in the fourth.
And, you know, honestly, I was impressed to see the inventory number not out of control, given the drop in revenue, inventory only grew 10%. And that's something you really want to keep an eye on, because when those inventory levels get really bloated, that's when margins really start suffering.
So a really tough time, no doubt. I feel like maybe there's some light at the end of the tunnel with Levi, because of that brand, but they've got some work to do, no doubt.
Hill: So before we wrap up, Ron. When you look at Levi's down around 15% in just a few days, you look at Bed Bath & Beyond down more than 20% in the past week, there are people who look at that and think, OK, these are brands that I think are going to survive, I can buy it on the cheap. Do you jump in at this point, or do you think, you know what, there are still too many X factors, give it another quarter?
Gross: As a somewhat traditional value investor, those thoughts are, kind of, near-and-dear to my heart, buying a stock that looks cheap -- and maybe I have a disparate view than the market as a whole, and so it is tempting. And for selected opportunities, I think it's fine. I bought Bed Bath & Beyond in February before the pandemic hit on the fact that I thought Tritton could turn this around. I don't think it should be the majority of your portfolio, opportunities like that. I think most of one's portfolio should be really strong companies that you believe in, that continue to put up great numbers and great earnings and earnings growth. But I think there can be a portion, 5% of your portfolio, that you put toward value plays or turnaround plays, with the caveat that most things don't turn, but the ones that do, hopefully will generate a return in excess of the ones that didn't work out.
Hill: Berkshire Hathaway finally made an acquisition this week. Berkshire is buying the natural gas asset from Dominion Energy for $4 billion. Ron, you throw in the debt, the enterprise value is around $10 billion, biggest deal for Berkshire Hathaway since 2016; although it kind of doesn't feel that big.
Gross: You know, I'm a big Berkshire fan, a big Buffett fan, it's actually my largest holding, and I've been waiting for him to use that elephant gun that he likes to talk about. This doesn't feel like that. Now, $10 billion is still $10 billion, but he's got $137 billion to put to work. And I'm all for being conservative and I trust him, but as a shareholder, I do want to see more.
Having said that, I think this is a good acquisition. It will double Berkshire's market share in the natural gas movement to around 18% in the U.S. I think he probably got a pretty good deal, natural gas prices are historically low, partially as a result of the pandemic. They have bounced off their July lows, but when this deal was being negotiated, I would imagine that he got this on the cheap, since things aren't looking that strong, but they likely will rebound.
You know, biggest Berkshire acquisition in four years. So as we said, $10 billion. All right, let's get moving though, buyback some stock, perhaps, if you can't find anything else out there that you like, but sitting with that much cash is just a drag. And you see that in the fact that Berkshire stock is down 20% this year.
Hill: SiriusXM (NASDAQ: LSXMB) is nearing a deal to buy Stitcher, the podcast division currently owned by E.W. Scripps. SiriusXM will pay $300 million for Stitcher, which includes the Midroll ad network. And, Jason, this instantly gives SiriusXM business relationships with some of the biggest podcasts out there, Conan O'Brien Needs a Friend, WTF with Marc Maron, Freakonomics Radio.
Moser: Yeah. I mean, SiriusXM needs a friend. I mean, WTF with this acquisition, Chris? No, I mean, seriously, this is the same company that bought Pandora, and I don't mean that as a compliment. I've said all along, Sirius is playing defense. As streaming takes over, they've been slow to the draw in a lot of ways there. Spotify and Apple Music are just really two formidable services with a lot of [laughs] users.
Sirius, on its own, is less than compelling. They are trying to pivot and become more, right, podcasts are certainly part of the strategy there. But again, you kind of get back to the distribution thing, and they're not quite there. You know, look at the mobile presence that SiriusXM has, for example, it's just not good. And I used to have SiriusXM, I mean, that's one of the reasons why I canceled is because we just don't really use it anymore.
I think the real story here is [laughs] Scripps. I mean they're selling this thing for $300 million, they bought it for, like, $5 million or something. But, you know, overall Stitcher generated $72.5 million in revenue last year, it's not a company that doesn't make any money. But Sirius is a subscription business, so this isn't about advertising, it's about buying more users and trying to figure out some compelling subscriptions to come from all of it. So I don't think the answer is going to be so clear in the near term. I think it's going to take a little time for them to figure out the strategy, but again, I mean, they're playing defense, you expect to see them try to do this to keep up.
Hill: I'll just say, as a potential silver lining, people have asked me for years, "Hey, is Motley Fool Money on SiriusXM?" And we're on Stitcher, have been since the beginning, so maybe now I can finally start telling people, yes, we are.
More companies are innovating to help customers deal with the [laughs] global pandemic, and Kraft Heinz (NASDAQ: KHC) is one such company. Kraft Heinz has developed a series of kits to enable customers to make their own ice cream in the flavors of Kraft Heinz condiments. That's right, guys: Ketchup, barbecue sauce, mayonnaise, creamy salad dressing, now you can have these flavors in an ice cream kit. Ron Gross, are you in?
Gross: As Mr. Wonderful would say, "Stop the madness," and I will add immediately, this is disgusting. Now, as I've said on the show before, I'm not a condiment guy. Of all those things, the barbecue sauce is the only one that would interest me somewhat, but not in an ice cream, ever, and not for $17. I see it's only in the U.K. right now, I think, so around £15 for the kit, you know, that's about £14 pounds too much.
Hill: You know what, I'm going to just give a shout-out to anyone in the U.K. who's listening right now. If you try one of these, drop an email to Radio@Fool.com, let us know how it goes. We're interested.
Jason, I feel like, gun to my head, I would try the barbecue sauce ice cream.
Moser: Well, that's the operative [laughs] phrase right there, "gun to your head." I'm with you, I'm with Ron, I don't see any reason in the world I would want to try this. I guess if I did, I would go barbecue. I mean, it's funny when you actually log on to the website here, a little bot comes up and says, "Hi, quick question before you go. If you didn't purchase today, what stopped you?" How about "These things look disgusting. That's what stopped me." I mean, do I even need to say it.?
Hill: Let's get to the stocks on our radar. Our man, Dan Boyd, who I know is also no fan of this new endeavor from Kraft Heinz. Jason Moser, you're up first, what are you looking at this week?
Moser: Yeah. Taking a look at Zoom Video Communications (NASDAQ: ZM), what we're broadcasting on right now, actually, ticker ZM. This is, obviously, a wonderful story. It has been a wonderful performer for Foolish investors ever since we've recommended it. It's the second-top performer in our Augmented Reality service. And I think it really has a long way to go still.
The news out this week -- you know, we've got SaaS, there's even BaaS, banking-as-a-service -- Zoom this week announced their efforts to get into the, wait for it, HaaS, market: hardware-as-a-service. And I'm not kidding either, they're actually coupling up with third-party providers to offer Zoom-integrated hardware that support their Zoom Rooms and Zoom Phone offerings. And I think, this actually is a pretty smart idea, because they're not really on the hook for the hardware, they're just partnering up. And I think it makes it a little bit easier for either businesses on the fence or businesses looking to expand their Zoom services to really, you know, get something that they know, like Zoom says, just works. It's a very customer-centric company. You have to keep your eye on those, they can be wonderful investments over time.
Hill: Dan Boyd, question about Zoom Video?
Dan Boyd: Jason, in the HBO show Silicon Valley, the idea of creating a hardware solution for a tech company was considered a joke. Is this going to be a joke for Zoom?
Moser: You know, I think perhaps five years ago, we might have thought it would be, but given where we are today and remote work, I think this actually stands a chance of doing pretty well.
Hill: Ron Gross, what are you looking at?
Gross: I'm going back to Rollins, Dan. ROL. Pest and termite control company, best known for its Orkin and Western brands. Steady performer. Increased revenue and earnings quarter over quarter for a decade plus, until COVID put a little bit of a halt to that. Serial acquirer, grows through acquisitions, 80% of sales are recurring. Commercial division took a hit because of the economy shutting down, but I think that will rebound. January made its 18th consecutive dividend increase of 12% or more, and they've taken a step back and cut the dividend for now.
Hill: Dan, question about Rollins?
Boyd: Not really a question, Chris, but more of a comment. When I find insects in my home, I just try to gently remove them and place them outside. I think that's the ethical thing to do.
Gross: Would you consider yourself a humanitarian?
Boyd: I'd consider myself an insect-arian, I guess.
Gross: Nice.
[...]
Hill: Earlier this week, I talked with David Henkes about the challenges facing restaurants and how the current pandemic might permanently change the ways in which we go out to eat. But I began by asking for his thoughts on the current state of things.
[...]
David Henkes: As a natural optimist, as I started to see restaurants reopen in May, into June, and it seemed that there was a lot of consumer pent-up demand, and numbers were coming back. And, listen, I mean, none of the sales numbers were great, with the exception of a couple, you know, delivery-focused concepts, you know, Wingstop, Papa John's, Domino's, those types of players. But I was starting to feel more optimistic, but I think as we've forecasted the industry -- and again, Technomic has been forecasting restaurants and broader food service industry since the early 70s -- we realized this is not a normal year. And so, we've been looking at scenarios.
And so, one of our scenarios for the industry was always that there would be a resurgence in some potential reclosers or new shutdowns; localized for sure. And so, what we, I think, are seeing play out here is more -- I don't want to say a worst-case scenario, but it's certainly one of the scenarios where we're not trending toward a best-case scenario for sure. And so, I think we're almost back to where we were maybe when we chatted in March or when I would have talked to you in April, that takeout, delivery remains critical for restaurants. That's going to now, in a lot of states and a lot of places, to continue to support the business for probably the next several weeks at least. And the dine-in experience, which, you know in most states had been limited to 25% or maybe 50% capacity, is probably on hold in a lot of places for the next month or so. And so restaurants are facing a continued uphill climb where all the fixed costs and all the labor and everything, as was a concern back when the first shutdown happened, are just exacerbated. And there's been some government support in the PPP, and some of the other things that we've seen.
But we're entering now a very dangerous phase, where a lot of restaurants that made it through the first three months are realizing that it's not working out. And so we think there's still a lot of heartache to come, a lot more challenges. And where we had hoped that things would be starting to brighten up is maybe not as bright as we thought it would be a month or two ago when we were looking at the industry.
Kind of a long-winded answer for you, but, you know, it's hard to get a national read on the industry, because there's so many -- I mean, you almost have to look at now -- and this is what we talked to a lot of our clients, but you have to look at it very regionally and almost on a state-by-state basis, because every state has different metrics and different opening rules, and some of them are closing. And then to your point, even in cities, within states, things are closing. And so it's hard to get a national read, but there's no question the industry is still going to be down probably 20% to 30% at least for the year when all of this is said and done.
Hill: Wow! Because the last time we talked, the range that you had given at that time was, sort of, best-case scenario, industry down about 11% in 2020. It sounds like we're obviously -- and you had said at the time, 27% decline is worst case, and it sounds like we're absolutely trending toward that worst-case scenario.
Henkes: Yeah. And, again, we're still, kind of, looking at scenarios, right? And it also depends on what type of restaurant you're talking about. Because quick-service restaurants, and if you look at, certainly, the publicly traded restaurant chains, which I know you track. I mean, some of them have been posting decent numbers, some of them are actually really great, some of them OK. And even some of the larger full-service chains have been able to pivot pretty strongly to delivery, third-party delivery or their own delivery, to curbside takeout or takeout more generally. And so there's certainly pockets of restaurants that are doing better than we anticipated, but the big challenge, and especially in sit-down restaurants, full-service restaurants, is so much of that business are small business owners, small business is one to six location operators.
You know, the big chains are generally speaking going to be fine, and so what's going to end up happening more broadly is, the business is going to be much more chain focused than it was last year or two years ago. And chains are going to have a bigger share. And it's really those independents where the continued challenges occur. And so sometimes the better news is masked by some of the publicly traded chain reports that, you know, give us some hope on what's going on. But those Main Street mom-and-pop operators are the ones that are going to continue to get hammered by this.
Hill: But even within some of the publicly traded restaurants -- and I'll just use Darden as an example, I mean, you look at their most recent result, they own Capital Grille, a high-end steakhouse, those results were so much worse than the results of Olive Garden and the other brands under the Darden umbrella. Whether it's chains like Capital Grille or mom-and-pop, is it safe to assume that higher-end restaurants that depend more on the in-restaurant sit-down experience, those are the ones to be the most worried about?
Henkes: 100%. There's no question. If you were, in 2019, a high-end, fine-dining or even polished-casual restaurant generating $60, $70 check averages, you didn't put a lot of thought into an off-premise strategy, you didn't really think about delivery, you didn't think about a takeout strategy. Maybe you did it as sort of an ancillary business just to drive some incremental revenue, but it wasn't a core part of your strategy. And what's happened since March is that those that hadn't had that beforehand have been severely disadvantaged. And it's very hard to replicate that in-store, in-restaurant experience for a higher-end restaurant in a takeout or delivery platform. And so there's no question that some of the casual-dining places, wing locations, obviously the pizza guys on the quick-service side, you know, those are all easy menu categories, if you will, that had already had some pretty strong off-premise business.
But you're absolutely right, the higher-end restaurants are most vulnerable. And you see them trying to pivot to this now. So I mean they're doing meal kits and boxes and selling things. You know, Alinea here in Chicago had a strong focus on off-premise over the last couple of years, I mean, nobody would have thought a year ago that Alinea, one of the Michelin-starred restaurants in Chicago, would have to do all of their business off premise. But they've shifted, and they're doing boxes and things that I think are $40 to $50 per person, which is still higher end and you get some great food with it, but it's still hard to replicate that experience. And so those are the ones, and especially the fine-dining, white-tablecloth independents, the true independents, those are the ones that probably -- you know, we're going to see some significant unit closures, business failures.
And again, within Darden or Brinker or any of the other ones, I mean you see within their more traditional casual dining, the parts of the business that perhaps had been struggling in years past, those are the ones that they had invested in some off-premise takeout or delivery capabilities previously, and they've been able to -- again, you know, not set the world on fire, but certainly at least maintain some levels of business that allow them to keep the lights on.
Hill: We've touched a little bit on delivery, in terms of delivery news, most recently Uber buying Postmates for $2.6 billion. What did you think of the deal for Uber, and does that tell us anything about the future of delivery?
Henkes: There's a couple things. One is, it's still very hard in today's environment for these third-party delivery companies to make money. Especially with Uber now. And when you think about Uber's, I don't know if you want to call their core business, but obviously the transportation side of Uber is getting killed right now. And so this move into Postmates and what it allows them to do -- and, I think, I was just reading something yesterday that they're now talking about this, it starts to get them not only new restaurant delivery, but Postmates is so much more than that. And they do last-mile delivery for a lot of different things, for retail, grocery delivery, pharmaceutical stuff. And so what this allows Uber and now with Postmates to do is to not only get into restaurant delivery, and hopefully get some synergies and lower cost and hopefully get to some higher level of profitability, but it now allows them, or at least gives them a greater platform to do delivery in a whole lot of other areas.
And I think that's part of the future of delivery, is that these restaurant-only platforms that are having trouble making it may need to look into other industries. And I think we're still going to continue to see continued transformation with the commission fees. And we see Grubhub -- especially, Grubhub has been, at least, charged with a lot of unfair business practices, rightly or wrongly. You know, players like DoorDash seem to have a little bit more flexibility. And I think what we're going to start to see is, a little bit more of a, sort of, à la carte system where they're going to need to offer a lot of different services at different price levels or different commission levels for restaurant operators, because certainly the government crackdown on fees and commissions, the ability to make money. I mean, it's all coming into this perfect storm where the bigger you are, at least, the more synergy, more [...] you can get, but it's still going to be really hard to make money in this environment, and I think we're going to see expansion into other areas, like I said.
Hill: Let's go into the future, 12, 18 months. Let's assume that America is past the pandemic, there's a vaccine, things are starting to get "back to normal." And part of getting back to normal is entrepreneurs looking at the restaurant business and investing in it. What do you think we're going to see in terms of permanent changes out of this? Is it smaller footprint for actual restaurants, is it more second kitchens within restaurants, more ghost kitchens outside of restaurants?
Henkes: Yeah, I think, one of the trends we had already been seeing is this move toward a smaller footprint. I mean if you look at, for example, a typical Cheesecake Factory. I mean, that type of location now is going to be very hard to support on a going-forward basis; these huge menus, huge square-footage locations. And so, already, I think, the movement was toward smaller footprints. And I think that's only going to accelerate.
And to your point, I think, as delivery and off-premise, more generally, continue to take share -- and it will continue to take share, even as people begin the dine in -- they've now realized they can get pretty high-quality restaurant meals at home. And so, delivery, we believe, which had already been growing double-digit even before the pandemic, is going to continue to eat into that on-premise share of consumption. And so, what that means then is that when you're building a restaurant or you're building your operation, you need to have a solution for that.
And so, ghost kitchens -- which, you know, really, we only started talking about ghost kitchens probably two years ago. I mean, this whole idea of a delivery-only kitchen. And there's a number of different ways it can work. If you're a restaurant, you can run your own virtual brand out of your own kitchen. There's third-party kitchens, like Kitchens United, that run them. DoorDash has tested delivery-only kitchens with some of the brands they work with. And so there's a lot of different ways that these can function or work within the industry, but there's no question that you're going to see a huge surge in some kind of delivery-only virtual kitchen.
You know, I was just reading this morning that Chuck E. Cheese had, for the last several months, been selling their pizza under the name Pasqually's Pizza on delivery apps. And I've heard some other chains that are doing something similar where they've developed their own virtual brand. There's no storefront for it, but if you're online you can buy, in this case a Chuck E. Cheese pizza under a different name. Is that a virtual kitchen, is that a delivery-only kitchen? It's certainly a virtual brand. But I think what it means is that the actual storefront, the actual location of a restaurant is less important than the location on the app or how much you've been able to drive interest in your brand either online or on a delivery app. And so it really changes the whole operation in terms of what the restaurant looks like and how it operates.
Hill: I applaud them for innovation, but I don't think changing the name is going to get me interested in Chuck E. Cheese pizza; that's just me.
Henkes: But if you don't know it, and you just eat pizza on a Saturday night, and you say, "Oh! Let me try this Pasqually's Pizza." And I think that's the thing. I mean, I think a lot of brands, in trying to expand their reach -- you know, if you're a casual-dining bar-and-grill and you want to get into the wing business, maybe you start -- or you want to focus on your wings -- maybe you start a virtual wing concept online and market it under a completely different brand. And so, it really opens up the opportunities for restaurants. Certainly, as researchers, then [...] challenges us to start thinking about, well, how do you actually define a brand? I mean, if Chuck E. Cheese is selling under Pasqually's, and Pasqually's suddenly is 10% of Chuck E. Cheese's sales, is that counted as a separate brand in our tracking of brands? Is it accounted for under Chuck E. Cheese revenue? And so, there's just some interesting things that we as industry trend watchers have to, sort of, identify and figure out how to track it.
But this whole move toward off-premise has some significant implications, and I think a lot of them aren't even going to be known, but there's no question that the investor money and just the interest level in operators opening or working with delivery-only virtual kitchens, whatever you want to call it, ghost kitchens, is going to remain extremely high for the next three to five years, and probably a significant investment opportunity for those that have the capital to do so.
Hill: One more thing, and then I'll let you go. Last time we talked, you said that one of the most impactful things that customers can do for their local restaurants is to buy alcohol when they're doing takeout orders. Is that still the case?
Henkes: It is. You know, beverage alcohol is such a high-margin item for restaurants in normal times. Now, what has happened, obviously, is, with the whole dine-in experience gone, that margin has disappeared with it. And so, what we've seen is a relaxation of local regulations allowing most restaurants and bars to sell off-premise, beer, wine, cocktails. It looks like a lot of cities are going to continue those, perhaps in some cases indefinitely.
And the challenge, though, is that, the experience, the price that you can charge for these is not the same as you're going to get in the restaurants. And so while the margin is still good, it's not as great as it would have otherwise been if you're in the location. I mean, a lot of places, now that sell beer have shifted to packaged beer, to cans, sometimes they're selling six-packs. And so, you can't sell that for the same price that you're selling a draft beer when you're sitting in the restaurants. And so, the margin structure changes somewhat on that.
And similarly, with cocktails or cocktail kits, I mean, it's an incremental revenue, for sure, but it's not the margin that it used to be. And so, certainly, we do a lot of work with the beverage/alcohol suppliers. And listen, when you look at the parts of the restaurant and food service business that are most significantly impacted, it's all the segments that serve alcohol, right; casual dining, fine dining, hotels, recreational venues. And so the beverage alcohol business, more broadly, is going to face some additional significant challenges that quick-service restaurants or others aren't going to, just because alcohol is sold in those segments that are most significantly impacted by the downturn. And so, to the extent you can buy a cocktail or glass of wine, a bottle of wine, a beer from an operator, [...] incrementally. And I would continue to recommend doing so, but it's certainly not as profitable as it is when you're sitting in the restaurant and you're paying $8 for a craft beer.
Hill: Well, I am going to do it anyway, just because you recommended it. [laughs] David Henkes, thanks for being here.
Henkes: Thanks, Chris, I appreciate it.
Hill: That's going to do it for this week's show. I'm Chris Hill. Thanks for listening, and we'll see you next week.
Chris Hill has no position in any of the stocks mentioned. Jason Moser has no position in any of the stocks mentioned. Ron Gross owns shares of Apple, Bed Bath & Beyond, and Target. The Motley Fool owns shares of and recommends Apple, Rollins, Spotify Technology, and Zoom Video Communications. The Motley Fool recommends Dominion Energy, Inc, Domino's Pizza, Nordstrom, and Uber Technologies and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Too much excess, shock to the system comes, it kind of thins things out a bit, and hopefully, the survivors can then resume growth and get back to maybe then expanding down the road if demand warrants it. But, you know, as bad as things are on the closure side there, and they're not good... Matt Frankel and I talk a lot about Simon Property Group on the Monday Industry Focus shows, and that's a really interesting story right there, because this is a real estate investment trust and they're the biggest mall operator in the country. Hill: Jason, kind of a similar story with Levi's this week, in the sense that, you know, online sales look great, but that couldn't make up for the fact that the bulk of their stores were closed for more than a couple of months.
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And to your point, I think, as delivery and off-premise, more generally, continue to take share -- and it will continue to take share, even as people begin the dine in -- they've now realized they can get pretty high-quality restaurant meals at home. The Motley Fool owns shares of and recommends Apple, Rollins, Spotify Technology, and Zoom Video Communications. The Motley Fool recommends Dominion Energy, Inc, Domino's Pizza, Nordstrom, and Uber Technologies and recommends the following options: short August 2020 $130 calls on Zoom Video Communications.
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And so there's certainly pockets of restaurants that are doing better than we anticipated, but the big challenge, and especially in sit-down restaurants, full-service restaurants, is so much of that business are small business owners, small business is one to six location operators. If you were, in 2019, a high-end, fine-dining or even polished-casual restaurant generating $60, $70 check averages, you didn't put a lot of thought into an off-premise strategy, you didn't really think about delivery, you didn't think about a takeout strategy. But this whole move toward off-premise has some significant implications, and I think a lot of them aren't even going to be known, but there's no question that the investor money and just the interest level in operators opening or working with delivery-only virtual kitchens, whatever you want to call it, ghost kitchens, is going to remain extremely high for the next three to five years, and probably a significant investment opportunity for those that have the capital to do so.
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I don't know. That's going to now, in a lot of states and a lot of places, to continue to support the business for probably the next several weeks at least. Hill: One more thing, and then I'll let you go.
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2020-07-13 00:00:00 UTC
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A Weird Year for Pipeline Companies
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https://www.nasdaq.com/articles/a-weird-year-for-pipeline-companies-2020-07-13
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In this episode of Industry Focus: Energy, Nick Sciple chats with Motley Fool contributor Jason Hall about the oil and gas pipeline industry. They provide a breakdown of the industry and talk about some recent deals, including one made by Warren Buffett. They discuss the regulatory and legal challenges faced by pipeline companies, the future of oil and gas in general, and much more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on July 9, 2020.
Nick Sciple: Welcome to Industry Focus. I'm Nick Sciple. We've got a great show for you today. We'll be taking a look at a week full of news in the oil and gas pipeline industry. Joining me to break it all down is Motley Fool contributor Jason Hall. Jason, welcome back on the podcast.
Jason Hall: It's so good to be on, and talking about oil stuff again.
Sciple: Yeah. I mentioned we're going to talk about oil and gas pipelines today. And of course, we've got to lead with Warren Buffett's latest deal. On Monday, we got news that Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Energy, the energy unit of Buffett's conglomerate, will pay about $4 billion in cash and take on $5.7 billion of existing debt to acquire Dominion Energy's (NYSE: D) natural gas transmission and storage business.
Jason, when you saw this news, what was your reaction?
Hall: Honestly, it was like, hey, this is exactly what Buffett does. I mean, this is as pure a Buffett deal as it gets. He finds a predictable cash cow, cash flow business, and he buys all of it, when he can, for a reasonable price. And I think that's what we saw right here. Buffett has been bad at energy investing on the equity side. He's been a terrible investor when it comes to buying oil stocks, but I think everybody [laughs] has over the past decade if you want to be fair. But this is exactly what Buffett has proven to be really, really good at.
Sciple: Yeah, this energy segment of Berkshire Hathaway, I think, Warren Buffett refers to it as his top dogs that really, kind of, drives the portfolio. When you look at these assets that Berkshire Hathaway acquired, what comes with them in this deal?
Hall: So first thing I'll note is, was it, over 7,000 miles of interstate gas pipelines. So that's like the arteries of the energy infrastructure in the U.S. So that's a great thing to own. We'll talk a little bit more about it on the show, why [laughs] right now it's actually a really good time to be buying these kinds of assets that are already in play and have been around for a long time. Again, these aren't oil pipelines, they're gas pipelines, they're gas transmissions.
So you think about natural gas as opposed to oil. It's generally pretty consistent in demand, it's what power plants really prefer to use, utilities really prefer to use it right now for energy generation. So it's a good, solid business, it's a toll-road business; you're not making a play on the commodity price. So that's like the core that, kind of, underpins what comes along with why Buffett would want to do this.
But what it also gets, it gets a 25% stake in Cove Point, which is an LNG export facility. It started out as an LNG import facility, but now it's an export facility. We'll talk about some of the advantages of owning that right now too. That's a pretty cool thing to get. He's paid $4 billion in cash and taken out about $5.7 billion of debt; which I wouldn't be surprised if we didn't see that debt get refinanced at current rates too.
Sciple: That's what I was thinking about. So [laughs] you know, when they buy this deal and they take on $5.7 billion in debt, OK. But given today's interest rates, I mean, they can refinance that as close to 0% as you're going to get. So I just view this as a cash deal, honestly, with Berkshire's access to capital.
Hall: Yeah, well, it's better than cash, right, because whatever interest rates you're going to pay, it certainly is going to be, I mean, [laughs] maybe they get negative rates, right? [laughs]
Sciple: Yeah, when you look at the price that Berkshire paid for these assets; I've seen some estimates, JPMorgan had these pipelines at about a $1 billion in EBITDA. So you get about 10X EV to EBITDA, [enterprise value to EBITDA] is what Berkshire is paying for these assets. What do you make of that valuation? Was it an attractive deal from a pricing point of view? Obviously, these assets have a long life and can drive cash flow over time.
Hall: Yeah. I don't think it was a steal, but I think it was certainly a fair price for what they paid. And then if you start looking at some of the publicly traded businesses out there, that are, you know, kind of somewhat similar in terms of what you can buy, it looks like a good value; it really does.
Sciple: So given that we've talked about the attractiveness of these assets over time, these are the arteries of the U.S. when it comes to the energy infrastructure. Natural gas is going to take more and more share away from coal as we move forward over the years. Why is Dominion selling these assets today?
Hall: You know, this is a really -- I don't want to say it's a touchy subject, but what you have to remember is that you think about the businesses that own and operate these kinds of assets. So typically you have two businesses. You have some utilities, like Dominion, that own some as part of a larger business that's primarily in regulated utilities. But then you have the stand-alone pure-play midstream pipeline companies, that's their business; they own pipelines, they own gathering infrastructure assets, they own storage facilities, and that's kind of all they do. And I think for Dominion, this is simply a case of having to make a decision about what it wanted to focus on going forward. [laughs] If you've paid any attention to the news over the past week, there's been a lot of bad news for the state of anybody trying to build pipelines or expand pipeline infrastructure; it's getting ugly out there right now.
Sciple: Absolutely. Dominion mentions, with the announcement, that they hope this will help accelerate some of their transition to reducing their emissions and things like that, but another thing they mention is in conjunction with the sale of these assets to Berkshire Hathaway, Dominion also announced that it is canceling its planned Atlantic Coast Pipeline that it had been working on with Duke Energy going back for six years. So this really looks like Dominion just wants to get out of this pipeline business. One of the issues they cite is continued legal costs, permitting costs, when it comes to trying to get these issues approved. They actually just won a 7:2 opinion in the Supreme Court last month that looked like they'd overcome some hurdles.
But they cite in their press release from canceling this pipeline that recent court announcement having to do with the Keystone XL pipeline in a Montana federal court. The judge there overturned an existing permitting scheme, Nationwide Permit 12, that had allowed a number of pipelines to pass with limited review. There has been continued challenges to that, and actually this week, the Supreme Court upheld that decision from the lower federal courts. So it looks like Dominion is looking out at the regulatory environment, the costs that it's going to take to bring this asset to market and comparing that with the potential returns over the lifetime of what they could potentially realize. They just wanted to get out of that business.
Hall: And I think you have to understand how the implications are different for a Dominion Energy, that has a large regulated utility business, than it would be for -- I think we'll talk about Energy Transfer (NYSE: ET) in a minute -- or one of these guys, that their sole business is pipelines and not any of this regulated business, it's when you start commingling utility customers business and those funds that are part of that regulated utility, with a side business or an unregulated business that you're trying to do, and it gets really hard and it gets really complex and complicated, and it can be really, really challenging. So if you're a Dominion and you see potential continued legislation, and those costs that can start -- you know, can get harder and harder to keep them segregated away from the regulated utility part of your business, because there are a lot of legal requirements to do that, that sometimes you just have to walk away, because unless you have a certain level of certainty that you're going to be able to move forward, the risk of unpredictability, it creates a problem.
So if you're an investor and you're looking for yield, you're looking for income, and you're looking for it to be higher than you can get from bonds, which is nothing now, right, but also you want to have it as safe as possible; utilities are typically a place in equities that investors are going to look. Because they generate those steady cash flows, and as an investor, you know that dividend is almost a promise, right, it's as close to a promise as you can get. Now, [laughs] obviously, that hasn't worked out too well for Dominion Energy investors. If you bought Dominion Energy stock last month or earlier this year, you're not happy right now, because the dividend is getting absolutely gutted as part of this deal. But again, the idea is they're kind of hitting the reset button, so they can just start over and just focus on the regulated business without the overhang and all the implications that come along with the unpredictable business that is [laughs] now building pipelines, which, you know, 10 years ago, you wouldn't have thought that this would be an unpredictable business, right?
Sciple: Yeah. To your point on unpredictability, the original estimates that Dominion and Duke had had for the cost of the project was $4.5 billion to $5 billion. Their most recent public guidance had increased around $8 billion, obviously, massive cost inflation when it comes to trying to get through all these regulatory hurdles. And, yeah, we mentioned this Atlantic Coast Pipeline that had been in development and is now being canceled. Keystone XL is a pipeline that had been proposed nearly a decade ago, at this point.
Hall: Not nearly, it was proposed in 2010. It's been 10 years.
Sciple: And so, this pipeline appears to have reached a point to where courts have ruled, it can't proceed forward. But you had mentioned Energy Transfer. This is another case, the Dakota Access Pipeline, they operate running from the Bakken, down toward Illinois helping to distribute that oil. That's a pipeline that's been controversial over a number of years, but it has actually been operational for the last four years. But on Monday, a U.S. district judge issued a ruling that the pipeline would have to shut down by Aug. 5 for a thorough environmental review, and some estimates say that could take up to 13 months. In response, Energy Transfer has said, "We're not complying."
What do you make of this, Jason? I mean, you've got a federal judge going toe to toe with a company that is saying we will not comply with your ruling. What does this mean for Energy Transfer, the business, today?
Hall: So philosophically, we can -- again, I think this is really like, this is like the epitome of the difference between a regulated utility and a stand-alone pipeline company. This is not a battle that you would have seen a company like -- I'm just completely drawing a blank here -- like the utility would, like Dominion. This is not about where you'd see Dominion being willing to want to fight because, again, we're not talking about the same pipelines here, but the reality is that if you count on regulators to be your friends, you can't fight city hall on something like this, because the political implications are just -- they're too big, right, they're too risky. But if you're Energy Transfer and your stock has been pummeled and your business is suffering right now because of your exposure to, say, I don't know, Chesapeake Energy, that's a big customer of theirs, and some of their contracts could be at risk, you know, in for a penny, in for a pound here, right, you have to, you have to take your risks and take your shots. And I think this is the kind of thing where they're saying, "We're going to push this as far as we can." You know, they still have legal options, and my expectation is that they're trying like hell to try to get some federal judge to issue a temporary injunction until this can go before the courts. And it can go all the way to the Supreme Court, right? I think it really could.
But this is their core business. This isn't a side business they're trying to grow, this is what they do, this is how they make a living. So I think they have no choice but to continue to push. And, I think, frankly, you know a Supreme Court ruling, simply from the perspective of giving some more clarity to the entire space for that predictability going forward, I mean, that may be the endgame. We'll see, we'll see.
Sciple: Yeah, certainly a lot of uncertainty going on here. And I agree, there's certainly a possibility that this could go to the Supreme Court. When you look at Energy Transfer today, you mentioned the Chesapeake Energy bankruptcy affecting them. The Chesapeake is trying to avoid several pipeline contracts. One of them is a nearly $300 million agreement with Energy Transfer. You look at the stock today, its dividend yield is nearly 20%. What do you make of the stock? I mean, what do you do with it here?
Hall: That dividend is getting cut, we all know it, that dividend is getting cut. But, no, I think here's the thing. So I think, if you're looking for a yield, if you're looking for income, when you see a 19% yield, with very few exceptions, that's not a place to go for yield. And I think the market is simply saying, we think there is a very high probability Energy Transfer's dividend is going to get cut. It's like, it's just going to have to come down, because the cash flows are affected. You know, there's substantial risk to its cash flows.
The Chesapeake deal is one thing, and now you have this with the Dakota Access Pipeline, that's a massive source of cash flows for the company that dividend investors aren't going to be able to count on, but I think what you can do is you can look at the business and say, "Wow! the stock price has really fallen a tremendous amount, if I think that there is any opportunity that they can salvage some of this and continue to move forward, maybe there's an opportunity for upside capital gains on buying the stock at this price, on a turnaround, if they can get their business prospects back lined up, so." But, again, that's a high-risk, sort of, scenario and it's two totally different investing thesis based on two totally different expectations.
So I think that's, kind of -- you have to put it in that bucket and decide whether or not you think that the risk is worth the potential returns. And for me right now, I can't give an answer to that. There's just too much uncertainty, there's too much litigation risk, there's too much legislation risk, we don't know, right, we don't know yet.
Sciple: Yeah, I agree with you, Jason. One of my, kind of, fundamental rules of investing is if my thesis depends on the government to do anything, it's probably not a good thesis. And so, I think in this case, you're dependent on the government coming back to you or the courts coming back to you with an opinion that reverses what has occurred in the lower court, which says that you can't maintain operations of your pipeline.
And, you know, if I own the stock already, I don't think I'd be selling, but I'm not going to borrow trouble buying into all this uncertainty right now, given that, again, you're dependent on the government making a favorable decision for you.
Hall: Something you and I spitballed a little bit that I brought up, I don't want to attribute this potentially terribly wrong idea to you, but something that just popped into my mind as we were looking at this is, maybe part of the endgame is, if the government is going to shut this down, at the risk of saying, OK, this pipeline is done, it can't operate. Maybe part of the endgame is saying, look, we've been operating this pipeline for multiple years based on you giving us the green light and you giving us the go-ahead. If you're going to take it away from us, you got to make us whole, right? I don't know, I think that'd be a pretty unprecedented thing for a pipeline, but last I checked, you know, and this is an eminent domain, I realize that, but if the government takes away your property for eminent domain, they have to pay you market value. So maybe there's still some expectation that if you're going to change your mind and say this can't go, maybe that's like a worst-case hope for the company is something like that happening. Just spitballing.
Sciple: Yeah, it's certainly abnormal for a pipeline that has been in operation for a number of years to be shut down, it is atypical. And so, to a certain extent, we're off the edge of the map on where we go from here.
You know, circling back to Buffett, we've talked about given the regulatory issues, Dominion doesn't want to be involved in building its Atlantic Coast Pipeline. We've had courts really restrict the ability to build new pipelines. What does that say about the attractiveness of these pipelines that Buffett just got, these pipelines that are already in existence, already operating, transport a key commodity when it comes to powering our country? Does that make these assets even more valuable, the fact that it's so, so hard to build new pipelines?
Hall: I think maybe it does. I think it certainly adds a layer of predictability to what they should be able to generate over the term of their existence. And I think we also have to delineate, too, that all pipelines aren't created equal. We're talking about Keystone XL and the Dakota Access, those are oil pipelines; these are natural gas assets. So in terms of, again, they feed energy for the electrical grid versus oil. And I'm pretty sure I saw you on Twitter take the bold stance that you think U.S. auto sales may have peaked, like, permanently peaked. So I mean, there's questions about, you know, in North America in terms of oil demand, that I think are some reasonable questions to ask. But gas, natural gas, is kind of a different story. I also think you start talking about taking natural gas to the next step, you start talking about LNG. So that Cove Point LNG export facility.
I think that's kind of a little secret value that's not getting enough play, because something that a lot of people aren't really aware of is that the oil crash this year also fundamentally affected the development of liquefied natural gas export facilities in North America. In the U.S., there's a bunch of these, there are a dozen or so, that were pretty lined up to start some stage of construction in the next year or so. I think they've all been delayed; I don't think anybody is moving forward with anything quickly. So I think that just adds an extra two years of zero competition for Cove Point as one of only a handful of LNG export facilities that are operating. And globally, LNG is going to bounce back, the demand is going to recover, and the thesis, long term, is still the same. So I think that's a nice little piece that's part of the pie too.
And then you start talking about biomethane, about renewable natural gas from landfills and dairy farms and other agricultural operations and human waste, that's like, that's a net positive, these are zero-carbon, negative-carbon sources of energy, that these pipelines can carry that too, because it's the same molecule. So like the long-term value of these assets is far different than oil, and, I mean, we could see a century of still use from these.
Sciple: I absolutely agree, Jason. On the car ownership peaking, I think the stats to know there is just that in the U.S., I want to say it's like, one-and-a-quarter [1.25] cars for every licensed driver in the U.S. and maybe even higher than that. There's just only so many cars that the country can take.
When you look at Warren Buffett jumping into this, and I also agree as well on your point about natural gas pipeline versus oil pipelines, I think that there's very little doubt in my mind that we're still going to be using natural gas as part of our electricity grid 50, 100 years down the line, and I don't have that same level of confidence about the role that oil is going to play. I think it's certainly going to be around; we're still going to be using plastics and things like that, but whether we're going to be using it on the same scale for transportation, which I think accounts for about 50% of oil demand in the U.S., I really don't know.
When you look at natural gas pipelines, specifically Warren Buffett moving into this space, a company we always hear a lot of questions about is Kinder Morgan, which is a company very involved in natural gas pipelines. When you see Warren Buffett move into this space, is this signal to you, hey, come on in, the water is fine? Maybe we should go look at some of these other pipeline companies for an attractive investment opportunity.
Hall: You know, yes and no. I think if you look at the price that Berkshire paid. I think it's about 10 times enterprise, so that's equity plus debt, about $9.7 billion. So about 10 times enterprise value to EBITDA, I think it kind of sets a good baseline to start looking at the pipeline companies. I think you might have to, kind of, normalize those a little bit, and maybe -- this is a weird year, right, and so, I think maybe you can apply those values and maybe look at last year's results and, kind of, think about future earnings potential a little bit. So some that might even look a little bit above that EV-to-EBITDA multiple might still be a good value, but I think it can definitely be a great place to identify pipelines that maybe do trade at a good value. Again, for investors that are looking for that steady, stable source of predictable income from dividends that pipeline companies, kind of, like utilities, tend to pay, you think maybe with a little more growth potential, as we need more of that infrastructure. But, dude! All bets are off right now [laughs] in terms of how much potential for growth there's going to be, especially when you cross the border or the federal government gets a bigger role in the thumbs-up or the thumbs-down.
Sciple: A lot of uncertainty in this space right now, and when [laughs] you're dealing with the Supreme Court getting involved and lots of court cases, we'll just have to see how things play out, but as we get more information, we'll be here to cover it, and I'll have you back on the podcast to break it all down.
Hall: I'm going to put one last piece of trivia on the end here. This just blew my mind. And so, over the past decade, Berkshire Hathaway stock has doubled plus a little bit. Did you know that the S&P 500 has generated twice the total return of Berkshire Hathaway over the past decade? It's lapped Berkshire Hathaway over the past decade.
Sciple: Do you think that maintains over the next decade?
Hall: I don't. I look at the price of Berkshire right now, the valuation, and I think it's an absolute buy. I think you look at the operating businesses, the cash flows they generate, and you look at its equities that have suffered -- Buffett has bought a hell of a lot of banks, [laughs] over the past decade, and banks have been hit very, very hard, and I think that's weighed a lot on the investing portfolio. I think that's carried over to the value of the stock.
So I sold my Berkshire shares about five years ago, but I'm looking at it right now as a strong buy, I really am.
Sciple: All right, folks, we're going out on a limb here. Berkshire Hathaway is a buy.
Hall: That's crazy to say that, huh?
Sciple: All right, Jason, thanks for coming on the podcast, as always.
Hall: A blast, always a blast.
Sciple: As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear.
Thanks to Tim Sparks for his work behind the glass. For Jason Hall, I'm Nick Sciple. Thanks for listening, and Fool on!
Jason Hall has no position in any of the stocks mentioned. Nick Sciple has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Kinder Morgan, and Twitter. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The Chesapeake deal is one thing, and now you have this with the Dakota Access Pipeline, that's a massive source of cash flows for the company that dividend investors aren't going to be able to count on, but I think what you can do is you can look at the business and say, "Wow! I think that's kind of a little secret value that's not getting enough play, because something that a lot of people aren't really aware of is that the oil crash this year also fundamentally affected the development of liquefied natural gas export facilities in North America. And then you start talking about biomethane, about renewable natural gas from landfills and dairy farms and other agricultural operations and human waste, that's like, that's a net positive, these are zero-carbon, negative-carbon sources of energy, that these pipelines can carry that too, because it's the same molecule.
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In this episode of Industry Focus: Energy, Nick Sciple chats with Motley Fool contributor Jason Hall about the oil and gas pipeline industry. On Monday, we got news that Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Energy, the energy unit of Buffett's conglomerate, will pay about $4 billion in cash and take on $5.7 billion of existing debt to acquire Dominion Energy's (NYSE: D) natural gas transmission and storage business. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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On Monday, we got news that Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Energy, the energy unit of Buffett's conglomerate, will pay about $4 billion in cash and take on $5.7 billion of existing debt to acquire Dominion Energy's (NYSE: D) natural gas transmission and storage business. Hall: And I think you have to understand how the implications are different for a Dominion Energy, that has a large regulated utility business, than it would be for -- I think we'll talk about Energy Transfer (NYSE: ET) in a minute -- or one of these guys, that their sole business is pipelines and not any of this regulated business, it's when you start commingling utility customers business and those funds that are part of that regulated utility, with a side business or an unregulated business that you're trying to do, and it gets really hard and it gets really complex and complicated, and it can be really, really challenging. When you look at Warren Buffett jumping into this, and I also agree as well on your point about natural gas pipeline versus oil pipelines, I think that there's very little doubt in my mind that we're still going to be using natural gas as part of our electricity grid 50, 100 years down the line, and I don't have that same level of confidence about the role that oil is going to play.
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I mentioned we're going to talk about oil and gas pipelines today. Hall: Something you and I spitballed a little bit that I brought up, I don't want to attribute this potentially terribly wrong idea to you, but something that just popped into my mind as we were looking at this is, maybe part of the endgame is, if the government is going to shut this down, at the risk of saying, OK, this pipeline is done, it can't operate. Hall: I don't.
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699059.0
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2020-07-13 00:00:00 UTC
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2 Stocks Warren Buffett May Buy Next
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https://www.nasdaq.com/articles/2-stocks-warren-buffett-may-buy-next-2020-07-13
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After almost 4.5 years of waiting, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett finally pulled the trigger on an acquisition a little over one week ago.
With Berkshire Hathaway sitting on an all-time record $137 billion in cash, cash equivalents, and marketable securities as of the end of the first quarter, Buffett's company announced a $9.7 billion deal to acquire natural gas transmission and storage assets from Dominion Energy (NYSE: D). The deal values the more than 7,700 miles of interstate pipeline being acquired from Dominion at $4 billion, but also includes about $5.7 billion in debt.
For Buffett, a deal like this makes a lot of sense. It increases Berkshire Hathaway Energy's market share of interstate natural gas transport to 18% from 8%, and it provides Buffett with a veritable cash cow as a middleman in the natural gas industry. For Dominion, it allows the company to focus almost entirely on its utility assets going forward.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
The question is, with the Dominion Energy deal now out in the open, what company might be on Buffett's acquisition radar next? While everything that follows is pure speculation on my part, I believe the following two stocks fit the bill for what Buffett is looking for.
DTE Energy
It's no secret that Warren Buffett is a fan of cash-cow companies that he can set and forget. That's why utility stocks are often a good bet to be Berkshire Hathaway's next purchase. Though I've previously opined that renewable energy giant NextEra Energy would make for a great fit, it's far too pricey for Berkshire Hathaway at this point in time. That's what makes Michigan-focused electric utility DTE Energy (NYSE: DTE) a logical runner-up to be acquired.
For one, Buffett is a big fan of execution. DTE Energy's management team has continually delivered for shareholders, with a compound annual earnings growth rate of 7.3% between 2008 and 2019, and an average annual dividend growth rate of 6.1% between 2009 and 2020. The expectation through 2024 is 5% to 7% EPS growth, with a targeted payout increase of 7%.
Image source: Getty Images.
Buffett will also be a fan of the diversity DTE Energy brings to the table. While more than half of DTE's operating income in 2020 will be generated from its highly predictable electric utility operations, the company is also generating fee-based revenue from gas pipelines and storage, as well as its DTE gas utility operations. Further, its Power & Industrial Projects segment aims to utilize renewable natural gas and cogeneration projects to drive a midpoint of $130 million in annual operating profit through 2024. All the while, DTE Energy is lessening its reliance on coal, which'll represent an estimated 45% of energy production in 2023, down from 77% in 2005.
But most importantly, DTE's electric and gas utility segments are regulated. Though this stops the company from outright raising rates anytime it chooses, it also means no exposure to potentially volatile wholesale pricing.
What Buffett would get with DTE Energy is very predictable revenue, cash flow, and earnings growth, with plenty of opportunity on the natural gas and renewables side of the equation for added growth. Considering that DTE Energy is down 17% year-to-date, it looks like the perfect utility stock for the Oracle of Omaha to consider buying.
McCormick & Co.
Another acquisition that would make a lot of sense for the Oracle of Omaha is spice and condiment kingpin McCormick (NYSE: MKC).
As some of you may recall, one of Buffett's worst investments to date has been his company's 26.7% stake in Kraft Heinz (NASDAQ: KHC). Buffett assumed that he was buying into brands that were impenetrable in the consumer-packaged goods (CPG) space, but has watched as organic and smaller players have disrupted a number of Kraft Heinz's core brands. Though Kraft Heinz remains profitable, its earnings growth trajectory has been underwhelming.
Image source: Getty Images.
Buying McCormick could change Berkshire's fortunes in the CPG space. McCormick has a growing line of top-tier spices and condiments led by brands like Frank's RedHot, French's, Lawry's, and products that bear the McCormick name. McCormick has used this brand recognition to outpace its competitors in the organic growth department, but has also turned to acquisitions to expand its portfolio and boost its growth potential. In 2017, for instance, McCormick acquired Lawry's and Stubb's Bar-B-Q sauce.
Like DTE Energy above, McCormick delivers. This is a company that's produced eight consecutive years of record operating cash flow, has paid a consecutive dividend since 1925, and in November 2019 announced its 34th straight year with a payout increase. This makes McCormick one of a few dozen elite dividend payers known as Dividend Aristocrats.
The best part about the spice and condiment industry is that it's relatively predictable. Higher and lower food costs can typically be seen months in advance, with demand for spices and condiments consistent throughout most economic environments. In fact, it could be argued that the coronavirus disease 2019 pandemic is a net-positive for the company as it'll see more Americans heading back to the kitchen to cook their own meals.
Maybe the biggest issue here is that McCormick has almost done too well for Buffett's liking. When Berkshire Hathaway goes shopping, Buffett prefers that his company nab great companies at a fair price. Unfortunately for Buffett, McCormick's superior execution has the company valued at 32 times estimated earnings for 2020. Even with a long-term sales growth rate of up to 6%, which is far and away tops among spice and condiment providers, this would be a lofty price for Buffett to pay to get his hands on what looks to be a truly impenetrable product portfolio.
Then again, never say never to a company that may still have more than $130 billion in cash on hand.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc, McCormick, and NextEra Energy and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In fact, it could be argued that the coronavirus disease 2019 pandemic is a net-positive for the company as it'll see more Americans heading back to the kitchen to cook their own meals. Even with a long-term sales growth rate of up to 6%, which is far and away tops among spice and condiment providers, this would be a lofty price for Buffett to pay to get his hands on what looks to be a truly impenetrable product portfolio. After almost 4.5 years of waiting, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett finally pulled the trigger on an acquisition a little over one week ago.
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With Berkshire Hathaway sitting on an all-time record $137 billion in cash, cash equivalents, and marketable securities as of the end of the first quarter, Buffett's company announced a $9.7 billion deal to acquire natural gas transmission and storage assets from Dominion Energy (NYSE: D). It increases Berkshire Hathaway Energy's market share of interstate natural gas transport to 18% from 8%, and it provides Buffett with a veritable cash cow as a middleman in the natural gas industry. The Motley Fool recommends Dominion Energy, Inc, McCormick, and NextEra Energy and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and long January 2021 $200 calls on Berkshire Hathaway (B shares).
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With Berkshire Hathaway sitting on an all-time record $137 billion in cash, cash equivalents, and marketable securities as of the end of the first quarter, Buffett's company announced a $9.7 billion deal to acquire natural gas transmission and storage assets from Dominion Energy (NYSE: D). It increases Berkshire Hathaway Energy's market share of interstate natural gas transport to 18% from 8%, and it provides Buffett with a veritable cash cow as a middleman in the natural gas industry. The Motley Fool recommends Dominion Energy, Inc, McCormick, and NextEra Energy and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and long January 2021 $200 calls on Berkshire Hathaway (B shares).
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With Berkshire Hathaway sitting on an all-time record $137 billion in cash, cash equivalents, and marketable securities as of the end of the first quarter, Buffett's company announced a $9.7 billion deal to acquire natural gas transmission and storage assets from Dominion Energy (NYSE: D). Like DTE Energy above, McCormick delivers. After almost 4.5 years of waiting, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett finally pulled the trigger on an acquisition a little over one week ago.
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699060.0
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2020-07-10 00:00:00 UTC
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Buffett's Berkshire Hathaway reduces share count, suggesting possible buybacks
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https://www.nasdaq.com/articles/buffetts-berkshire-hathaway-reduces-share-count-suggesting-possible-buybacks-2020-07-10
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By Jonathan Stempel
July 10 (Reuters) - Berkshire Hathaway Inc BRKa.N has reduced its share count by 1.2% since April 23, a regulatory filing shows, suggesting that Chairman Warren Buffett might have become more aggressive in repurchasing its significantly underperforming stock.
The reduction in the conglomerate's outstanding shares was noted in a Wednesday filing concerning Buffett's $2.9 billion donation of Berkshire stock to five nonprofits, part of his pledge to give away nearly all his fortune.
If Berkshire repurchased those shares, it might have conducted roughly $4.9 billion to $5.9 billion of buybacks, depending on the price, over 2-1/2 months, analysts said.
"It implies relatively strong buyback activity," said James Shanahan, an Edward Jones & Co analyst with a "buy" rating on Berkshire. "There is certainly capacity."
He said buybacks might have totaled $5.3 billion, based on Berkshire's average share price from April 23 to July 7. Since bottoming on March 23, Berkshire's share price had through Thursday risen 12%, lagging the Standard & Poor's 500's .SPX 41% gain.
Berkshire did not immediately respond to a request for comment.
Buybacks could help Buffett reduce Berkshire's cash hoard, which totaled $137.2 billion as of March 31.
It has been 4-1/2 years since the legendary billionaire completed a major acquisition for his Omaha, Nebraska-based conglomerate, though Berkshire did agree last Sunday to pay $4 billion for some gas assets from Dominion Energy Inc D.N.
Buffett's buyback appetite had been relatively muted since July 2018, when a policy change let him and Vice Chairman Charlie Munger repurchase stock when they thought its price was below Berkshire's intrinsic value.
The old policy allowed buybacks only at prices up to 1.2 times book value. Shanahan estimated Berkshire's current multiple at 1.1.
Berkshire's previous buybacks under the current policy totaled about $8 billion, including $1.7 billion from January to March as the coronavirus pandemic drove down the price.
Wednesday's filing said Buffett owned the equivalent of 248,741 Class A shares, a 15.54% stake, following his donations.
That suggests Berkshire had the equivalent of just over 1.6 million Class A shares outstanding, down roughly 19,000 from April 23.
Some investors believe Berkshire's cash has hurt its stock price.
Lawrence Cunningham, a law professor who has published several books about Berkshire, said impatience may explain why some investors sold Buffett their stock.
"Berkshire's stalwart quality shareholders do not sell, so we are seeing a voluntary purging of the shorter-term, lower quality shareholders," he said.
Buffett was asked at Berkshire's May 2 annual meeting why he had not repurchased more stock.
He said the price had not fallen to "where it really feels way better to us than other things, including the option value of money, to step up in a big, big way."
(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Jonathan Stempel July 10 (Reuters) - Berkshire Hathaway Inc BRKa.N has reduced its share count by 1.2% since April 23, a regulatory filing shows, suggesting that Chairman Warren Buffett might have become more aggressive in repurchasing its significantly underperforming stock. It has been 4-1/2 years since the legendary billionaire completed a major acquisition for his Omaha, Nebraska-based conglomerate, though Berkshire did agree last Sunday to pay $4 billion for some gas assets from Dominion Energy Inc D.N. Buffett's buyback appetite had been relatively muted since July 2018, when a policy change let him and Vice Chairman Charlie Munger repurchase stock when they thought its price was below Berkshire's intrinsic value.
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By Jonathan Stempel July 10 (Reuters) - Berkshire Hathaway Inc BRKa.N has reduced its share count by 1.2% since April 23, a regulatory filing shows, suggesting that Chairman Warren Buffett might have become more aggressive in repurchasing its significantly underperforming stock. The reduction in the conglomerate's outstanding shares was noted in a Wednesday filing concerning Buffett's $2.9 billion donation of Berkshire stock to five nonprofits, part of his pledge to give away nearly all his fortune. Berkshire's previous buybacks under the current policy totaled about $8 billion, including $1.7 billion from January to March as the coronavirus pandemic drove down the price.
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By Jonathan Stempel July 10 (Reuters) - Berkshire Hathaway Inc BRKa.N has reduced its share count by 1.2% since April 23, a regulatory filing shows, suggesting that Chairman Warren Buffett might have become more aggressive in repurchasing its significantly underperforming stock. If Berkshire repurchased those shares, it might have conducted roughly $4.9 billion to $5.9 billion of buybacks, depending on the price, over 2-1/2 months, analysts said. Berkshire's previous buybacks under the current policy totaled about $8 billion, including $1.7 billion from January to March as the coronavirus pandemic drove down the price.
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By Jonathan Stempel July 10 (Reuters) - Berkshire Hathaway Inc BRKa.N has reduced its share count by 1.2% since April 23, a regulatory filing shows, suggesting that Chairman Warren Buffett might have become more aggressive in repurchasing its significantly underperforming stock. Berkshire's previous buybacks under the current policy totaled about $8 billion, including $1.7 billion from January to March as the coronavirus pandemic drove down the price. That suggests Berkshire had the equivalent of just over 1.6 million Class A shares outstanding, down roughly 19,000 from April 23.
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699061.0
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2020-07-09 00:00:00 UTC
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Notable ETF Outflow Detected - XLU, NEE, D, DUK
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https://www.nasdaq.com/articles/notable-etf-outflow-detected-xlu-nee-d-duk-2020-07-09
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $86.2 million dollar outflow -- that's a 0.8% decrease week over week (from 198,270,000 to 196,770,000). Among the largest underlying components of XLU, in trading today NextEra Energy Inc (Symbol: NEE) is off about 0.9%, Dominion Energy Inc (Symbol: D) is down about 2.4%, and Duke Energy Corp (Symbol: DUK) is lower by about 1.9%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average:
Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $56.41. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Click here to find out which 9 other ETFs experienced notable outflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $86.2 million dollar outflow -- that's a 0.8% decrease week over week (from 198,270,000 to 196,770,000). These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $56.41. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Click here to find out which 9 other ETFs experienced notable outflows » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $86.2 million dollar outflow -- that's a 0.8% decrease week over week (from 198,270,000 to 196,770,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $56.41. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $86.2 million dollar outflow -- that's a 0.8% decrease week over week (from 198,270,000 to 196,770,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $56.41. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed).
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699062.0
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2020-07-08 00:00:00 UTC
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We Did The Math EUSA Can Go To $63
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https://www.nasdaq.com/articles/we-did-the-math-eusa-can-go-to-%2463-2020-07-08
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the iShares MSCI USA Equal Weighted ETF (Symbol: EUSA), we found that the implied analyst target price for the ETF based upon its underlying holdings is $62.96 per unit.
With EUSA trading at a recent price near $57.41 per unit, that means that analysts see 9.66% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of EUSA's underlying holdings with notable upside to their analyst target prices are Dominion Energy Inc (Symbol: D), Dell Technologies Inc (Symbol: DELL), and Molina Healthcare Inc (Symbol: MOH). Although D has traded at a recent price of $74.22/share, the average analyst target is 13.99% higher at $84.60/share. Similarly, DELL has 11.43% upside from the recent share price of $52.95 if the average analyst target price of $59.00/share is reached, and analysts on average are expecting MOH to reach a target price of $201.91/share, which is 10.68% above the recent price of $182.42. Below is a twelve month price history chart comparing the stock performance of D, DELL, and MOH:
Below is a summary table of the current analyst target prices discussed above:
NAME SYMBOL RECENT PRICE AVG. ANALYST 12-MO. TARGET % UPSIDE TO TARGET
iShares MSCI USA Equal Weighted ETF EUSA $57.41 $62.96 9.66%
Dominion Energy Inc D $74.22 $84.60 13.99%
Dell Technologies Inc DELL $52.95 $59.00 11.43%
Molina Healthcare Inc MOH $182.42 $201.91 10.68%
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
10 ETFs With Most Upside To Analyst Targets »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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For the iShares MSCI USA Equal Weighted ETF (Symbol: EUSA), we found that the implied analyst target price for the ETF based upon its underlying holdings is $62.96 per unit. iShares MSCI USA Equal Weighted ETF EUSA $57.41 $62.96 9.66% Dominion Energy Inc D $74.22 $84.60 13.99% Dell Technologies Inc DELL $52.95 $59.00 11.43% Molina Healthcare Inc MOH $182.42 $201.91 10.68% Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments?
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. Three of EUSA's underlying holdings with notable upside to their analyst target prices are Dominion Energy Inc (Symbol: D), Dell Technologies Inc (Symbol: DELL), and Molina Healthcare Inc (Symbol: MOH). iShares MSCI USA Equal Weighted ETF EUSA $57.41 $62.96 9.66% Dominion Energy Inc D $74.22 $84.60 13.99% Dell Technologies Inc DELL $52.95 $59.00 11.43% Molina Healthcare Inc MOH $182.42 $201.91 10.68% Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now?
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. Similarly, DELL has 11.43% upside from the recent share price of $52.95 if the average analyst target price of $59.00/share is reached, and analysts on average are expecting MOH to reach a target price of $201.91/share, which is 10.68% above the recent price of $182.42. A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past.
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. With EUSA trading at a recent price near $57.41 per unit, that means that analysts see 9.66% upside for this ETF looking through to the average analyst targets of the underlying holdings. iShares MSCI USA Equal Weighted ETF EUSA $57.41 $62.96 9.66% Dominion Energy Inc D $74.22 $84.60 13.99% Dell Technologies Inc DELL $52.95 $59.00 11.43% Molina Healthcare Inc MOH $182.42 $201.91 10.68% Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now?
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699063.0
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2020-07-08 00:00:00 UTC
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Wednesday Sector Leaders: Utilities, Technology & Communications
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https://www.nasdaq.com/articles/wednesday-sector-leaders%3A-utilities-technology-communications-2020-07-08
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The best performing sector as of midday Wednesday is the Utilities sector, higher by 0.6%. Within that group, NextEra Energy Inc (Symbol: NEE) and Dominion Energy Inc (Symbol: D) are two large stocks leading the way, showing a gain of 2.5% and 1.5%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is up 0.9% on the day, and down 9.56% year-to-date. NextEra Energy Inc, meanwhile, is up 5.57% year-to-date, and Dominion Energy Inc , is down 6.79% year-to-date. Combined, NEE and D make up approximately 23.1% of the underlying holdings of XLU.
The next best performing sector is the Technology & Communications sector, up 0.3%. Among large Technology & Communications stocks, Twitter Inc (Symbol: TWTR) and Fortinet Inc (Symbol: FTNT) are the most notable, showing a gain of 7.5% and 5.4%, respectively. One ETF closely tracking Technology & Communications stocks is the Technology Select Sector SPDR ETF (XLK), which is up 0.9% in midday trading, and up 17.35% on a year-to-date basis. Twitter Inc, meanwhile, is up 10.69% year-to-date, and Fortinet Inc is up 36.19% year-to-date. FTNT makes up approximately 0.3% of the underlying holdings of XLK.
Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom:
Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Wednesday. As you can see, two sectors are up on the day, while seven sectors are down.
SECTOR % CHANGE
Utilities +0.6%
Technology & Communications +0.3%
Services -0.1%
Financial -0.2%
Energy -0.2%
Consumer Products -0.4%
Healthcare -0.6%
Industrial -0.6%
Materials -2.7%
10 ETFs With Stocks That Insiders Are Buying »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Combined, NEE and D make up approximately 23.1% of the underlying holdings of XLU. Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom: Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Wednesday. Utilities +0.6% Technology & Communications +0.3% Services -0.1% Financial -0.2% Energy -0.2% Consumer Products -0.4% Healthcare -0.6% Industrial -0.6% Materials -2.7% 10 ETFs With Stocks That Insiders Are Buying » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is up 0.9% on the day, and down 9.56% year-to-date. Among large Technology & Communications stocks, Twitter Inc (Symbol: TWTR) and Fortinet Inc (Symbol: FTNT) are the most notable, showing a gain of 7.5% and 5.4%, respectively. One ETF closely tracking Technology & Communications stocks is the Technology Select Sector SPDR ETF (XLK), which is up 0.9% in midday trading, and up 17.35% on a year-to-date basis.
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Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is up 0.9% on the day, and down 9.56% year-to-date. One ETF closely tracking Technology & Communications stocks is the Technology Select Sector SPDR ETF (XLK), which is up 0.9% in midday trading, and up 17.35% on a year-to-date basis. Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom: Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Wednesday.
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Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is up 0.9% on the day, and down 9.56% year-to-date. One ETF closely tracking Technology & Communications stocks is the Technology Select Sector SPDR ETF (XLK), which is up 0.9% in midday trading, and up 17.35% on a year-to-date basis. The best performing sector as of midday Wednesday is the Utilities sector, higher by 0.6%.
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699064.0
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2020-07-08 00:00:00 UTC
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End of an era? Series of U.S. setbacks bodes ill for big oil, gas pipeline projects
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https://www.nasdaq.com/articles/end-of-an-era-series-of-u.s.-setbacks-bodes-ill-for-big-oil-gas-pipeline-projects-2020-07
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By Valerie Volcovici and Stephanie Kelly
WASHINGTON/NEW YORK, July 8 (Reuters) - A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: environmental activists and landowners opposed to projects have become good at blocking them in court.
The latest setbacks have increased the difficulty for developers of billions of dollars worth of pipeline projects in getting needed permits and community support. The oil industry says the pipelines are needed to expand oil and gas production and deliver it to fuel-hungry markets, but a rising chorus of critics argue they pose an unacceptable future risk to climate, air and water.
"Any company that is going to look to invest that kind of money into our infrastructure is really going to have to take a hard look," said Craig Stevens, spokesman for Grow America's Infrastructure Now, a coalition comprised mainly of chambers of commerce and energy associations.
The Trump administration has sought to accelerate permits and cut red tape for big-ticket energy projects such as the Dakota Access and Keystone XL pipelines. That effort has failed so far, and may even have made legal challenges easier, because rushed permitting paperwork has caught the eyes of judges.
A federal judge on Monday ordered the Dakota Access pipeline, the biggest duct moving oil out of the huge Bakken basin, to shut down and empty because the Army Corps of Engineers had failed to do an adequate environmental impact study. The same day, the U.S. Supreme Court blocked construction on the proposed Keystone XL line from Canada pending a deeper environmental review.
For years, both those pipelines have been targets of protests and lawsuits by climate, environment and indigenous rights activists.
On Sunday, Dominion Energy Inc and Duke Energy Corp decided to abandon the $8 billion Atlantic Coast Pipeline, meant to move West Virginia natural gas to East Coast markets, after a long delay to clear legal roadblocks almost doubled its estimated cost.
"What we have been seeing in the last couple of weeks is a shift in the importance of communities and landowners — and their voices in this process," said Greg Buppert, a lawyer for the Southern Environmental Law Center, which represented opponents of the Atlantic Coast Pipeline.
"Building energy infrastructure today is certainly more challenging than it was five, 10 or 15 years ago," said Joan Dresken, chief counsel to the Interstate Natural Gas Association of America.
U.S. oil and gas lobby group the American Petroleum Institute is concerned about the "chilling effect" the recent decisions will have on the industry and investor community, said Robin Rorick, API vice president of midstream and industry operations.
RECIPE FOR A SETBACK
The unifying factors in all these setbacks were a highly motivated opposition and shoddy regulatory paperwork, according to Josh Price, senior analyst of energy and utilities at Height Capital Markets.
He added that both factors were, ironically, enabled by President Donald Trump's vocal efforts to boost the fossil fuels industries and downplay climate risks.
"You have environmental justice groups emboldened by the Trump administration’s stance on climate and really dedicating a lot of resources to halting projects through the courts," Price said. "The second part in this dynamic is some of the hasty work being done at the permitting agencies in the Trump administration. We’ve seen this time and time again, this effort to streamline projects has backfired."
A White House official did not immediately respond to a request for comment.
Trump has said oil and gas jobs are important to the economy and that the industry can thrive without causing significant environmental damage.
Investors in future will likely favor projects that expand on existing infrastructure and already have in place rights of way and environmental permits, said Jay Hatfield, portfolio manager of the New York-based InfraCap MLP ETF, a fund with a focus on energy pipeline operators.
"There are possible expansion opportunities when you can't do long-haul pipes... The cancellations of recent projects could make it more valuable to own those assets," he said.
In the coming days, the Trump administration is expected to finalize an overhaul of the National Environmental Protection Act, a bedrock environmental law guiding environmental reviews for major projects. The revisions will likely set time limits for environmental assessments and limiting the scope of reviews.
Environmental activists oppose the overhaul, but also figure that if it goes ahead it will only formalize legal risks for big energy infrastructure projects.
"There is no path to building new major crude oil pipelines anymore," said Jan Hasselman, the Earthjustice lawyer representing the Standing Rock Sioux tribe in its years-long battle to block Dakota Access. (Reporting by Valerie Volcovici and Stephanie Kelly; additional reporting by Laura Sanicola; editing by Richard Valdmanis and David Gregorio) ((valerie.volcovici@thomsonreuters.com;)) Keywords: USA PIPELINES/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Valerie Volcovici and Stephanie Kelly WASHINGTON/NEW YORK, July 8 (Reuters) - A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: environmental activists and landowners opposed to projects have become good at blocking them in court. A federal judge on Monday ordered the Dakota Access pipeline, the biggest duct moving oil out of the huge Bakken basin, to shut down and empty because the Army Corps of Engineers had failed to do an adequate environmental impact study. Investors in future will likely favor projects that expand on existing infrastructure and already have in place rights of way and environmental permits, said Jay Hatfield, portfolio manager of the New York-based InfraCap MLP ETF, a fund with a focus on energy pipeline operators.
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By Valerie Volcovici and Stephanie Kelly WASHINGTON/NEW YORK, July 8 (Reuters) - A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: environmental activists and landowners opposed to projects have become good at blocking them in court. On Sunday, Dominion Energy Inc and Duke Energy Corp decided to abandon the $8 billion Atlantic Coast Pipeline, meant to move West Virginia natural gas to East Coast markets, after a long delay to clear legal roadblocks almost doubled its estimated cost. Environmental activists oppose the overhaul, but also figure that if it goes ahead it will only formalize legal risks for big energy infrastructure projects.
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By Valerie Volcovici and Stephanie Kelly WASHINGTON/NEW YORK, July 8 (Reuters) - A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: environmental activists and landowners opposed to projects have become good at blocking them in court. Investors in future will likely favor projects that expand on existing infrastructure and already have in place rights of way and environmental permits, said Jay Hatfield, portfolio manager of the New York-based InfraCap MLP ETF, a fund with a focus on energy pipeline operators. In the coming days, the Trump administration is expected to finalize an overhaul of the National Environmental Protection Act, a bedrock environmental law guiding environmental reviews for major projects.
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By Valerie Volcovici and Stephanie Kelly WASHINGTON/NEW YORK, July 8 (Reuters) - A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: environmental activists and landowners opposed to projects have become good at blocking them in court. The Trump administration has sought to accelerate permits and cut red tape for big-ticket energy projects such as the Dakota Access and Keystone XL pipelines. In the coming days, the Trump administration is expected to finalize an overhaul of the National Environmental Protection Act, a bedrock environmental law guiding environmental reviews for major projects.
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699065.0
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2020-07-08 00:00:00 UTC
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After 4 Years, Buffett Finally Goes Shopping: Here Are 5 Things You Need to Know
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https://www.nasdaq.com/articles/after-4-years-buffett-finally-goes-shopping%3A-here-are-5-things-you-need-to-know-2020-07-08
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With Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) weighing in at the end of the first quarter with an all-time record $137 billion in cash, cash equivalents, and marketable securities, it was only a matter of time before the Oracle of Omaha made a move. Over the holiday-lengthened weekend, it finally happened.
After making Berkshire Hathaway's last acquisition almost 4.5 years ago (Precision Castparts), it was announced Sunday afternoon, July 5, that Berkshire Hathaway affiliate Berkshire Hathaway Energy would acquire an assortment of natural gas transmission and storage assets from Dominion Energy (NYSE: D) in an all-cash deal valued at $9.7 billion, which includes the assumption of $5.7 billion in debt.
Image source: Getty Images.
The tangible assets being acquired for $4 billion include Dominion's full stakes in Dominion Energy Transmission, Carolina Gas Transmission, and the Questar Pipeline, along with Dominion's 50% stake in the Iroquois Gas Transmission System. All told, this works out to more than 7,700 miles of natural gas transmission pipeline and gives Berkshire Hathaway control of 18% of the United States' interstate natural gas transmission, up from 8% prior to this deal.
Berkshire Hathaway Energy also gains 900 billion cubic feet of storage and a 25% stake in liquefied natural gas (LNG) export, import and storage facility Cove Point in Maryland. Dominion will retain a 50% ownership stake in Cove Point, with Brookfield Asset Management owning the final 25% stake. The press releases from both companies estimate the deal closing during the fourth quarter.
Now that Buffett has come out of acquisition hibernation, here are the five most important things you need to know following the Dominion deal.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
1. Buffett is a big fan of cash cows
First of all, let's just say that this purchase is vintage Buffett. Although he's reiterated on numerous occasions that he's angling for elephant-sized deals, he'll never turn down an acquisition opportunity (for the right price) that improves an existing economic moat or bolsters his cash flow. In this situation, the Dominion Energy asset deal more than doubles Berkshire Hathaway Energy's interstate natural gas transmission market share.
According to a report put out by the U.S. Energy Information Administration last year, natural gas is expected to grow from 34% of total electricity generation in 2018 to 39% by 2050, with LNG exports nearly tripling by 2040 from 2018 levels. In other words, Buffett donned his long-term binoculars and saw a path to steady fee-based revenue over the long run.
Image source: Getty Images.
2. He prefers businesses that have hard assets
One thing you'll consistently note about Warren Buffett is that when he chooses to acquire a business, that business will often have plenty hard assets. This is to say that the company being acquired has tangible equipment, including factories, facilities, or pipelines, and/or products that he can feel or see in action.
You see, Buffett is an old-school investor who's been analyzing businesses since the ripe old age of 11, which is when he bought his first stock. Back when Buffett was learning about valuing businesses, and even throughout the lion's share of his investing career, there weren't many asset-light business to analyze. By asset-light I'm referring to businesses whose intellectual property, software, or virtual services are the prime asset determinant. Put simply, Buffett really doesn't seem to understand how to value asset-light companies, which could explain his aversion to tech stocks.
However, as long as hard-asset businesses exist (and there are still plenty), Buffett will have plenty of research to conduct.
Image source: Getty Images.
3. The Oracle of Omaha loves a crisis
Make no mistake about it, Warren Buffett loves to make acquisitions during times of fear and panic. It's perhaps the hallmark of his investment career, and one of the reasons he's made such a boatload of money over the past five decades.
Though Buffett was harped on by Wall Street and retail investors for not doing more during the coronavirus crash during February and March, he's shown that being picky isn't necessarily a bad thing. With the oil and gas sector going through an historic rough patch that's seen more than 20 North American producers file for bankruptcy protection in 2020, and Dominion Energy wanting to focus its attention on its utility operations, Buffett seized the opportunity to make a deal on terms that were favorable to Berkshire and its shareholders.
If a crisis rears its head, there's a good chance you can count on Warren Buffett to eventually strike.
Image source: Getty Images.
4. Berkshire Hathaway still has a ton of cash
Fourth, you should understand that while this is a $9.7 billion deal, it's hardly even put a dent into Berkshire Hathaway's cash coffers. In fact, it's not out of the question that Berkshire Hathaway's cash balance actually increases, in spite of this deal.
Although we won't know the full story of what Buffett and his team have been up to until the mid-August filing of the company's 13F with the Securities and Exchange Commission, Buffett did produce a slide during Berkshire Hathaway's virtual annual shareholders meeting in May that showed $6.1 billion in net equity sales during the month of April. This selling activity was primarily the result of Berkshire dumping its holdings in all four of its airline stocks.
Thus, even with a $9.7 billion deal headed for completion during the fourth quarter, the cash raised from selling Berkshire's airlines, along with expected profits and dividend income from other owned businesses, could push the company's coffers beyond $137 billion again sooner than you realize.
Image source: Getty Images.
5. This won't be Buffett's last deal
Finally, don't count on Buffett sitting out another 4.5 years before making a deal. While there was an extraordinarily long gap between Buffett's latest and previous acquisition, this was probably more of an anomaly than a trend. Buffett's acquisition history shows that he's a fan of making bolt-on, earnings-accretive deals with regularity.
What might come next for Berkshire Hathaway? Though tech stock valuations have ascended to the heavens, most financial stocks, including banks, have been pulverized with the Federal Reserve choosing to keep its federal funds rate at a record low and the coronavirus hampering the economic recovery. Since financial institutions are trading at valuations that haven't been seen in years, or perhaps since the financial crisis more than a decade earlier, it wouldn't be surprising if Buffett looked for an elephant-sized deal in his favorite sector.
In my mind, there's no question that Buffett is already thinking about what his next deal might be.
10 stocks we like better than Berkshire Hathaway (B shares)
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (B shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Brookfield Asset Management. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Although he's reiterated on numerous occasions that he's angling for elephant-sized deals, he'll never turn down an acquisition opportunity (for the right price) that improves an existing economic moat or bolsters his cash flow. According to a report put out by the U.S. Energy Information Administration last year, natural gas is expected to grow from 34% of total electricity generation in 2018 to 39% by 2050, with LNG exports nearly tripling by 2040 from 2018 levels. With the oil and gas sector going through an historic rough patch that's seen more than 20 North American producers file for bankruptcy protection in 2020, and Dominion Energy wanting to focus its attention on its utility operations, Buffett seized the opportunity to make a deal on terms that were favorable to Berkshire and its shareholders.
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The tangible assets being acquired for $4 billion include Dominion's full stakes in Dominion Energy Transmission, Carolina Gas Transmission, and the Questar Pipeline, along with Dominion's 50% stake in the Iroquois Gas Transmission System. In this situation, the Dominion Energy asset deal more than doubles Berkshire Hathaway Energy's interstate natural gas transmission market share. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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After making Berkshire Hathaway's last acquisition almost 4.5 years ago (Precision Castparts), it was announced Sunday afternoon, July 5, that Berkshire Hathaway affiliate Berkshire Hathaway Energy would acquire an assortment of natural gas transmission and storage assets from Dominion Energy (NYSE: D) in an all-cash deal valued at $9.7 billion, which includes the assumption of $5.7 billion in debt. Berkshire Hathaway still has a ton of cash Fourth, you should understand that while this is a $9.7 billion deal, it's hardly even put a dent into Berkshire Hathaway's cash coffers. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Back when Buffett was learning about valuing businesses, and even throughout the lion's share of his investing career, there weren't many asset-light business to analyze. This won't be Buffett's last deal Finally, don't count on Buffett sitting out another 4.5 years before making a deal. With Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) weighing in at the end of the first quarter with an all-time record $137 billion in cash, cash equivalents, and marketable securities, it was only a matter of time before the Oracle of Omaha made a move.
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699066.0
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2020-07-07 00:00:00 UTC
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The March Toward Renewables
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https://www.nasdaq.com/articles/the-march-toward-renewables-2020-07-08
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In this episode of MarketFoolery, Chris Hill chats with Motley Fool analyst Nick Sciple, about the latest news from the markets. Warren Buffett makes a big new deal, and there is news of further consolidation in the food delivery space. They also take questions from listeners and much more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
Stock Advisor returns as of 2/1/20
This video was recorded on July 6, 2020.
Chris Hill: It's Monday, July 6. Welcome to MarketFoolery. I'm Chris Hill. With me today, Industry Focus host Nick Sciple. Good to see you, Sir.
Nick Sciple: Great to be here, Chris. We were talking about before the show, this is my first appearance on MarketFoolery, so it's great to be in the big leagues now, Chris.
Hill: [laughs] Long-time listeners of Motley Fool podcasts are well acquainted with Nick's work on Industry Focus. You know, when Independence Day comes on a Saturday, I think it's reasonable to expect that it's going to be, sort of, a quiet business news day on Monday, that's what I was expecting, but the news fairy showed up. I love it when the news fairy shows up. So, we're going to talk about a couple of deals that are in the news. We're also going to dip into The Fool mailbag.
But let's start with Warren Buffett, who finally got out his elephant gun [laughs] and put it to work. Berkshire Hathaway is buying the natural gas assets from Dominion Energy for $4 billion. When you throw in the debt, it's actually closer to a $10 billion deal. We knew months ago that we were going to see consolidation in the energy industry, we knew we're going to see deals. Let me just start with this, Nick, what was your reaction when you saw this news?
Sciple: So, the reaction, obviously, anytime you see Warren Buffett hop into the market a $10 billion enterprise value deal, it's a big deal. This is Warren Buffett's biggest acquisition on an enterprise value basis since Precision Castparts in 2016, so obviously a big deal to see Warren Buffett hopping into the market. And when it comes to the actual acquisition; to me, this feels like a classic Warren Buffett deal. These pipeline assets, they're really monopoly at the end of the day. If you own this pipeline, you own a monopoly on transmitting these gas assets around the country. And when you look at the role that natural gas plays in our electricity infrastructure, it's only going to get bigger as the years go on.
So, I pulled up some stats today. In 2019, about 23% of electricity production in the U.S. came from coal, about 38% from natural gas. That coal number is going down and it's going to be largely replaced by natural gas and renewable energy. I know a lot of folks are excited about solar and wind and the role they can play in the market as they become cheaper, and they certainly will grow, but given natural gas' role as a power source that can come on quickly and steadily throughout the day, natural gas is only going to become bigger and bigger as a contributor to our electricity assets. And so, Warren Buffett having a monopoly on part of that distribution network in the U.S. is particularly valuable.
I think I saw a stat this morning, this brings Berkshire's control over U.S. natural gas distribution to about 18%, so a really significant part of this distribution of natural gas is going to become a bigger and bigger part of our electricity infrastructure. So, I think it's a classic Warren Buffett deal.
Hill: Yeah. And, you know, you mentioned the footprint that Berkshire is going to have when it comes to natural gas transmission. That's actually up from 8%, so that's a pretty sizable leap to control effectively one-fifth of natural gas transmissions in the U.S. Part of me was not surprised by this deal, given Berkshire's investments in energy over the years, given how important energy businesses are to the overall portfolio. Selfishly, you know, if you told me Buffett is going to make an acquisition over the weekend, whether or not I would have guessed it was in the energy industry, I would have guessed it would have been larger. I mean, it's good to have the context that you shared in terms of, look, this may not seem like a big deal relative to the amount of cash they have, and that's sort of how I was framing it, I think the smarter way for investors to frame it is the way you did, just in terms of like, look, let's measure this not against the pile of cash that Berkshire has, which I believe as of the most recent annual meeting was north of $135 billion, let's judge it compared to previous acquisitions.
And Buffett has been saying for months now, in part at the annual meeting, he doesn't see value out there. Just because he has the money, doesn't mean he's going to go out and spend it unless he sees the value here. And when you look at Dominion Energy's stock [laughs] not really getting a pop out of this, I know it's a big company, but you know, part of my read on that is, Buffett got a good price.
Sciple: Yeah. So, I saw a quote from JPMorgan today [laughs] and the way they described it was, "Not the highest we have seen gas pipes transact at." So, yeah, I think it's a reasonable price. And I think that the big thing for Buffett, when you heard him talk about airlines, what happened with coronavirus, his vision of the future of what the potential was for that industry was really significantly changed by what took place. I think when you look at these pipeline businesses, the predictability is so, so different from what you're looking at from airlines, because I think we can reasonably predict that electricity demand is going to continue up into the right going into the future, as we become more and more technologically focused, more and more electric cars, that sort of thing.
And so, I think it's really reasonable to predict the continued growth in demand for energy, and as a result, the continued growth in demand for natural gas. So, when you just look at this asset, I know it's only $10 billion of this $137 billion cash pile, this is a cash flow stream that's really easy for Warren Buffett to predict and value over time. And I think it's a deal that really makes a lot of sense. Now, would we like Buffett to go out and spend a $130 billion really quick? I think we'd all like to, it would be really exciting, but it's really hard to find these deals, spending $10 billion all-at-once, it's really, really difficult. And so, the fact that he found this deal, looks particularly attractive and it's the type of deal that I think fits Warren Buffett's investing philosophy, a very predictable infrastructure play, I like it.
Hill: Let's move from energy to the food service industry. In the wake of its failed attempt to buy Grubhub (NYSE: GRUB), Uber (NYSE: UBER) is buying Postmates for $2.65 billion. Postmates is the fourth-largest food delivery service business in the United States. And it seems like, certainly from the reaction of Uber's stock, which is up 4%, 5% today, it seems like this is being well-received. They're paying less money, they're getting a smaller asset, but they're getting greater exposure to some pretty big markets, like Los Angeles and Miami.
And you know what, when you look at Postmates, which is a private company that kicked the tires on a potential IPO last year, you know, they almost needed to do this deal, didn't they, because they were out of money, otherwise they were probably looking at having to IPO in the current environment.
Sciple: Yeah. So, the rumor was that Postmates was either going to get the biggest possible deal they could get from a SPAC [Special Purpose Acquisition Company] company or they would get acquired by Uber. And it seems to have been the case that Uber gave them the most attractive deal. I think we've been expecting consolidation in this space, [laughs] nobody makes any money, so maybe if we consolidate more somebody will. After this deal, Postmates and Uber Eats together will have about a 37% market share of food delivery in the U.S. Compare that with DoorDash at 45%, and Grubhub at 17%. So, really this industry is becoming significantly more consolidated.
I think that's good for the company. From my point-of-view, I don't see the economies of scale here in this business. So, I think when you look at logistics business, like, FedEx or Amazon, the whole idea is you consolidate things in distribution centers, squeeze out efficiency that way, you really can't do that in food delivery, you've got to do this one-way trip, you have to go to the restaurant, pick up the food, bring it back to the customer. You know, there's this concept of, your margin is my opportunity. Well, the margin we're skimming here is restaurants, there's really not that much margin there. So, I think it's a positive for the industry that it's consolidated, and there's going to be less competitive pressure on price as the industry becomes more consolidated. I don't know if it makes me any more excited about investing in the industry just given, I don't think there's significant economies of scale here.
Hill: Yeah, when you look at the delivery business -- food delivery, that is -- it really does seem like a war of attrition that it's just, these businesses are trying to be the last one standing. The mayor of Miami came out this morning, announced a reclosing of restaurants. So, again, with Postmates' footprint there, you know, obviously the deal isn't going to close. And by the way, I should mention, we shouldn't assume this is going to get done. I mean, I'm more confident this is going to get done than the Grubhub deal, but it is worth remembering that [laughs] earlier this year came the announcement, you know, a lot of hubbub about, oh, great, this partnership between Uber and Grubhub. And the deal fell apart. So, until everything is signed in ink, we shouldn't assume, but it really does seem like it's going that way.
Sciple: Yeah, one thing I did want to note on synergies between these companies, I thought was interesting, is there was a quote from Dara Khosrowshahi, who's the CEO of Uber, talking about how they're going to integrate the two products. And one of the services they mentioned integrating was Postmates' subscription service, where it's $9.99 per month for a subscription that provides no free delivery on any orders over $12, which sounds great, but that's literally what DashPass is, that's literally [laughs] the exact terms and exactly what you get if you pay for DashPass through DoorDash. So, I think this is just a signal of the commoditization in this industry. I think as it gets down to a smaller number of players, maybe within certain markets where those players are dominant, they can carve out a profitable business, but I don't see these companies having tech-based margins in the near future.
One area where I could be wrong is Uber has rolled out a product where they're going to be working with a city in California, I believe, to integrate with their public transit network. I think that gives some opportunities for some software like margins, that sort of thing. One concern I have there, though, is just the history in Uber's business, when it comes to working with governments, hasn't been the most positive, but if they can build that out, I do think that has some potential to increase their margins and drive some more profitability, but we'll see.
Hill: Let's go back to energy as we dip into The Fool mailbag. Our email address is MarketFoolery@Fool.com. Question from Jaime Lugo, who writes, "Do you think oil stocks and funds, like U.S. Oil, with the ticker USO, will bounce back in the next few months or a year, or do you think this is the time where green and renewable energies like solar will prevail?"
Kind of a binary choice that Jaime is offering up there.
Sciple: Yeah, so, yes and no. I think on the front-end, I think in the near-term, it's going to be difficult for, particularly, these oil and gas exploration funds, because a lot of these shale companies have been in really difficult positioning from a balance sheet point-of-view. And there's going to be bankruptcies in the space, we've already seen a number of those, Whiting Petroleum, Chesapeake Energy, and we're going to see more. So, it's going to be really difficult for these shale players in the near-term.
Now, does that mean, now is the time where there's the inflection point and renewables are going to take the lead and it's over for oil and gas? No, I don't think it's the case, and I would actually argue that in some ways some of these renewable companies are a little bit overstretched. I think the poster child there is Nikola Motor, trading at a higher market cap than Ford with no revenue.
So, I think renewables are going to become a bigger and bigger share of our power generation going forward. However, the transition is not going to be as quickly as a lot of folks would like, and part of that is because of that intermittency problem I talked about earlier. So, when you're running an electrical grid, it's really important that there is demand for the power you generate, you need to match the power that you generate to when there's going to be demand from the grid. And one of the challenges with renewable energies like solar and wind is that they're very intermittent. And so, when the sun is out, power is being generated, but you can't necessarily align that power with demand. And so, if you don't do that, you can have voltage issues on your grid, blackouts, all kinds of problems. And so, for that reason, you can't just snap your fingers and replace power sources like coal, which are 100% renewable. You even see that in Germany where they've really ramped up their renewable production, but a lot of their existing power generation has remained in place, because you need to have that smoothness in the grid.
So, I think renewables are going to grow, but it's going to be a steady, slow transition over years and years and years and years. And I think to the extent that folks think that we're at this inflection point where all of the sudden the grid is going to shift over 100% away from natural gas and those types of energy sources, I don't think it's likely.
I do think though that coming this year, I think it's likely we're going to see some significant government investing in renewables. And so, that's probably going to support these stocks. Whether the pace of the transition to renewables supports where some of these stocks are trading today, I don't know. Those are, kind of, my thoughts on where the space is today.
I think, actually, given the pessimism around oil and gas and, you know, people are really reluctant to invest in some of these sectors, there's a chance that we overshoot to the downside and there's some value opportunities in oil and gas, but we'll see. I hesitate to predict oil prices; who knows.
Hill: I'm not going to ask you to predict oil prices, but I am going to ask, before we wrap up, for a prediction on more M&A activity, because I could see, as this pandemic drags on, as you know, whether it's Dominion Energy or any other business out there, businesses look to sort of either stave off bankruptcy or shed parts of their business so that they can remain solvent. I could see the biggest players in this space, ExxonMobil, Chevron, etc., being the longer-term winners because they have the cash to get through this. They can, like Warren Buffett, pick up some of these companies' whole cloth or assets within these companies, at a value.
So, I'm wondering; first, do you expect to see some of the biggest players in this industry make those types of acquisitions? And along with that, would it surprise you if some of the acquisitions were in renewables? In the same way that an alcohol business, like Constellation Brands has a portfolio of beer, wine and spirits, would it surprise you if ExxonMobil, Chevron, Royal Dutch Shell, any of these businesses decided to make a big play in something like solar, rather than sort of develop their own.
Sciple: Yes, I think 100% there's going to be more consolidation in oil and gas. Major players like Exxon, BP, those types of folks are going to make acquisitions where it makes sense, where there's quality assets available in the shale patch.
I do think, your point about, will these major oil and gas companies make investments in renewable? I think it is a good one. I think the main driver behind that is the rise of ESG funds, more and more investment dollars being allocated in a way where they only flow to companies that meet certain ESG environmental benchmarks. And I think, as large asset managers put pressure on these companies to meet emissions targets and to be more green, etc., we'll see those types of moves, whether it's -- I think in the case of Dominion, part of the reason they divested some of their natural gas assets is to accelerate a pledge they've made to become net-zero emission. I think we're going to see more and more of this from energy companies as institutional investors say, we're not going to give you our money, we're not going to invest in you if you don't show some progress toward these goals that we have. So, I certainly think that's a possibility too to occur in the coming years.
Hill: You can hear him every Thursday on our Industry Focus podcast. Nick Sciple, thanks for being here.
Sciple: Glad to be on, Chris.
Hill: As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
That's going to do it for this edition of MarketFoolery. The show is mixed by Dan Boyd, I'm Chris Hill, thanks for listening, we'll see you tomorrow.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon and ExxonMobil. Nick Sciple has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Constellation Brands, and FedEx. The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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And I think that the big thing for Buffett, when you heard him talk about airlines, what happened with coronavirus, his vision of the future of what the potential was for that industry was really significantly changed by what took place. Sciple: Yeah, one thing I did want to note on synergies between these companies, I thought was interesting, is there was a quote from Dara Khosrowshahi, who's the CEO of Uber, talking about how they're going to integrate the two products. One concern I have there, though, is just the history in Uber's business, when it comes to working with governments, hasn't been the most positive, but if they can build that out, I do think that has some potential to increase their margins and drive some more profitability, but we'll see.
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In the wake of its failed attempt to buy Grubhub (NYSE: GRUB), Uber (NYSE: UBER) is buying Postmates for $2.65 billion. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Constellation Brands, and FedEx. The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2022 $1940 calls on Amazon.
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I know a lot of folks are excited about solar and wind and the role they can play in the market as they become cheaper, and they certainly will grow, but given natural gas' role as a power source that can come on quickly and steadily throughout the day, natural gas is only going to become bigger and bigger as a contributor to our electricity assets. That's actually up from 8%, so that's a pretty sizable leap to control effectively one-fifth of natural gas transmissions in the U.S. Part of me was not surprised by this deal, given Berkshire's investments in energy over the years, given how important energy businesses are to the overall portfolio. The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: long January 2022 $1920 calls on Amazon, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2022 $1940 calls on Amazon.
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In this episode of MarketFoolery, Chris Hill chats with Motley Fool analyst Nick Sciple, about the latest news from the markets. Warren Buffett makes a big new deal, and there is news of further consolidation in the food delivery space. I don't know if it makes me any more excited about investing in the industry just given, I don't think there's significant economies of scale here.
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2020-07-07 00:00:00 UTC
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Buffett Just Fired His Elephant Gun -- or Did He?
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Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) just made its first investment of the COVID era by purchasing the natural gas assets of Dominion (NYSE: D).
In this episode of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP discuss what investors need to know about it. In addition, hear about the latest efforts to force retailers to accept cash as a payment option and get the details on Wells Fargo's (NYSE: WFC) upcoming dividend cut. And finally, Frankel has his eye on Green Dot (NYSE: GDOT) while Moser is watching recent IPO Lemonade (NYSE: LMND) this week.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on July 6, 2020.
Jason Moser: It's Monday, July 6th. I'm your host Jason Moser, joining me today is my financial partner-in-crime Certified Financial Planner, Matt Frankel. Matt, how's everything going?
Matt Frankel: Pretty good. It's a rainy day in South Carolina, but it was a beautiful weekend. Hopefully you had a nice 4th of July out there.
Moser: Yeah, yeah. It was nice, it was hot, you know, but I mean everybody seemed like they really enjoyed themselves. My wife and kids got to go hang out at the pool in the neighborhood here for a while. I got some work done around the yard and stuff like that, did a little barbecuing, that was fun. It sounded like you had one of your specialties going this weekend, huh?
Frankel: Yeah, I'm a barbecue guy; I made a beef brisket. It's been a while since I've had enough people over to my house, because I don't know if you've seen a beef brisket, they're big cuts of meat.
Moser: [laughs] It's a lot of meat.
Frankel: So, it's been a while since I've had enough people over my house to justify making one. So, that was nice; it's always a big hit.
Moser: Yeah. You know, I was thinking about it over the weekend. I think that my favorite holiday, food-wise, is still Thanksgiving. But the 4th of July holiday is usually a close second. We did a lot of good grilling, had a lot of good food. I do enjoy that summer cookout.
Frankel: Yeah, for sure. It's always a good time when you can bust out the grill and -- I don't know about you, I like cooking for a lot of people.
Moser: Yeah, well, yeah, I do too. I'm kind of the cook of the family, and I mean, it's just one of those things I have the ability to do and I enjoy it. So, it's one of those things I can do to contribute to the household. [laughs] But, yeah, I do like being able to cook for folks, so yeah.
Well on today's Financial show, we're going to take a look at Warren Buffett's latest firing of the elephant gun, could be a potential controversial investment here the Berkshire Hathaway is making for a lot of money. Big banks dividend is getting a little bit smaller it seems. As always, we have a couple of stocks for you to keep your eye on this week. But first off today, Matt, you know, this was something we read a few days back and it's not something, we had a release, it's not the first time we've seen this type of sentiment, but it does seem like something that's gaining some traction. There's a bipartisan Senate bill that's been introduced that would actually punish retailers for refusing cash payments.
Now, we talk about the War on Cash here all the time. I mean, when you look at some of these companies that are really leading that way, from the big ones, like MasterCard and Visa, smaller companies that are getting a lot bigger, PayPal, Square -- I mean, Square has been on fire here the past couple of weeks. We talk a lot about how, in particular, the pandemic, people have wanted to handle cash less and less. And there is science behind the fact that cash is pretty filthy. I mean, it does transmit germs. And so, it's understandable that people may not want to handle cash as much.
But this, the Payment Choice Act, which is something that's getting some traction here in the Senate, essentially they're saying that that's fine, the War on Cash is great, mobile payments, contactless, that's all fine, but you can't refuse using cash, you can't tell consumers that they can't use cash.
And I'd like to know your stance on this, because I think I know it, but what do you think about -- I mean, it's kind of weird this legislation has to exist, but by the same token, if I'm a merchant, I don't think I'd want to refuse any form of payment, I want to give my customers any which way to pay to ultimately make the sale. So, is this a legislation that really needs to exist?
Frankel: Well there's three points. One, like you said, it's just bad business to refuse cash. You know, you don't want to turn away customers that have [laughs] forms of legal currency. That's just a generally bad idea. No. 2, the purpose of the bill is to protect the people who don't have bank accounts. They call them the unbanked and the underbanked segment of the population. It's about 6% of the U.S. population and it skews toward minorities. African-American and Hispanics are a disproportionately large amount of that population. So, it's considered somewhat of a discriminatory act to refuse cash altogether. That's No. 2. And from a legal standpoint, it's written right on the money, this note is legal tender. It's really hard to make the argument toward refusing cash. That it's the one form of payment that is specifically -- you know, it's written on there, this is legal money in the United States of America.
So, I'm not surprised it has bipartisan support. Cash should have a place in our society. In a perfect world everybody would have access to a bank account, don't get me wrong. But cash should have some role in our financial system, at least for the time-being until we can figure out how to get digital payments reliably into everybody's hands.
Moser: Yeah. You make a good point there in regard to the unbanked and the underbanked, and I think the numbers that apply there. So, if you talk about actual unbanked, the FDIC [Federal Deposit Insurance Corporation] had a survey back in 2017 or '18, where they saw approximately 6.5% of Americans did not have a bank account at all. And then if you add underbanked to that equation, which is, you know, folks that need to resort to perhaps nontraditional methods to basically manage their financial lives, whether it's payday loans or something like that, the underbanked is essentially 25% of the population. So, there's a lot of people out there that don't have what we may see as a common, sort of, access to a bank account, a lot of people don't have that. So, you see the success of companies like Square with their cash app or PayPal, with PayPal and Venmo and Xoom and what not. I mean, it's sort of changing, maybe, that definition of what banking is in the 21st century.
And I tend to agree with you, I feel like cash has a role in the economy. I'll give an example. I was over at Burke Nursery here over the weekend, it's a local nursery, and you know I was getting a bunch of mulch for a yard. And so, it's really great. You go in there, you just tell them what you want, then you pull your car around and they have a couple of guys come out and load it in the back of the car for you. And so, you know anytime I do that, I want to be able to tip those guys. I mean, they're doing hard work and it's out there it's hot, you know, I'll throw a couple of bucks their way. The only way I can do that is with cash. And so, until we get to a point where maybe you could disrupt that tipping mentality, in at least certain cases, I mean, any which way you cut it, it really does feel like cash is always going to have a place. And like you said, the language on the money says it plain as a day, like, [laughs] you have to accept it.
Frankel: Right. At some point, cash may be 1% or 2% of our transaction volume, I think right now it's something around a third, a third of transactions in America take place in cash. And it's generally lower dollar purchases. And I mean, I usually carry some cash, because if I'm buying something for $4 or something to that effect, I really don't want to use my credit card. But there's definitely a place for cash, and the cash use is just going to dwindle for the foreseeable future, but I don't see it going away anytime in the next few decades.
Moser: Yeah, I tend to agree. Interesting legislation nonetheless, the Payment Choice Act, I think that makes a lot of sense.
Well, hey, Matt, did you hear that? Did you hear that? That was the sound, the sound of Warren Buffett's elephant gun going off. [laughs] That was Warren Buffett's elephant gun, man, did you hear, you see this Berkshire Hathaway buying Dominion Energy natural gas assets ...
Frankel: ... Was it really the elephant gun?
Moser: Well, I guess, what was it, $4 billion transaction, the assumption of debt values the whole deal at $10 billion, I mean that's -- you know, I don't have $10 billion lying around on my couch. I mean, it seems like kind of a big deal, at least in relation to what he's not been doing lately, it is a big deal. It does strike me, I was a bit surprised -- I kind of -- I don't want to say a ho-hum, but this really does seem like a very Buffett-style investment, you know, investing in energy and natural gas. Talk to us a little bit about this. You follow Berkshire Hathaway, you write a lot about him and you know this company very well, explain this deal to me and to our listeners.
Frankel: Yeah, when I first saw the news about this yesterday, my first reaction was "Meh!" I'm not that excited about it, and I'd tell you why. One, you're right, $4 billion is a lot of money for pretty much every company but Berkshire Hathaway. Berkshire Hathaway ended the first quarter with $137 billion on its balance sheet, and that was before Buffett unloaded all the airline stocks and raised cash that way. So, $4 billion is kind of a drop in the bucket. And people were hoping he would take advantage of some sort of, you know, distress situation.
When you think back to the Great Recession era, coming out of the Great Recession Buffett invested in Goldman Sachs, Bank of America ...
Moser: GE, too, right? Didn't he invest in GE at that time?
Frankel: GE, but we don't talk about that. [laughs] I think he got out while the getting was still good. But you know, he got out of General Electric long ago. So, he made money off of it. But the point being, that during the crisis era, he invested in distressed companies, he did Buffett moves. And not only that, but the Bank of America and Goldman Sachs deals, those were investments that you and I couldn't have made.
If you remember the Bank of America deal, for example, he bought a bunch of warrants that gave him -- or he bought preferred stock, but it gave him the option of buying a bunch of common shares anytime within the next decade or so for, I think, $7/share. So, he quadrupled his money on that investment. Those securities didn't exist, they created them for Warren Buffett. Goldman Sachs was a similar deal too.
So, people were hoping for something similar like this. Maybe he would, you know, acquire a hotel chain that was going poorly or acquire some company that wasn't doing well. Dominion is doing fine, they're my power company, I know they're doing just fine. Dominion didn't need to sell its natural gas resources, if anything, its shareholders are kind of upset, because now they got a dividend cut out of the deal, you know, Dominion is going to have less income-producing resources to pay dividends with. They've already declared a dividend cut.
So, it does help -- I mean, utilities are a very Buffett business. They're pretty much guaranteed money. The only thing I really like about this deal is it adds to the margin of safety in Berkshire's cash flows, because utilities are money that are going to come in no matter what. People are always going to pay their electric bill; people are always going to pay their natural gas bill in this case. So, this increases Buffett's -- I think Berkshire has an 18% share of the natural gas pipeline business in the U.S. now after this deal, which makes him a pretty major player.
It's a pretty small deal, Berkshire-wise, it helps their utility business, it adds -- consistent cash flow is, in my opinion, the No. 1 perk of this deal, but it's not what a lot of his shareholders were hoping for, it's not likely to get a lot of people excited. People would be excited if Berkshire were to buy an airline that was about to go bankrupt and got it for pennies on the dollar or something like that. Because that would be a crisis-era Buffett investment that you would think of.
When you think back to the financial crisis, you don't think what utilities was Buffett looking at, you are thinking what banks did he invest in, what distressed companies did he buy. So, I don't hate the investment. That $4 billion will definitely be generating more revenue and more cash flow for shareholders than it would have sitting in Treasury securities. So, in that way it's definitely a good sign. But I still think Buffett is looking for that one COVID-era deal that's really going to, you know, live on through history, and this isn't it.
Moser: Yeah, I think you're right. I mean, it's a good point you make there, in that, whether it is energy/utilities or insurance, he really does have a penchant for those consistent cash flow businesses, right? The businesses that you know those payments are always coming in. I mean, those types of businesses can afford to take on a little bit of a different capital structure. They are able to handle more debt because they're so capital intensive, but also because they're so reliable. I mean, you know, your power bills are going to get paid for, insurance bills are going to get paid for. But, yeah, it does strike me as, well, I guess, it's OK. I mean, I'm not a Berkshire shareholder anymore, so I don't really care about it from that perspective, but yeah, it seems like we're waiting for some big, sexy acquisition and this just isn't it.
Frankel: Yeah. It could be coming, it could not be coming, but what I do like is that this, like you said, it's safe cash flow, it's going to generate more cash flow, so Berkshire's cash stockpile will grow even faster now. And it gives, the way I look at it, for every safe acquisition or investment Buffett makes like this, it gives him more wiggle room to make more stock purchases, more less-boring investments, if you will.
Moser: Well, yeah, take a position in, like, PagSeguro or StoneCo, I mean those are certainly smaller riskier ideas.
Frankel: Right. So, the more utilities; insurance companies, railroads, things like this you own, the easier it is to justify taking swings at that. So, I'm hoping this isn't the last of his 2020 investments. Remember I wrote the article at the beginning of the year, my 5 Bold Predictions. The only one that hasn't come true yet is Buffett will make a big acquisition and I'm not declaring it a victory today. I could take the easy victory lap, but I'm not going to, because I don't think this is a big Buffett-defining acquisition, I guess you could say.
Moser: I like that, man, hold to your standard, I can appreciate that, nothing wrong with that, Matt. Well, so in talking about Berkshire Hathaway, Warren Buffett, in related news, now Wells Fargo, which is clearly a very large Berkshire holding -- I mean, they've owned shares in Wells Fargo for a long, long time. We talked recently about the stress tests and these, sort of, worst-case scenarios where the Fed has looked to these banks, to say, listen, in the case of just the worst-case scenario, we could see some balance sheets and some capital positions here getting strained.
And so, there are some stipulations laid down in regard to share repurchases, in regard to dividends, but Wells Fargo, it looks like, is actually going to be cutting its dividend. Now, I don't think that's something that's going to happen maybe today, from what I can gather, the company reports earnings next week, on July 14th, and that'll be for their second quarter. But it does sound like, for this third quarter, they're actually going to be, at the very least, cutting their dividend, I don't think they would eliminate it, do you?
Frankel: No. So, here's why they're going to cut their dividend. They've already announced they're going to have some sort of reduced payout, they haven't announced what it's going to be yet. So, Wells Fargo, as you know, is mostly a commercial bank, meaning that they don't have a giant investment banking operation, they make most of their money by taking in deposits and loaning out money. Because of that, they have a lot of exposure to potential losses if things go badly with this recession. So, during the first quarter, they built up their reserves by $3.1 billion, which reduced their earnings per share from, I think, $0.73/ share to $0.01/share. They didn't lose the money. They set this money aside in case the worst happens.
So, the Fed's recent action limits bank dividends to a formula based on their last four quarters of earnings. So, in the first quarter, Wells Fargo earned $0.01/share; that's obviously not helping its dividend. In the third and fourth quarter of last year, I have the numbers right in front of me. Wells Fargo earned $0.92 and $0.60 in the third and fourth quarters of last year. So, those are the three quarters we know so far. So, the bank also announced that it's going to be setting aside even more money in its loss reserves than it did during the first quarter, which pretty much means that it's going to have negative earnings in the second quarter when you factor that in.
So, doing the math, they had about $1.50/share in profit in the third and fourth quarter of last year, essentially nothing in the first quarter of this year. So, depending on what the profit they report in the second quarter of this year next week, they're going to be able to make a determination for their dividend going forward. It's not going to be enough to support the payout that they have.
Moser: No. And the stock has had a really tough year thus far. I think, essentially, year-to-date it's been cut-in-half already.
Frankel: Oh, Wells Fargo has had a very tough three years. Remember, Wells Fargo has been underperforming since before the pandemic was going on. It wasn't that long ago, I think in early 2016, Wells Fargo was considered the top-notch bank stock in America. All the scandals came out, so Wells Fargo is down something like 70% over the past few years, at a time, and the overall bank sector is up. So, they're by far the worst-performing bank stock out of the big four, including this year. So, Wells Fargo has been a real underperformer, their current dividend translated to something like an 8% yield. So, even if they're forced to cut their dividend in half, which I think is probably a pretty likely scenario, you're still looking at a 4% yielding bank stock. Wells Fargo's asset quality, it's pretty high quality, it's just that they have so much commercial banking exposure that in a worst-case scenario they are more prone to disaster.
Now, not that we think this is going to happen, the stress tests are designed to examine a scenario that's not really likely to happen. So, shareholders shouldn't panic. If anything, this could be potentially a buying opportunity on weakness. I'm hesitant to call any buying opportunity in Wells Fargo, just because of how it's gone the past few years, but I will say, the stock has got my attention in the past couple of months, I haven't pulled the trigger on it. But I'm not worried about it because of this dividend action, this is not a dividend cut in response to actual losses yet.
Moser: Yeah. Well, I mean, you know, you make a good point there. This is all based on some pretty simple math out there. I mean, obviously, Wells Fargo has had had some issues, but the fact that these banks are being held to these stress test standards, I mean, that's the whole point of this was to avoid the travesty and the carnage of what happened 10, 11 years ago, to avoid that happening again. And if they're running a tight ship, if things are going well, that dividend will come back. They maintain such a large presence in the mortgage market alone, I mean, this isn't a bank that can just go away.
We talk about in times when companies cut dividends, oftentimes it may sound like bad news, it sounds like a bad headline, but really, if you're forward-thinking, if you have a bit of a longer timeline, oftentimes that really actually is very good news, because that means the company is taking a look at its financial situation and trying to make sure they have all of their i's dotted and t's crossed.
Frankel: Yeah. And dividend cuts are not -- it depends on the circumstances; a proactive dividend cut can be a good thing. We're seeing a lot of that in the real estate sector this year. A lot of the real estate companies I follow are cutting dividends, especially hotel real estate, a lot of them are cutting dividends to preserve liquidity in anticipation of a worst-case scenario or something to that effect. So, something like that could be a net positive for shareholders long-term, or at least not a negative. You know, preserving liquidity is always a good thing or anticipation of a worst-case scenario, like Wells Fargo. It's a proactive dividend cut. It's not in response to an inability to pay, it's in response to what could happen down the road.
So, that's not necessarily a bad thing, what you don't want to see is a company forced to cut its dividend because it doesn't have any money. And those are the situations where it could be a runaway red flag situation.
Moser: And that's where you look at a company's financials, you look at that income statement, you can see that payout ratio, it's a clear-as-day metric. And the higher it is, the more you have to kind of wonder, can this company afford this type of dividend policy? It's one thing if it's a one-off, but if it's a sustained track record of a high dividend payout ratio, then I mean, you have to take that into consideration, no question about it.
Well, Matt, before we take off this week, let's give our listeners one to watch for the coming week. What is your one to watch this week?
Frankel: I'm going to bring back one of my old favorites, and I'm going to brag about it for just a minute. Green Dot, ticker symbol GDOT. I talked about Green Dot a long time ago. The stock got clobbered. They ended up making a major change, original Founder Steve Streit retired, we had him on the show a while ago, if you remember. He retired. They brought in a new CEO, Dan Henry, who's kind of a game-changing CEO for them. He's really prioritizing growth. He wants them to leverage their bank charter. He, kind of, really views their bank charter as the big differentiator between them and other prepaid card companies.
And this whole Wirecard scandal, if you've been following that, I'm sure you have been, you're the War on Cash guy. So, Wirecard, if you're not familiar, essentially $2 billion of cash evaporated from their balance sheet. So the Wirecard scandal could actually really play out to Green Dots advantage, especially being the payments company with a bank charter, because as you know, we follow companies like -- how long Square have been trying to get a bank charter for? So, having a bank charter in hand is a big differentiator right now, in a space that's getting crowded.
Green Dot has already doubled off of its lows, which I'm happy to say. For all the people who kept yelling at me about constantly talking about them, and it's finally starting to pan out a little bit. But I think there could be a lot more from here. Remember, they also have the Banking-as-a-Service business with customers like Apple, Uber, Intuit, and I think there's a lot more room on that side of the business too. They're a really unique company.
Moser: Absolutely. And what's the ticker on that?
Frankel: GDOT.
Moser: GDOT. Alright. Well, I am going to spend the week trying to learn a little bit more about a recent IPO, a lot of you probably have heard of this already. Lemonade, ticker is LMND. Interesting insurance play here. And going through their S-1, just to start getting a little bit more familiar with the business, their mission statement. Their mission is to harness technology and social impact to be the world's most-loved insurance company. And that alone, kind of, caught me, because I think a lot of people these days, you kind of think of insurance as like, nobody I think really loves their insurance company. I think most people just wish they didn't have to necessarily pay the bill or just hope that when they do have to file a claim that their insurance company [laughs] isn't going to screw them.
You know, maybe Lemonade sees a big opportunity there to really, kind of, change the narrative and the perception here. No question, it is geared toward a younger consumer, they are working on digitizing insurance from end-to-end. But it's also really interesting that their model, like a typical insurance company, they'll take those premiums in and then they'll, at some point or another, a catastrophe will happen and they'll have to pay out, and their profitability depends on that. Whether it's a pandemic or weather-related, whatever it may be.
It looks like Lemonade actually just -- they retain a fixed fee, about 25% of their premiums, and then ultimately pass off the insurance aspect of the business to third-party, basically they offload that business to reinsurers. So, I guess what they think they have at least is a little bit more consistency in the profitability, and, you know, utilizing technology really to attract perhaps a younger demographic. But new IPO, I mean, insurance is right up our alley here. I think I'd be a fun business to learn about, and maybe what we can do is we can try to take a week in the coming weeks here and do a deep-dive on the company for one of the shows here. But that's going to be the company I'm taking a look at this week.
So, listen, Matt, hey, you know, I'm glad you guys had a safe 4th, it sounds like everybody is doing well down there. I appreciate you taking the time to join us today.
Frankel: Of course. Always good to be here.
Moser: Alrighty. That's going to do it for us this week, folks. Remember you can always reach out to us on Twitter @MFIndustryFocus. You can drop us an email at IndustryFocus@Fool.com.
As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Today's show is produced by Tim Sparks. Thanks for making it happen, Tim, I appreciate you. From Matt Frankel, I'm Jason Moser, thanks for listening and we'll see you next week.
Jason Moser owns shares of Mastercard, PayPal Holdings, Square, and Visa. Matthew Frankel, CFP owns shares of Apple, Bank of America, Berkshire Hathaway (B shares), Goldman Sachs, Green Dot, and Square and has the following options: short August 2020 $105 calls on Square. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Intuit, Mastercard, PayPal Holdings, Square, Twitter, and Visa. The Motley Fool owns shares of Stoneco LTD. The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short September 2020 $70 puts on Square, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In addition, hear about the latest efforts to force retailers to accept cash as a payment option and get the details on Wells Fargo's (NYSE: WFC) upcoming dividend cut. Well on today's Financial show, we're going to take a look at Warren Buffett's latest firing of the elephant gun, could be a potential controversial investment here the Berkshire Hathaway is making for a lot of money. So, this increases Buffett's -- I think Berkshire has an 18% share of the natural gas pipeline business in the U.S. now after this deal, which makes him a pretty major player.
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Matthew Frankel, CFP owns shares of Apple, Bank of America, Berkshire Hathaway (B shares), Goldman Sachs, Green Dot, and Square and has the following options: short August 2020 $105 calls on Square. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Intuit, Mastercard, PayPal Holdings, Square, Twitter, and Visa. The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short September 2020 $70 puts on Square, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and long January 2022 $75 calls on PayPal Holdings.
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So, there's a lot of people out there that don't have what we may see as a common, sort of, access to a bank account, a lot of people don't have that. We talk about in times when companies cut dividends, oftentimes it may sound like bad news, it sounds like a bad headline, but really, if you're forward-thinking, if you have a bit of a longer timeline, oftentimes that really actually is very good news, because that means the company is taking a look at its financial situation and trying to make sure they have all of their i's dotted and t's crossed. Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) just made its first investment of the COVID era by purchasing the natural gas assets of Dominion (NYSE: D).
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So, that's not necessarily a bad thing, what you don't want to see is a company forced to cut its dividend because it doesn't have any money. And that alone, kind of, caught me, because I think a lot of people these days, you kind of think of insurance as like, nobody I think really loves their insurance company. Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) just made its first investment of the COVID era by purchasing the natural gas assets of Dominion (NYSE: D).
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2020-07-06 00:00:00 UTC
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BUZZ-U.S. STOCKS ON THE MOVE-Square, Uber, Walgreens, Nio, Spotify
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D
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https://www.nasdaq.com/articles/buzz-u.s.-stocks-on-the-move-square-uber-walgreens-nio-spotify-2020-07-06
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nan
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Eikon search string for individual stock moves: STXBZ
The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi
The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh
Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. .N
At 12:32 ET, the Dow Jones Industrial Average .DJI was up 1.28% at 26,157.45. The S&P 500 .SPX was up 1.43% at 3,174.71 and the Nasdaq Composite .IXIC was up 2.22% at 10,433.754. The top three S&P 500 .PG.INX percentage gainers: ** Freeport-McMoRan Inc , up 8% ** Xilinx Inc , up 7.1% ** MarketAxess Holdings Inc , up 5.2% The top three S&P 500 .PL.INX percentage losers: ** ONEOK Inc , down 11.9% ** Dominion Energy Inc , down 10.7% ** Marathon Oil , down 5.8% The top two NYSE .PG.N percentage gainers: ** Lemonade Inc O , up 30.4% ** Mogu Inc , up 30.2% The top two Nasdaq .PG.O percentage gainers: ** Ayro Inc , up 115.6% ** Electrameccanica Vehicles Corp , up 52.1% The top three Nasdaq .PL.O percentage losers: ** BELLUS Health Inc , down 77% ** Obseva SA , down 44.9% ** Liminal BioSciences Inc, down 20.8%
** Uber Technologies Inc UBER.N: up 6.8% Uber scoops up Postmates for $2.65 bln in 'everyday' delivery push ** Safe-T Group SFET.OSFET.TA: up 5.8% BUZZ-Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 67.6% BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 2.1% BUZZ-Bernstein downgrades to 'underperform' on valuation ** Emergent EBS.N: up 4.5% BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 2.1% BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 22.2% BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 3.1% BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests ** JPMorgan Chase & Co JPM.N: up 1.3%
BUZZ-U.S. banks track rise in yields on risk-on sentiment ** Sally Beauty SBH.N: up 5.7%
BUZZ-Rises as strong sales momentum continues into June ** Uber Technologies Inc UBER.N: up 6.8%
BUZZ-Gains on $2.65 billion Postmates deal ** Niu Technologies NIU.O: up 21.5%
BUZZ-Surges on jump in Q2 e-scooter sales ** Immunomedics IMMU.O: up 9.8%
BUZZ-Up on positive study data for breast cancer therapy ** Forum Energy Tech FET.N: down 18.0%
BUZZ-Plunges on bankruptcy warning ** Freeport-McMoRan FCX.N: up 8.0%
BUZZ-Scales over 4-month high on upbeat output forecast ** Duke Energy DUK.N: down 3.1%
BUZZ-Falls on estimated $2 bln charge on dropped project ** Walgreens Boots Alliance Inc DUK.N: up 3.6%
BUZZ-Baird sees improved retail environment, hikes PT ** Fortuna Silver FVI.TO: down 2.3%
BUZZ-Down after worker dies at Peru mine, co halts operations ** Sina Corp SINA.O: up 10.5%
BUZZ-Jumps on receiving go-private bid ** Square SQ.N: up 10.6%
BUZZ-Brokerage remains positive on rising Cash App adoption ** JinkoSolar JKS.N: up 8.9%
BUZZ-Up on Chile solar module supply deal ** Energy Transfer ET.N: down 11.2%
BUZZ-Down on court orders to shut DAPL operations ** Amazon.com AMZN.O: up 4.4%
BUZZ-Hits $3,000 mark for first time ** Criteo CRTO.O: up 18.2%
BUZZ-Jumps after raising Q2 revenue forecast ** Waitr Holdings Inc WTRH.O: up 33.0%
BUZZ-Jumps on upbeat preliminary Q2 results
(Compiled by Bharath Manjesh in Bengaluru)
((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. .N At 12:32 ET, the Dow Jones Industrial Average .DJI was up 1.28% at 26,157.45. The top three S&P 500 .PG.INX percentage gainers: ** Freeport-McMoRan Inc , up 8% ** Xilinx Inc , up 7.1% ** MarketAxess Holdings Inc , up 5.2% The top three S&P 500 .PL.INX percentage losers: ** ONEOK Inc , down 11.9% ** Dominion Energy Inc , down 10.7% ** Marathon Oil , down 5.8% The top two NYSE .PG.N percentage gainers: ** Lemonade Inc O , up 30.4% ** Mogu Inc , up 30.2% The top two Nasdaq .PG.O percentage gainers: ** Ayro Inc , up 115.6% ** Electrameccanica Vehicles Corp , up 52.1% The top three Nasdaq .PL.O percentage losers: ** BELLUS Health Inc , down 77% ** Obseva SA , down 44.9% ** Liminal BioSciences Inc, down 20.8% ** Uber Technologies Inc UBER.N: up 6.8% Uber scoops up Postmates for $2.65 bln in 'everyday' delivery push ** Safe-T Group SFET.OSFET.TA: up 5.8% BUZZ-Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 67.6% BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 2.1% BUZZ-Bernstein downgrades to 'underperform' on valuation ** Emergent EBS.N: up 4.5% BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 2.1% BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 22.2% BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 3.1% BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests ** JPMorgan Chase & Co JPM.N: up 1.3% BUZZ-U.S. banks track rise in yields on risk-on sentiment ** Sally Beauty SBH.N: up 5.7% BUZZ-Rises as strong sales momentum continues into June ** Uber Technologies Inc UBER.N: up 6.8% BUZZ-Gains on $2.65 billion Postmates deal ** Niu Technologies NIU.O: up 21.5% BUZZ-Surges on jump in Q2 e-scooter sales ** Immunomedics IMMU.O: up 9.8% BUZZ-Up on positive study data for breast cancer therapy ** Forum Energy Tech FET.N: down 18.0% BUZZ-Plunges on bankruptcy warning ** Freeport-McMoRan FCX.N: up 8.0% BUZZ-Scales over 4-month high on upbeat output forecast ** Duke Energy DUK.N: down 3.1% BUZZ-Falls on estimated $2 bln charge on dropped project ** Walgreens Boots Alliance Inc DUK.N: up 3.6% BUZZ-Baird sees improved retail environment, hikes PT ** Fortuna Silver FVI.TO: down 2.3% BUZZ-Down after worker dies at Peru mine, co halts operations ** Sina Corp SINA.O: up 10.5% BUZZ-Jumps on receiving go-private bid ** Square SQ.N: up 10.6% BUZZ-Brokerage remains positive on rising Cash App adoption ** JinkoSolar JKS.N: up 8.9% BUZZ-Up on Chile solar module supply deal ** Energy Transfer ET.N: down 11.2% BUZZ-Down on court orders to shut DAPL operations ** Amazon.com AMZN.O: up 4.4% BUZZ-Hits $3,000 mark for first time ** Criteo CRTO.O: up 18.2% BUZZ-Jumps after raising Q2 revenue forecast ** Waitr Holdings Inc WTRH.O: up 33.0% BUZZ-Jumps on upbeat preliminary Q2 results (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. .N At 12:32 ET, the Dow Jones Industrial Average .DJI was up 1.28% at 26,157.45. The top three S&P 500 .PG.INX percentage gainers: ** Freeport-McMoRan Inc , up 8% ** Xilinx Inc , up 7.1% ** MarketAxess Holdings Inc , up 5.2% The top three S&P 500 .PL.INX percentage losers: ** ONEOK Inc , down 11.9% ** Dominion Energy Inc , down 10.7% ** Marathon Oil , down 5.8% The top two NYSE .PG.N percentage gainers: ** Lemonade Inc O , up 30.4% ** Mogu Inc , up 30.2% The top two Nasdaq .PG.O percentage gainers: ** Ayro Inc , up 115.6% ** Electrameccanica Vehicles Corp , up 52.1% The top three Nasdaq .PL.O percentage losers: ** BELLUS Health Inc , down 77% ** Obseva SA , down 44.9% ** Liminal BioSciences Inc, down 20.8% ** Uber Technologies Inc UBER.N: up 6.8% Uber scoops up Postmates for $2.65 bln in 'everyday' delivery push ** Safe-T Group SFET.OSFET.TA: up 5.8% BUZZ-Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 67.6% BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 2.1% BUZZ-Bernstein downgrades to 'underperform' on valuation ** Emergent EBS.N: up 4.5% BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 2.1% BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 22.2% BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 3.1% BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests ** JPMorgan Chase & Co JPM.N: up 1.3% BUZZ-U.S. banks track rise in yields on risk-on sentiment ** Sally Beauty SBH.N: up 5.7% BUZZ-Rises as strong sales momentum continues into June ** Uber Technologies Inc UBER.N: up 6.8% BUZZ-Gains on $2.65 billion Postmates deal ** Niu Technologies NIU.O: up 21.5% BUZZ-Surges on jump in Q2 e-scooter sales ** Immunomedics IMMU.O: up 9.8% BUZZ-Up on positive study data for breast cancer therapy ** Forum Energy Tech FET.N: down 18.0% BUZZ-Plunges on bankruptcy warning ** Freeport-McMoRan FCX.N: up 8.0% BUZZ-Scales over 4-month high on upbeat output forecast ** Duke Energy DUK.N: down 3.1% BUZZ-Falls on estimated $2 bln charge on dropped project ** Walgreens Boots Alliance Inc DUK.N: up 3.6% BUZZ-Baird sees improved retail environment, hikes PT ** Fortuna Silver FVI.TO: down 2.3% BUZZ-Down after worker dies at Peru mine, co halts operations ** Sina Corp SINA.O: up 10.5% BUZZ-Jumps on receiving go-private bid ** Square SQ.N: up 10.6% BUZZ-Brokerage remains positive on rising Cash App adoption ** JinkoSolar JKS.N: up 8.9% BUZZ-Up on Chile solar module supply deal ** Energy Transfer ET.N: down 11.2% BUZZ-Down on court orders to shut DAPL operations ** Amazon.com AMZN.O: up 4.4% BUZZ-Hits $3,000 mark for first time ** Criteo CRTO.O: up 18.2% BUZZ-Jumps after raising Q2 revenue forecast ** Waitr Holdings Inc WTRH.O: up 33.0% BUZZ-Jumps on upbeat preliminary Q2 results (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. .N At 12:32 ET, the Dow Jones Industrial Average .DJI was up 1.28% at 26,157.45. The top three S&P 500 .PG.INX percentage gainers: ** Freeport-McMoRan Inc , up 8% ** Xilinx Inc , up 7.1% ** MarketAxess Holdings Inc , up 5.2% The top three S&P 500 .PL.INX percentage losers: ** ONEOK Inc , down 11.9% ** Dominion Energy Inc , down 10.7% ** Marathon Oil , down 5.8% The top two NYSE .PG.N percentage gainers: ** Lemonade Inc O , up 30.4% ** Mogu Inc , up 30.2% The top two Nasdaq .PG.O percentage gainers: ** Ayro Inc , up 115.6% ** Electrameccanica Vehicles Corp , up 52.1% The top three Nasdaq .PL.O percentage losers: ** BELLUS Health Inc , down 77% ** Obseva SA , down 44.9% ** Liminal BioSciences Inc, down 20.8% ** Uber Technologies Inc UBER.N: up 6.8% Uber scoops up Postmates for $2.65 bln in 'everyday' delivery push ** Safe-T Group SFET.OSFET.TA: up 5.8% BUZZ-Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 67.6% BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 2.1% BUZZ-Bernstein downgrades to 'underperform' on valuation ** Emergent EBS.N: up 4.5% BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 2.1% BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 22.2% BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 3.1% BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests ** JPMorgan Chase & Co JPM.N: up 1.3% BUZZ-U.S. banks track rise in yields on risk-on sentiment ** Sally Beauty SBH.N: up 5.7% BUZZ-Rises as strong sales momentum continues into June ** Uber Technologies Inc UBER.N: up 6.8% BUZZ-Gains on $2.65 billion Postmates deal ** Niu Technologies NIU.O: up 21.5% BUZZ-Surges on jump in Q2 e-scooter sales ** Immunomedics IMMU.O: up 9.8% BUZZ-Up on positive study data for breast cancer therapy ** Forum Energy Tech FET.N: down 18.0% BUZZ-Plunges on bankruptcy warning ** Freeport-McMoRan FCX.N: up 8.0% BUZZ-Scales over 4-month high on upbeat output forecast ** Duke Energy DUK.N: down 3.1% BUZZ-Falls on estimated $2 bln charge on dropped project ** Walgreens Boots Alliance Inc DUK.N: up 3.6% BUZZ-Baird sees improved retail environment, hikes PT ** Fortuna Silver FVI.TO: down 2.3% BUZZ-Down after worker dies at Peru mine, co halts operations ** Sina Corp SINA.O: up 10.5% BUZZ-Jumps on receiving go-private bid ** Square SQ.N: up 10.6% BUZZ-Brokerage remains positive on rising Cash App adoption ** JinkoSolar JKS.N: up 8.9% BUZZ-Up on Chile solar module supply deal ** Energy Transfer ET.N: down 11.2% BUZZ-Down on court orders to shut DAPL operations ** Amazon.com AMZN.O: up 4.4% BUZZ-Hits $3,000 mark for first time ** Criteo CRTO.O: up 18.2% BUZZ-Jumps after raising Q2 revenue forecast ** Waitr Holdings Inc WTRH.O: up 33.0% BUZZ-Jumps on upbeat preliminary Q2 results (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. .N At 12:32 ET, the Dow Jones Industrial Average .DJI was up 1.28% at 26,157.45. The S&P 500 .SPX was up 1.43% at 3,174.71 and the Nasdaq Composite .IXIC was up 2.22% at 10,433.754.
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699069.0
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2020-07-06 00:00:00 UTC
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Dominion Energy Stock Falls 11.3% After the Atlantic Coast Pipeline Is Axed
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D
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https://www.nasdaq.com/articles/dominion-energy-stock-falls-11.3-after-the-atlantic-coast-pipeline-is-axed-2020-07-06
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nan
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nan
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What happened
Shares of Dominion Energy (NYSE: D) fell as much as 11.3% on Monday after the company announced two seismic shifts in strategy. First, Dominion and partner Duke Energy (NYSE: DUK) announced the cancellation of the Atlantic Coast Pipeline. Despite earning a decisive win in the Supreme Court in June allowing the duo to proceed with the massive project, the threat of lawsuits and delays proved too much to overcome.
Second, Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. The all-cash transaction includes the assumption of $5.7 billion in debt, while the remaining $4 billion will be plowed into stock buybacks.
As of 1:34 p.m. EDT today, the dividend stock had settled to a 9.8% loss.
Image source: Getty Images.
So what
The Atlantic Coast Pipeline was intended to send natural gas from the energy-rich Appalachian region to the energy-poor Mid-Atlantic and Southeast. Originally estimated to cost between $4.5 billion and $5 billion, delays and lawsuits drove up costs to nearly $8 billion.
One obstacle proved fatal: The pipeline had to cross the Appalachian Trail at about 600 feet underground. While the U.S. Forest Service granted Dominion Energy and Duke Energy a permit to proceed, a lawsuit argued the permit was illegitimate. It was elevated to the Supreme Court, which just last month ruled the permit was lawful. But the threat of more delays and lawsuits forced the companies to nix their plans.
Dominion Energy was hoping to leverage its vast natural gas storage and transmission assets in the region to complement the project. But with the pipeline canceled, it made sense to divest the assets and downsize operations.
While the move virtually guarantees the company is going all-in with its ambitious offshore wind portfolio, management pledged to use the $4 billion in cash proceeds to repurchase shares. Given the nascent state of the offshore wind industry, that financial decision might prove questionable in the not-too-distant future.
Now what
After exiting natural gas storage and transmission, Dominion Energy is likely to focus its growth strategy on offshore wind power. Individual investors will find new obstacles and opportunities in the next-generation renewable energy source, but the business is at least geographically positioned to succeed.
Thinking more broadly, today's news could have consequences well beyond Dominion Energy. For instance, it could signal trouble for other pipeline operators attempting to move excess natural gas from Appalachia southward.
It could also boost confidence in America's fledgling efforts to jump-start what could become the world's largest offshore wind-power market by 2030. If the national pipeline of projects develops as hoped, then the many major American cities on the Eastern Seaboard could be increasingly powered by zero-carbon electricity by the end of the decade, with Dominion Energy playing a central role.
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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Despite earning a decisive win in the Supreme Court in June allowing the duo to proceed with the massive project, the threat of lawsuits and delays proved too much to overcome. While the move virtually guarantees the company is going all-in with its ambitious offshore wind portfolio, management pledged to use the $4 billion in cash proceeds to repurchase shares. If the national pipeline of projects develops as hoped, then the many major American cities on the Eastern Seaboard could be increasingly powered by zero-carbon electricity by the end of the decade, with Dominion Energy playing a central role.
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First, Dominion and partner Duke Energy (NYSE: DUK) announced the cancellation of the Atlantic Coast Pipeline. Second, Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Second, Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. While the U.S. Forest Service granted Dominion Energy and Duke Energy a permit to proceed, a lawsuit argued the permit was illegitimate. The Motley Fool recommends Dominion Energy, Inc and Duke Energy and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Second, Dominion Energy agreed to sell its natural gas transmission and storage assets to Berkshire Hathaway for $9.7 billion. So what The Atlantic Coast Pipeline was intended to send natural gas from the energy-rich Appalachian region to the energy-poor Mid-Atlantic and Southeast. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares).
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699070.0
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2020-07-06 00:00:00 UTC
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Financial Sector Update for 07/06/2020: FOUR,LFC,BRK.A,BRK.B,D,NMIH
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D
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https://www.nasdaq.com/articles/financial-sector-update-for-07-06-2020%3A-fourlfcbrk.abrk.bdnmih-2020-07-06
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nan
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nan
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Financial stocks extended their Monday gains in afternoon trading, with the NYSE Financial Index rising 1.5% while the SPDR Financial Select Sector ETF was climbing 1.9%.
The Philadelphia Housing Index was ahead 2.1%.
In company news, Shift4 Payments (FOUR) was 8.6% higher in late trade after the payments processor Monday said merchant transaction volume continued to grow despite rising COVID-19 infection rates, climbing 10% or more in all but seven states compared with the final week in May. States reporting the steepest increases included Pennsylvania, up 70%, and New York and New Jersey, rising 67% and 62%, respectively, it said.
China Life Insurance (LFC) climbed more than 17% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange. The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing.
Berkshire Hathaway (BRK.A,BRK.B) rose about 2.5% after the financial and industrial conglomerate late Sunday announced plans to acquire Dominion Energy's (D) natural gas transmission and storage business for $4 billion in cash and $5.7 billion in assumed debt, marking its first major deal in nearly four years.
NMI Holdings (NMIH) was narrowly higher on Monday after earlier saying it had 10,816 customer loans in default during June, up from 2,265 loans during the previous month, while the default ratio rose to 2.9% last month compared with 0.61% in May.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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States reporting the steepest increases included Pennsylvania, up 70%, and New York and New Jersey, rising 67% and 62%, respectively, it said. The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing. Berkshire Hathaway (BRK.A,BRK.B) rose about 2.5% after the financial and industrial conglomerate late Sunday announced plans to acquire Dominion Energy's (D) natural gas transmission and storage business for $4 billion in cash and $5.7 billion in assumed debt, marking its first major deal in nearly four years.
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In company news, Shift4 Payments (FOUR) was 8.6% higher in late trade after the payments processor Monday said merchant transaction volume continued to grow despite rising COVID-19 infection rates, climbing 10% or more in all but seven states compared with the final week in May. China Life Insurance (LFC) climbed more than 17% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange. The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing.
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Financial stocks extended their Monday gains in afternoon trading, with the NYSE Financial Index rising 1.5% while the SPDR Financial Select Sector ETF was climbing 1.9%. In company news, Shift4 Payments (FOUR) was 8.6% higher in late trade after the payments processor Monday said merchant transaction volume continued to grow despite rising COVID-19 infection rates, climbing 10% or more in all but seven states compared with the final week in May. China Life Insurance (LFC) climbed more than 17% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange.
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Financial stocks extended their Monday gains in afternoon trading, with the NYSE Financial Index rising 1.5% while the SPDR Financial Select Sector ETF was climbing 1.9%. The Philadelphia Housing Index was ahead 2.1%. In company news, Shift4 Payments (FOUR) was 8.6% higher in late trade after the payments processor Monday said merchant transaction volume continued to grow despite rising COVID-19 infection rates, climbing 10% or more in all but seven states compared with the final week in May.
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699071.0
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2020-07-06 00:00:00 UTC
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D Dividend Yield Pushes Past 5%
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D
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https://www.nasdaq.com/articles/d-dividend-yield-pushes-past-5-2020-07-06
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nan
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nan
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Looking at the universe of stocks we cover at Dividend Channel, in trading on Monday, shares of Dominion Energy Inc (Symbol: D) were yielding above the 5% mark based on its quarterly dividend (annualized to $3.76), with the stock changing hands as low as $73.31 on the day. Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market's total return. To illustrate, suppose for example you purchased shares of the S&P 500 ETF (SPY) back on 12/31/1999 — you would have paid $146.88 per share. Fast forward to 12/31/2012 and each share was worth $142.41 on that date, a decrease of $4.67/share over all those years. But now consider that you collected a whopping $25.98 per share in dividends over the same period, for a positive total return of 23.36%. Even with dividends reinvested, that only amounts to an average annual total return of about 1.6%; so by comparison collecting a yield above 5% would appear considerably attractive if that yield is sustainable. Dominion Energy Inc (Symbol: D) is an S&P 500 company, giving it special status as one of the large-cap companies making up the S&P 500 Index.
In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Dominion Energy Inc , looking at the history chart for D below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 5% annual yield.
Click here to find out which 9 other dividend stocks just recently went on sale »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking at the universe of stocks we cover at Dividend Channel, in trading on Monday, shares of Dominion Energy Inc (Symbol: D) were yielding above the 5% mark based on its quarterly dividend (annualized to $3.76), with the stock changing hands as low as $73.31 on the day. But now consider that you collected a whopping $25.98 per share in dividends over the same period, for a positive total return of 23.36%. In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company.
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Looking at the universe of stocks we cover at Dividend Channel, in trading on Monday, shares of Dominion Energy Inc (Symbol: D) were yielding above the 5% mark based on its quarterly dividend (annualized to $3.76), with the stock changing hands as low as $73.31 on the day. Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market's total return. In the case of Dominion Energy Inc , looking at the history chart for D below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 5% annual yield.
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Looking at the universe of stocks we cover at Dividend Channel, in trading on Monday, shares of Dominion Energy Inc (Symbol: D) were yielding above the 5% mark based on its quarterly dividend (annualized to $3.76), with the stock changing hands as low as $73.31 on the day. Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market's total return. Even with dividends reinvested, that only amounts to an average annual total return of about 1.6%; so by comparison collecting a yield above 5% would appear considerably attractive if that yield is sustainable.
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Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market's total return. To illustrate, suppose for example you purchased shares of the S&P 500 ETF (SPY) back on 12/31/1999 — you would have paid $146.88 per share. Dominion Energy Inc (Symbol: D) is an S&P 500 company, giving it special status as one of the large-cap companies making up the S&P 500 Index.
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699072.0
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2020-07-06 00:00:00 UTC
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Monday Sector Laggards: Utilities, Energy
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D
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https://www.nasdaq.com/articles/monday-sector-laggards%3A-utilities-energy-2020-07-06
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nan
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nan
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In afternoon trading on Monday, Utilities stocks are the worst performing sector, showing a 0.7% loss. Within that group, Dominion Energy Inc (Symbol: D) and Duke Energy Corp (Symbol: DUK) are two large stocks that are lagging, showing a loss of 9.3% and 2.5%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is down 1.3% on the day, and down 10.12% year-to-date. Dominion Energy Inc , meanwhile, is down 7.22% year-to-date, and Duke Energy Corp, is down 10.41% year-to-date. Combined, D and DUK make up approximately 15.6% of the underlying holdings of XLU.
The next worst performing sector is the Energy sector, not showing much of a gain. Among large Energy stocks, ONEOK Inc (Symbol: OKE) and Marathon Oil Corp. (Symbol: MRO) are the most notable, showing a loss of 11.2% and 5.2%, respectively. One ETF closely tracking Energy stocks is the Energy Select Sector SPDR ETF (XLE), which is down 0.1% in midday trading, and down 36.08% on a year-to-date basis. ONEOK Inc, meanwhile, is down 59.81% year-to-date, and Marathon Oil Corp., is down 56.89% year-to-date. Combined, OKE and MRO make up approximately 3.0% of the underlying holdings of XLE.
Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom:
Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Monday. As you can see, seven sectors are up on the day, while one sector is down.
SECTOR % CHANGE
Financial +1.4%
Technology & Communications +1.3%
Industrial +1.2%
Services +1.0%
Materials +1.0%
Healthcare +0.8%
Consumer Products +0.7%
Energy 0.0%
Utilities -0.7%
10 ETFs With Stocks That Insiders Are Buying »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In afternoon trading on Monday, Utilities stocks are the worst performing sector, showing a 0.7% loss. Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom: Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Monday. Financial +1.4% Technology & Communications +1.3% Industrial +1.2% Services +1.0% Materials +1.0% Healthcare +0.8% Consumer Products +0.7% Energy 0.0% Utilities -0.7% 10 ETFs With Stocks That Insiders Are Buying » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In afternoon trading on Monday, Utilities stocks are the worst performing sector, showing a 0.7% loss. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is down 1.3% on the day, and down 10.12% year-to-date. Among large Energy stocks, ONEOK Inc (Symbol: OKE) and Marathon Oil Corp. (Symbol: MRO) are the most notable, showing a loss of 11.2% and 5.2%, respectively.
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Within that group, Dominion Energy Inc (Symbol: D) and Duke Energy Corp (Symbol: DUK) are two large stocks that are lagging, showing a loss of 9.3% and 2.5%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is down 1.3% on the day, and down 10.12% year-to-date. One ETF closely tracking Energy stocks is the Energy Select Sector SPDR ETF (XLE), which is down 0.1% in midday trading, and down 36.08% on a year-to-date basis.
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In afternoon trading on Monday, Utilities stocks are the worst performing sector, showing a 0.7% loss. Within that group, Dominion Energy Inc (Symbol: D) and Duke Energy Corp (Symbol: DUK) are two large stocks that are lagging, showing a loss of 9.3% and 2.5%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is down 1.3% on the day, and down 10.12% year-to-date.
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699073.0
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2020-07-06 00:00:00 UTC
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Why Pipeline Stocks Are Tumbling Today
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D
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https://www.nasdaq.com/articles/why-pipeline-stocks-are-tumbling-today-2020-07-06
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nan
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nan
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What happened
Pipeline stocks are getting pulverized today. Several were down more than 10% by 12:30 p.m. EDT on Monday, including Energy Transfer (NYSE: ET), Phillips 66 Partners (NYSE: PSXP), ONEOK (NYSE: OKE), and Crestwood Equity Partners (NYSE: CEQP). Driving down shares of these pipeline operators was an unexpected legal setback and the cancellation of a major pipeline project.
So what
The U.S. District Court for the District of Columbia ordered that the Dakota Access Pipeline shut down and empty by Aug. 5 for further environmental review. The pipeline had been transporting oil out of North Dakota for the past three years. However, it previously faced a series of legal setbacks during construction, which delayed its in-service date.
Image source: Getty Images.
The news is a major blow to the pipeline's owners, which include Energy Transfer (with a 36.37% interest), Phillips 66 Partners (25% stake) and a joint venture between Marathon Petroleum (NYSE: MPC) and Enbridge (NYSE: ENB) that owns a 36.75% interest. With the pipeline shutting down, they'll no longer earn its contractually secured cash flows. On top of that, they'll incur additional costs as they fight to bring the pipeline back online. Because of that, these companies might have to reduce their high-yielding dividends.
The pipeline shutdown will also impact pipeline operators in North Dakota, like ONEOK and Crestwood. That's because producers in the region won't have enough pipeline capacity to ship their oil out of Bakken Shale, which will likely impact their ability to expand production. As a result, companies like ONEOK and Crestwood will gather and process fewer volumes while Dakota Access remains offline, which will impact their cash flows and ability to pay dividends.
Meanwhile, in another crushing blow to the pipeline sector, utilities Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK) canceled their long-delayed Atlantic Coast Pipeline following a series of legal setbacks. While the two companies won a favorable ruling by the U.S. Supreme Court last month, the U.S. District Court in Montana overruled a long-standing federal permit authority, which an appeals court wasn't likely to reverse. With so many legal hurdles to overcome, Duke and Dominion opted to abandon the project due to increasing costs. They initially expected to spend $4.5 billion to $5 billion on the gas pipeline, but delays and overruns had recently pushed the projected cost up to $8 billion.
The pipeline industry's latest setbacks will likely make companies less inclined to pursue major pipeline construction projects. That will impact the sector's ability to grow, making it even less attractive to investors.
Now what
The pipeline sector has become a battleground for environmentalists who want to keep the country's fossil fuel resources in the ground. That's because they can more easily mount legal battles to stop federal and state permits for new pipelines than those for new wells. These tactics are proving to be successful as they've forced the delay or cancellation of a growing number of major pipeline projects.
Because of that, it will be much harder for pipeline companies to expand their operations in the coming years. However, one possible outcome of the increasing limitations on the sector's growth is consolidation. By joining forces, pipeline companies could optimize their existing asset footprints to increase their ability to transport oil and gas.
10 stocks we like better than Energy Transfer LP
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Matthew DiLallo owns shares of Crestwood Equity Partners LP, Enbridge, and Energy Transfer LP. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and ONEOK. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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That's because producers in the region won't have enough pipeline capacity to ship their oil out of Bakken Shale, which will likely impact their ability to expand production. As a result, companies like ONEOK and Crestwood will gather and process fewer volumes while Dakota Access remains offline, which will impact their cash flows and ability to pay dividends. By joining forces, pipeline companies could optimize their existing asset footprints to increase their ability to transport oil and gas.
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Several were down more than 10% by 12:30 p.m. EDT on Monday, including Energy Transfer (NYSE: ET), Phillips 66 Partners (NYSE: PSXP), ONEOK (NYSE: OKE), and Crestwood Equity Partners (NYSE: CEQP). See the 10 stocks *Stock Advisor returns as of June 2, 2020 Matthew DiLallo owns shares of Crestwood Equity Partners LP, Enbridge, and Energy Transfer LP. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and ONEOK.
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Driving down shares of these pipeline operators was an unexpected legal setback and the cancellation of a major pipeline project. Meanwhile, in another crushing blow to the pipeline sector, utilities Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK) canceled their long-delayed Atlantic Coast Pipeline following a series of legal setbacks. The pipeline industry's latest setbacks will likely make companies less inclined to pursue major pipeline construction projects.
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Driving down shares of these pipeline operators was an unexpected legal setback and the cancellation of a major pipeline project. As a result, companies like ONEOK and Crestwood will gather and process fewer volumes while Dakota Access remains offline, which will impact their cash flows and ability to pay dividends. The Motley Fool recommends Dominion Energy, Inc, Duke Energy, and ONEOK.
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699074.0
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2020-07-06 00:00:00 UTC
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Noteworthy Monday Option Activity: D, GOOG, FB
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D
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https://www.nasdaq.com/articles/noteworthy-monday-option-activity%3A-d-goog-fb-2020-07-06
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Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in Dominion Energy Inc (Symbol: D), where a total of 49,725 contracts have traded so far, representing approximately 5.0 million underlying shares. That amounts to about 118.1% of D's average daily trading volume over the past month of 4.2 million shares. Especially high volume was seen for the $90 strike call option expiring July 17, 2020, with 11,582 contracts trading so far today, representing approximately 1.2 million underlying shares of D. Below is a chart showing D's trailing twelve month trading history, with the $90 strike highlighted in orange:
Alphabet Inc (Symbol: GOOG) options are showing a volume of 20,647 contracts thus far today. That number of contracts represents approximately 2.1 million underlying shares, working out to a sizeable 110.9% of GOOG's average daily trading volume over the past month, of 1.9 million shares. Particularly high volume was seen for the $1500 strike call option expiring July 10, 2020, with 1,034 contracts trading so far today, representing approximately 103,400 underlying shares of GOOG. Below is a chart showing GOOG's trailing twelve month trading history, with the $1500 strike highlighted in orange:
And Facebook Inc (Symbol: FB) saw options trading volume of 261,553 contracts, representing approximately 26.2 million underlying shares or approximately 95% of FB's average daily trading volume over the past month, of 27.5 million shares. Especially high volume was seen for the $240 strike call option expiring July 10, 2020, with 23,347 contracts trading so far today, representing approximately 2.3 million underlying shares of FB. Below is a chart showing FB's trailing twelve month trading history, with the $240 strike highlighted in orange:
For the various different available expirations for D options, GOOG options, or FB options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Especially high volume was seen for the $90 strike call option expiring July 17, 2020, with 11,582 contracts trading so far today, representing approximately 1.2 million underlying shares of D. Below is a chart showing D's trailing twelve month trading history, with the $90 strike highlighted in orange: Alphabet Inc (Symbol: GOOG) options are showing a volume of 20,647 contracts thus far today. Particularly high volume was seen for the $1500 strike call option expiring July 10, 2020, with 1,034 contracts trading so far today, representing approximately 103,400 underlying shares of GOOG. Especially high volume was seen for the $240 strike call option expiring July 10, 2020, with 23,347 contracts trading so far today, representing approximately 2.3 million underlying shares of FB.
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Especially high volume was seen for the $90 strike call option expiring July 17, 2020, with 11,582 contracts trading so far today, representing approximately 1.2 million underlying shares of D. Below is a chart showing D's trailing twelve month trading history, with the $90 strike highlighted in orange: Alphabet Inc (Symbol: GOOG) options are showing a volume of 20,647 contracts thus far today. Below is a chart showing GOOG's trailing twelve month trading history, with the $1500 strike highlighted in orange: And Facebook Inc (Symbol: FB) saw options trading volume of 261,553 contracts, representing approximately 26.2 million underlying shares or approximately 95% of FB's average daily trading volume over the past month, of 27.5 million shares. Especially high volume was seen for the $240 strike call option expiring July 10, 2020, with 23,347 contracts trading so far today, representing approximately 2.3 million underlying shares of FB.
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Especially high volume was seen for the $90 strike call option expiring July 17, 2020, with 11,582 contracts trading so far today, representing approximately 1.2 million underlying shares of D. Below is a chart showing D's trailing twelve month trading history, with the $90 strike highlighted in orange: Alphabet Inc (Symbol: GOOG) options are showing a volume of 20,647 contracts thus far today. Below is a chart showing GOOG's trailing twelve month trading history, with the $1500 strike highlighted in orange: And Facebook Inc (Symbol: FB) saw options trading volume of 261,553 contracts, representing approximately 26.2 million underlying shares or approximately 95% of FB's average daily trading volume over the past month, of 27.5 million shares. Especially high volume was seen for the $240 strike call option expiring July 10, 2020, with 23,347 contracts trading so far today, representing approximately 2.3 million underlying shares of FB.
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Especially high volume was seen for the $90 strike call option expiring July 17, 2020, with 11,582 contracts trading so far today, representing approximately 1.2 million underlying shares of D. Below is a chart showing D's trailing twelve month trading history, with the $90 strike highlighted in orange: Alphabet Inc (Symbol: GOOG) options are showing a volume of 20,647 contracts thus far today. Below is a chart showing GOOG's trailing twelve month trading history, with the $1500 strike highlighted in orange: And Facebook Inc (Symbol: FB) saw options trading volume of 261,553 contracts, representing approximately 26.2 million underlying shares or approximately 95% of FB's average daily trading volume over the past month, of 27.5 million shares. Today's Most Active Call & Put Options of the S&P 500 » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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699075.0
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2020-07-06 00:00:00 UTC
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Financial Sector Update for 07/06/2020: LFC,BRK.A,BRK.B,D,NMIH
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D
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https://www.nasdaq.com/articles/financial-sector-update-for-07-06-2020%3A-lfcbrk.abrk.bdnmih-2020-07-06
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Financial stocks were sharply higher in afternoon trading, with the NYSE Financial Index rising 1.4% while the SPDR Financial Select Sector ETF was climbing 1.5%.
The Philadelphia Housing Index was ahead 2%.
In company news, China Life Insurance (LFC) climbed 23% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange. The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing.
Berkshire Hathaway (BRK.A,BRK.B) climbed about 2% after the financial and industrial conglomerate late Sunday announced plans to acquire Dominion Energy's (D) natural gas transmission and storage business for $4 billion in cash and $5.7 billion in assumed debt, marking its first major deal in nearly four years.
NMI Holdings (NMIH) was narrow lower on Monday gain after earlier saying it had 10,816 customer loans in default during June, up from 2,265 loans during the previous month, while the default ratio rose to 2.9% last month compared with 0.61% in May.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing. Berkshire Hathaway (BRK.A,BRK.B) climbed about 2% after the financial and industrial conglomerate late Sunday announced plans to acquire Dominion Energy's (D) natural gas transmission and storage business for $4 billion in cash and $5.7 billion in assumed debt, marking its first major deal in nearly four years. NMI Holdings (NMIH) was narrow lower on Monday gain after earlier saying it had 10,816 customer loans in default during June, up from 2,265 loans during the previous month, while the default ratio rose to 2.9% last month compared with 0.61% in May.
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Financial stocks were sharply higher in afternoon trading, with the NYSE Financial Index rising 1.4% while the SPDR Financial Select Sector ETF was climbing 1.5%. In company news, China Life Insurance (LFC) climbed 23% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange. The company, whose shares continue to trade on the New York Stock Exchange, Monday also said it has applied to have the redeemed securities delisted in Hong Kong, according to a regulatory filing.
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Financial stocks were sharply higher in afternoon trading, with the NYSE Financial Index rising 1.4% while the SPDR Financial Select Sector ETF was climbing 1.5%. In company news, China Life Insurance (LFC) climbed 23% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange. Berkshire Hathaway (BRK.A,BRK.B) climbed about 2% after the financial and industrial conglomerate late Sunday announced plans to acquire Dominion Energy's (D) natural gas transmission and storage business for $4 billion in cash and $5.7 billion in assumed debt, marking its first major deal in nearly four years.
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Financial stocks were sharply higher in afternoon trading, with the NYSE Financial Index rising 1.4% while the SPDR Financial Select Sector ETF was climbing 1.5%. The Philadelphia Housing Index was ahead 2%. In company news, China Life Insurance (LFC) climbed 23% after saying it Friday completed the $1.28 billion redemption and cancellation of all of its ordinary stock previously traded on the Hong Kong stock exchange.
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699076.0
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2020-07-06 00:00:00 UTC
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Judge Orders Dakota Access Pipeline Shut Down, Report Says
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D
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https://www.nasdaq.com/articles/judge-orders-dakota-access-pipeline-shut-down-report-says-2020-07-06
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A U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, according to a Fox News report. The oil pipeline, owned by Energy Transfer LP (NYSE: ET), carries light sweet crude from the Bakken region in North Dakota to major refining markets in the Midwest and Gulf regions. The judge has ordered an environmental review be completed within 30 days.
The news comes just one day after another pipeline project was canceled by Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK). The cancellation of the Atlantic Coast Pipeline (ACP) project was announced after Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) agreed to buy Dominion's natural gas assets for $4 billion, plus another $5.7 billion of debt.
Image source: Getty Images.
The 1,172-mile Dakota Access underground pipeline went into service on June 1, 2017, and traverses North Dakota, South Dakota, Iowa, and Illinois. It has been the subject of protests from the Standing Rock Sioux Tribe for its potential to cause environmental harm. The tribe draws its drinking water from the Missouri River, under which the pipeline runs.
The federal judge found that the U.S. Army Corps of Engineers violated the National Environmental Policy Act when it granted an easement on the portion of the pipeline running under Lake Oahe, according to the report.
The Army Corps had determined after a yearlong review in 2018 that the pipeline posed no significant environmental threats. But the Sioux tribe maintained the study was flawed. The judge acknowledged the disruption that the shutdown will cause, but determined that it was necessary pending the 30-day environmental review.
10 stocks we like better than Energy Transfer LP
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Energy Transfer LP wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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A U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, according to a Fox News report. The federal judge found that the U.S. Army Corps of Engineers violated the National Environmental Policy Act when it granted an easement on the portion of the pipeline running under Lake Oahe, according to the report. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Energy Transfer LP wasn't one of them!
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A U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, according to a Fox News report. The oil pipeline, owned by Energy Transfer LP (NYSE: ET), carries light sweet crude from the Bakken region in North Dakota to major refining markets in the Midwest and Gulf regions. The news comes just one day after another pipeline project was canceled by Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK).
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The oil pipeline, owned by Energy Transfer LP (NYSE: ET), carries light sweet crude from the Bakken region in North Dakota to major refining markets in the Midwest and Gulf regions. The federal judge found that the U.S. Army Corps of Engineers violated the National Environmental Policy Act when it granted an easement on the portion of the pipeline running under Lake Oahe, according to the report. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Howard Smith has no position in any of the stocks mentioned.
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The oil pipeline, owned by Energy Transfer LP (NYSE: ET), carries light sweet crude from the Bakken region in North Dakota to major refining markets in the Midwest and Gulf regions. The judge has ordered an environmental review be completed within 30 days. A U.S. district court judge ordered the Dakota Access Pipeline temporarily shut down and drained by Aug. 5, according to a Fox News report.
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699077.0
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2020-07-06 00:00:00 UTC
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S&P 500 Movers: D, FCX
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D
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https://www.nasdaq.com/articles/sp-500-movers%3A-d-fcx-2020-07-06
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nan
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In early trading on Monday, shares of Freeport-McMoran Copper & Gold topped the list of the day's best performing components of the S&P 500 index, trading up 6.8%. Year to date, Freeport-McMoran Copper & Gold has lost about 6.4% of its value.
And the worst performing S&P 500 component thus far on the day is Dominion Energy, trading down 5.2%. Dominion Energy is lower by about 5.4% looking at the year to date performance.
Two other components making moves today are DXC Technology, trading down 1.8%, and Xilinx, trading up 6.3% on the day.
VIDEO: S&P 500 Movers: D, FCX
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Year to date, Freeport-McMoran Copper & Gold has lost about 6.4% of its value. And the worst performing S&P 500 component thus far on the day is Dominion Energy, trading down 5.2%. Dominion Energy is lower by about 5.4% looking at the year to date performance.
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In early trading on Monday, shares of Freeport-McMoran Copper & Gold topped the list of the day's best performing components of the S&P 500 index, trading up 6.8%. Year to date, Freeport-McMoran Copper & Gold has lost about 6.4% of its value. And the worst performing S&P 500 component thus far on the day is Dominion Energy, trading down 5.2%.
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In early trading on Monday, shares of Freeport-McMoran Copper & Gold topped the list of the day's best performing components of the S&P 500 index, trading up 6.8%. And the worst performing S&P 500 component thus far on the day is Dominion Energy, trading down 5.2%. Two other components making moves today are DXC Technology, trading down 1.8%, and Xilinx, trading up 6.3% on the day.
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In early trading on Monday, shares of Freeport-McMoran Copper & Gold topped the list of the day's best performing components of the S&P 500 index, trading up 6.8%. And the worst performing S&P 500 component thus far on the day is Dominion Energy, trading down 5.2%. VIDEO: S&P 500 Movers: D, FCX The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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699078.0
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2020-07-06 00:00:00 UTC
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Why Alternative Energy Stocks Jumped on Monday
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https://www.nasdaq.com/articles/why-alternative-energy-stocks-jumped-on-monday-2020-07-06
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What happened
Shares of alternative energy stocks had a great run to start the week with many climbing double digits. Plug Power (NASDAQ: PLUG), Bloom Energy (NYSE: BE), Ballard Power Systems (NASDAQ: BLDP), and FuelCell Energy (NASDAQ: FCEL) were up as much as 15.3%, 13%, 15.3%, and 21.8% respectively.
At 12:30 p.m. EDT, shares were still trading 12%, 11%, 13.9%, and 13.7% higher, and clean energy stocks overall have had a great day on the market.
Image source: Getty Images.
So what
The biggest news this weekend was that Dominion Energy and Duke Energy have abandoned the Atlantic Coast Pipeline project and Dominion decided to sell its gas pipeline and storage business to Berkshire Hathaway. The move was a nod to the economic reality that fossil fuels are a shrinking proportion of the U.S. energy future and are quickly being replaced by alternative energy.
While this news is good from a macro perspective, there wasn't anything specific that will help any of these companies operationally. They still need to dig out from losing hundreds of millions of dollars combined each year, including 2019.
PLUG Net Income (TTM) data by YCharts
The market doesn't seem to have much regard for valuations right now and these clean energy stocks have been huge beneficiaries. But beware that none of these companies are exactly on solid footing financially.
Now what
The reality is that fuel cell stocks have been on a tear recently and with the market rising sharply today it's not surprising they're up as well. Momentum traders can often push shares up rapidly once they get on board, but shares can fall just as quickly as well.
What I would focus on in 2020 is the operational momentum of each of these companies. There's no question that the world is moving toward renewable energy and that should help clean energy and renewable energy stocks, but it doesn't mean that every company will benefit evenly. We've seen in the past that growth in wind and solar, for example, has not led to rising profitability or higher stock prices for the industry long-term. In fact, competition and low margins has led to bankruptcies and falling stock prices, which is something I fear could happen for fuel cell stocks as well.
We've seen fits and starts for fuel cell stocks before. But each time shares have risen companies have failed to live up to expectations and shares have fallen back to earth again. Given financial losses, this could easily happen again, so buyer beware after this quick rise in shares.
10 stocks we like better than FuelCell Energy
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and FuelCell Energy wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of alternative energy stocks had a great run to start the week with many climbing double digits. PLUG Net Income (TTM) data by YCharts The market doesn't seem to have much regard for valuations right now and these clean energy stocks have been huge beneficiaries. We've seen in the past that growth in wind and solar, for example, has not led to rising profitability or higher stock prices for the industry long-term.
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What happened Shares of alternative energy stocks had a great run to start the week with many climbing double digits. Plug Power (NASDAQ: PLUG), Bloom Energy (NYSE: BE), Ballard Power Systems (NASDAQ: BLDP), and FuelCell Energy (NASDAQ: FCEL) were up as much as 15.3%, 13%, 15.3%, and 21.8% respectively. There's no question that the world is moving toward renewable energy and that should help clean energy and renewable energy stocks, but it doesn't mean that every company will benefit evenly.
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There's no question that the world is moving toward renewable energy and that should help clean energy and renewable energy stocks, but it doesn't mean that every company will benefit evenly. 10 stocks we like better than FuelCell Energy When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Travis Hoium has no position in any of the stocks mentioned.
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At 12:30 p.m. EDT, shares were still trading 12%, 11%, 13.9%, and 13.7% higher, and clean energy stocks overall have had a great day on the market. Momentum traders can often push shares up rapidly once they get on board, but shares can fall just as quickly as well. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and FuelCell Energy wasn't one of them!
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699079.0
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2020-07-06 00:00:00 UTC
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Wall Street gains on strong services sector data, China-led recovery hopes
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D
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https://www.nasdaq.com/articles/wall-street-gains-on-strong-services-sector-data-china-led-recovery-hopes-2020-07-06
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By Medha Singh and C Nivedita
July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home.
The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.
During Asian hours, Chinese stocks jumped more than 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis. .SS
A slew of upbeat U.S. data, including a record rise in June payrolls, has powered the Nasdaq .IXIC to all-time highs and brought the S&P 500 .SPX and the Dow .DJI about 6% and 11% below their respective peaks from February.
"Investors are more focused on what the other side of this pandemic looks like, as opposed to the short-term risks of shutdowns," said Matt Lindholm, managing director - investment strategies at CAZ Investments in Houston.
A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery.
During the Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak.
"July is going to be critical in making sure the virus can be contained and in a way that the economic recovery can continue and if Democrats or Republicans get together to continue to supply a type of fiscal stimulus that can continue to support the economy," said Keith Buchanan, senior portfolio manager at GlobAlt Investments in Atlanta.
At 11:09 a.m. ET, the Dow Jones Industrial Average .DJIwas up 366.02 points, or 1.42%, at 26,193.38, the S&P 500 .SPXwas up 48.09 points, or 1.54%, at 3,178.10. The Nasdaq Composite .IXICwas up 236.36 points, or 2.32%, at 10,443.99.
Ten of the 11 major S&P sectors were trading higher, with technology .SPLRCT providing the biggest boost to the benchmark S&P 500.
Among individual shares, Tesla Inc TSLA.O surged 9%, rising for the fifth session as JPMorgan bumped up its price target for the electric carmaker's stock following better-than-expected quarterly deliveries.
Uber Technologies Inc UBER.N climbed 5.4% after the ride-sharing company agreed to buy food-delivery app Postmates Inc in a $2.65-billion all-stock deal.
Dominion Energy Inc D.N and Duke Energy Corp DUK.N fell 7.5% and 2.5%, respectively, after the energy firms abandoned the $8-billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost.
Advancing issues outnumbered decliners by a 3.21-to-1 ratio on the NYSE and by a 2.51-to-1 ratio on the Nasdaq.
The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 133 new highs and nine new lows.
(Reporting by Medha Singh and C Nivedita in Bengaluru; Editing by Uttaresh.V and Maju Samuel)
((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780, outside U.S. +91 80 6749 1130; Twitter: https://twitter.com/medhasinghs))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Medha Singh and C Nivedita July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. During Asian hours, Chinese stocks jumped more than 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis.
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By Medha Singh and C Nivedita July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 133 new highs and nine new lows.
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By Medha Singh and C Nivedita July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery. The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 133 new highs and nine new lows.
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By Medha Singh and C Nivedita July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. During Asian hours, Chinese stocks jumped more than 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis.
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699080.0
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2020-07-06 00:00:00 UTC
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Stock Alert: Dominion Energy Drops 6%
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D
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https://www.nasdaq.com/articles/stock-alert%3A-dominion-energy-drops-6-2020-07-06
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nan
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(RTTNews) - Shares of Dominion Energy, Inc. (D) are falling more than 6% Monday morning at $77.06. It has traded in the range of $57.79- $90.89 in the past 52 weeks.
Sunday, Dominion Energy said its natural gas assets are being bought by Warren Buffett's Berkshire Hathaway for $4 billion. The existing debt of about $5.7 billion for Dominion's Gas Transmission and Storage Business is also to be taken over by Berkshire's energy division, making the deal value $9.7 billion.
Dominion Energy also said yesterday that it, along with its partner Duke Energy was canceling the Atlantic Coast Pipeline project due to "ongoing delays and increasing cost uncertainty which threatens the economic viability of the project."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Shares of Dominion Energy, Inc. (D) are falling more than 6% Monday morning at $77.06. Sunday, Dominion Energy said its natural gas assets are being bought by Warren Buffett's Berkshire Hathaway for $4 billion. Dominion Energy also said yesterday that it, along with its partner Duke Energy was canceling the Atlantic Coast Pipeline project due to "ongoing delays and increasing cost uncertainty which threatens the economic viability of the project."
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(RTTNews) - Shares of Dominion Energy, Inc. (D) are falling more than 6% Monday morning at $77.06. The existing debt of about $5.7 billion for Dominion's Gas Transmission and Storage Business is also to be taken over by Berkshire's energy division, making the deal value $9.7 billion. Dominion Energy also said yesterday that it, along with its partner Duke Energy was canceling the Atlantic Coast Pipeline project due to "ongoing delays and increasing cost uncertainty which threatens the economic viability of the project."
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The existing debt of about $5.7 billion for Dominion's Gas Transmission and Storage Business is also to be taken over by Berkshire's energy division, making the deal value $9.7 billion. Dominion Energy also said yesterday that it, along with its partner Duke Energy was canceling the Atlantic Coast Pipeline project due to "ongoing delays and increasing cost uncertainty which threatens the economic viability of the project." The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - Shares of Dominion Energy, Inc. (D) are falling more than 6% Monday morning at $77.06. It has traded in the range of $57.79- $90.89 in the past 52 weeks. Sunday, Dominion Energy said its natural gas assets are being bought by Warren Buffett's Berkshire Hathaway for $4 billion.
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699081.0
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2020-07-06 00:00:00 UTC
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Wall Street gains on surprise services data, China-led rebound hopes
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D
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https://www.nasdaq.com/articles/wall-street-gains-on-surprise-services-data-china-led-rebound-hopes-2020-07-06
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nan
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nan
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For a live blog on the U.S. stock market, click LIVE/ or type LIVE/ in a news window.
ISM non-manufacturing index jumps to highest since February
Uber jumps on deal to buy food delivery app Postmates
Tesla climbs as JPM hikes price target
Regeneron up as COVID-19 antibody cocktail in late-stage trial
Indexes: Dow 1.25%, S&P 1.31%, Nasdaq 1.84%
Updates to open
By Medha Singh
July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home.
The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.
During Asian hours, Chinese stocks surged 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis. .SS
A slew of upbeat U.S. data, including a record rise in June payrolls, has powered the Nasdaq .IXIC to all-time highs and brought the S&P 500 .SPX and the Dow .DJI about 6% and 11% below their respective peaks from February.
"Investors are more focused on what the other side of this pandemic looks like, as opposed to the short-term risks of shutdowns," said Matt Lindholm, managing director - investment strategies at CAZ Investments in Houston.
A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery.
During the Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak.
At 10:18 a.m. ET, the Dow Jones Industrial Average was up 322.73 points, or 1.25%, at 26,150.09, the S&P 500 was up 41.08 points, or 1.31%, at 3,171.09 and the Nasdaq Composite .IXIC was up 187.95 points, or 1.84%, at 10,395.58.
All the 11 major S&P sectors were trading higher, with technology .SPLRCT and financial .SPSY stocks providing the biggest boost to the benchmark S&P 500.
Among individual shares, Tesla Inc TSLA.O surged 7.4%, building on a four-day rally, after JPMorgan bumped up its price target for the electric carmaker's stock following its better-than-expected quarterly deliveries.
Uber Technologies Inc UBER.N climbed 4.4% after the ride-sharing company agreed on a deal to buy food-delivery app Postmates Inc in a $2.65-billion all-stock agreement.
Regeneron Pharmaceuticals Inc REGN.O gained 1.5% as the drugmaker said it had begun late-stage clinical trials to assess the effectiveness of its antibody cocktail in preventing and treating COVID-19.
Dominion Energy Inc D.N and Duke Energy Corp DUK.N fell 6.1% and 1.5%, respectively, after the energy firms abandoned the $8-billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost.
Advancing issues outnumbered decliners by a 4.28-to-1 ratio on the NYSE, and a 2.50-to-1 ratio on the Nasdaq.
The S&P index recorded 31 new 52-week highs and no new low, while the Nasdaq recorded 115 new highs and nine new lows.
(Reporting by Medha Singh and C Nivedita in Bengaluru; Editing by Maju Samuel and Uttaresh.V)
((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780, outside U.S. +91 80 6749 1130; Twitter: https://twitter.com/medhasinghs))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. During Asian hours, Chinese stocks surged 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis. Among individual shares, Tesla Inc TSLA.O surged 7.4%, building on a four-day rally, after JPMorgan bumped up its price target for the electric carmaker's stock following its better-than-expected quarterly deliveries.
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ISM non-manufacturing index jumps to highest since February Uber jumps on deal to buy food delivery app Postmates Tesla climbs as JPM hikes price target Regeneron up as COVID-19 antibody cocktail in late-stage trial Indexes: Dow 1.25%, S&P 1.31%, Nasdaq 1.84% Updates to open By Medha Singh July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. The S&P index recorded 31 new 52-week highs and no new low, while the Nasdaq recorded 115 new highs and nine new lows.
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ISM non-manufacturing index jumps to highest since February Uber jumps on deal to buy food delivery app Postmates Tesla climbs as JPM hikes price target Regeneron up as COVID-19 antibody cocktail in late-stage trial Indexes: Dow 1.25%, S&P 1.31%, Nasdaq 1.84% Updates to open By Medha Singh July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery. A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery.
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For a live blog on the U.S. stock market, click LIVE/ or type LIVE/ in a news window. ISM non-manufacturing index jumps to highest since February Uber jumps on deal to buy food delivery app Postmates Tesla climbs as JPM hikes price target Regeneron up as COVID-19 antibody cocktail in late-stage trial Indexes: Dow 1.25%, S&P 1.31%, Nasdaq 1.84% Updates to open By Medha Singh July 6 (Reuters) - Wall Street's major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China's economic revival helped investors look past a surge in new cases of COVID-19 at home. The ISM's non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.
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699082.0
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2020-07-06 00:00:00 UTC
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Financial Sector Update for 07/06/2020: DFS, HSBC, BRK.A, D, XLF, FAS, FAZ
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D
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https://www.nasdaq.com/articles/financial-sector-update-for-07-06-2020%3A-dfs-hsbc-brk.a-d-xlf-fas-faz-2020-07-06
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nan
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nan
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Financial stocks were climbing premarket Monday as the Select Financial Sector SPDR (XLF) was over 2% higher recently. The Direxion Daily Financial Bull 3X shares (FAS) were gaining over 5% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) were down more than 5%.
Discover Financial Services (DFS) was climbing past 4% after saying it intends to support the restaurant industry as it rebounds from the impact of the COVID-19 pandemic by providing a cumulative $5 million to 200 Black-owned restaurants between July 6 and Oct. 31.
HSBC Holdings (HSBC) said it will invest further in its businesses in China after receiving a backlash for supporting the controversial new security law for Hong Kong, London newspaper City AM reported, citing a statement. HSBC was more than 4% higher in recent trading.
Berkshire Hathaway (BRK.A) was unchanged after its subsidiary Berkshire Hathaway Energy said it has signed a definitive agreement to acquire Dominion Energy's (D) natural gas transmission and storage business, with the deal carrying an enterprise value of about $9.7 billion.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Discover Financial Services (DFS) was climbing past 4% after saying it intends to support the restaurant industry as it rebounds from the impact of the COVID-19 pandemic by providing a cumulative $5 million to 200 Black-owned restaurants between July 6 and Oct. 31. HSBC Holdings (HSBC) said it will invest further in its businesses in China after receiving a backlash for supporting the controversial new security law for Hong Kong, London newspaper City AM reported, citing a statement. Berkshire Hathaway (BRK.A) was unchanged after its subsidiary Berkshire Hathaway Energy said it has signed a definitive agreement to acquire Dominion Energy's (D) natural gas transmission and storage business, with the deal carrying an enterprise value of about $9.7 billion.
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Financial stocks were climbing premarket Monday as the Select Financial Sector SPDR (XLF) was over 2% higher recently. The Direxion Daily Financial Bull 3X shares (FAS) were gaining over 5% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) were down more than 5%. Berkshire Hathaway (BRK.A) was unchanged after its subsidiary Berkshire Hathaway Energy said it has signed a definitive agreement to acquire Dominion Energy's (D) natural gas transmission and storage business, with the deal carrying an enterprise value of about $9.7 billion.
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Financial stocks were climbing premarket Monday as the Select Financial Sector SPDR (XLF) was over 2% higher recently. The Direxion Daily Financial Bull 3X shares (FAS) were gaining over 5% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) were down more than 5%. HSBC Holdings (HSBC) said it will invest further in its businesses in China after receiving a backlash for supporting the controversial new security law for Hong Kong, London newspaper City AM reported, citing a statement.
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The Direxion Daily Financial Bull 3X shares (FAS) were gaining over 5% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) were down more than 5%. Discover Financial Services (DFS) was climbing past 4% after saying it intends to support the restaurant industry as it rebounds from the impact of the COVID-19 pandemic by providing a cumulative $5 million to 200 Black-owned restaurants between July 6 and Oct. 31. HSBC was more than 4% higher in recent trading.
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699083.0
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2020-07-06 00:00:00 UTC
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BUZZ-U.S. STOCKS ON THE MOVE-Uber, Nio, Spotify, Endologix, Safe-T Group
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https://www.nasdaq.com/articles/buzz-u.s.-stocks-on-the-move-uber-nio-spotify-endologix-safe-t-group-2020-07-06
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nan
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nan
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Eikon search string for individual stock moves: STXBZ
The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi
The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh
Wall Street's main indexes were set to open higher on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections. .N
At 8:13 ET, Dow e-minis 1YMc1 were up 1.48% at 26,139. S&P 500 e-minis ESc1 were up 1.21% at 3,166.75, while Nasdaq 100 e-minis NQc1 were up 1.19% at 10,479. The top three NYSE percentage gainers premarket .PRPG.N: ** Legg Mason , up 34.8% ** Marcus Corp , up 7.6% ** The Brink's Co , up 22.2% The top two NYSE percentage losers premarket .PRPL.N: ** Weidai Ltd , down 24.1% ** Forum Energy Technologies Inc , down 13.4% The top Nasdaq percentage gainer premarket .PRPG.O: ** Rosehill Resources Inc , up 105.0% The top two Nasdaq percentage losers premarket .PRPL.O: ** BELLUS Health Inc , down 75.9% ** Endologix Inc , down 50.6% ** Uber Technologies Inc UBER.N: up 6.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 7.5% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 50.6% premarket BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 1.5% premarket BUZZ-Bernstein downgrades to 'underperform' on valuation ** Fastly FSLY.N: down 1.7% premarket BUZZ-Falls as Piper Sandler downgrades stock on valuation concerns ** Emergent EBS.N: up 1.1% premarket BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 3.1% premarket BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 21.7% premarket BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 4.2% premarket BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests
(Compiled by Bharath Manjesh in Bengaluru)
((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's main indexes were set to open higher on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections. .N At 8:13 ET, Dow e-minis 1YMc1 were up 1.48% at 26,139. The top three NYSE percentage gainers premarket .PRPG.N: ** Legg Mason , up 34.8% ** Marcus Corp , up 7.6% ** The Brink's Co , up 22.2% The top two NYSE percentage losers premarket .PRPL.N: ** Weidai Ltd , down 24.1% ** Forum Energy Technologies Inc , down 13.4% The top Nasdaq percentage gainer premarket .PRPG.O: ** Rosehill Resources Inc , up 105.0% The top two Nasdaq percentage losers premarket .PRPL.O: ** BELLUS Health Inc , down 75.9% ** Endologix Inc , down 50.6% ** Uber Technologies Inc UBER.N: up 6.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 7.5% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 50.6% premarket BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 1.5% premarket BUZZ-Bernstein downgrades to 'underperform' on valuation ** Fastly FSLY.N: down 1.7% premarket BUZZ-Falls as Piper Sandler downgrades stock on valuation concerns ** Emergent EBS.N: up 1.1% premarket BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 3.1% premarket BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 21.7% premarket BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 4.2% premarket BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's main indexes were set to open higher on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections. S&P 500 e-minis ESc1 were up 1.21% at 3,166.75, while Nasdaq 100 e-minis NQc1 were up 1.19% at 10,479. The top three NYSE percentage gainers premarket .PRPG.N: ** Legg Mason , up 34.8% ** Marcus Corp , up 7.6% ** The Brink's Co , up 22.2% The top two NYSE percentage losers premarket .PRPL.N: ** Weidai Ltd , down 24.1% ** Forum Energy Technologies Inc , down 13.4% The top Nasdaq percentage gainer premarket .PRPG.O: ** Rosehill Resources Inc , up 105.0% The top two Nasdaq percentage losers premarket .PRPL.O: ** BELLUS Health Inc , down 75.9% ** Endologix Inc , down 50.6% ** Uber Technologies Inc UBER.N: up 6.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 7.5% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 50.6% premarket BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 1.5% premarket BUZZ-Bernstein downgrades to 'underperform' on valuation ** Fastly FSLY.N: down 1.7% premarket BUZZ-Falls as Piper Sandler downgrades stock on valuation concerns ** Emergent EBS.N: up 1.1% premarket BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 3.1% premarket BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 21.7% premarket BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 4.2% premarket BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's main indexes were set to open higher on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections. S&P 500 e-minis ESc1 were up 1.21% at 3,166.75, while Nasdaq 100 e-minis NQc1 were up 1.19% at 10,479. The top three NYSE percentage gainers premarket .PRPG.N: ** Legg Mason , up 34.8% ** Marcus Corp , up 7.6% ** The Brink's Co , up 22.2% The top two NYSE percentage losers premarket .PRPL.N: ** Weidai Ltd , down 24.1% ** Forum Energy Technologies Inc , down 13.4% The top Nasdaq percentage gainer premarket .PRPG.O: ** Rosehill Resources Inc , up 105.0% The top two Nasdaq percentage losers premarket .PRPL.O: ** BELLUS Health Inc , down 75.9% ** Endologix Inc , down 50.6% ** Uber Technologies Inc UBER.N: up 6.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 7.5% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook ** Endologix ELGX.O: down 50.6% premarket BUZZ-Plunges after filing for bankruptcy ** Spotify SPOT.N: down 1.5% premarket BUZZ-Bernstein downgrades to 'underperform' on valuation ** Fastly FSLY.N: down 1.7% premarket BUZZ-Falls as Piper Sandler downgrades stock on valuation concerns ** Emergent EBS.N: up 1.1% premarket BUZZ-Up on deal to make drug substance for J&J's COVID-19 vaccine ** Regeneron REGN.O: up 3.1% premarket BUZZ-Up as COVID-19 antibody cocktail moves into late-stage trials ** Nio Inc NIO.N: up 21.7% premarket BUZZ-Nio leads a surge in U.S.-listed Chinese firms on revival hopes ** Becton Dickinson BDX.N: up 4.2% premarket BUZZ-Rises as FDA allows emergency use of COVID-19 antigen tests (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's main indexes were set to open higher on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections. .N At 8:13 ET, Dow e-minis 1YMc1 were up 1.48% at 26,139. S&P 500 e-minis ESc1 were up 1.21% at 3,166.75, while Nasdaq 100 e-minis NQc1 were up 1.19% at 10,479.
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699084.0
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2020-07-06 00:00:00 UTC
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BUZZ-U.S. STOCKS ON THE MOVE-Uber, Dominion Energy, Safe-T Group
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D
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https://www.nasdaq.com/articles/buzz-u.s.-stocks-on-the-move-uber-dominion-energy-safe-t-group-2020-07-06
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nan
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nan
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Eikon search string for individual stock moves: STXBZ
The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi
The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh
U.S. stock index futures rose on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections over the long weekend. .N
At 6:51 ET, Dow e-minis 1YMc1 were up 1.40% at 26,120. S&P 500 e-minis ESc1 were up 1.13% at 3,164.5, while Nasdaq 100 e-minis NQc1 were up 1.17% at 10,476.5. The top three NYSE percentage gainers premarket .PRPG.N: ** China Life Insurance Co , up 22.1% ** Nio Inc , up 15.0% ** Ladder Capital Corp , up 11.4% The top three NYSE percentage losers premarket .PRPL.N: ** Natuzzi Spa , down 29.8% ** Weidai Ltd , down 17.3% ** Culp Inc , down 9.2% The top two Nasdaq percentage gainers premarket .PRPG.O: ** LM Funding America , up 123.6% ** Urban One Inc , up 45.3% The top three Nasdaq percentage losers premarket .PRPL.O: ** Endologix Inc , down 35.1% ** BELLUS Health Inc , down 16.8% ** Lightbridge Corp , down 14.2% ** Dominion Energy D.N: up 5.8% premarket Rises on Berkshire Hathaway deal for gas assets
Buffett's Berkshire to buy Dominion Energy gas assets for $4 bln ** Uber Technologies Inc UBER.N: up 5.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 17.2% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook
(Compiled by Bharath Manjesh in Bengaluru)
((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh U.S. stock index futures rose on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections over the long weekend. .N At 6:51 ET, Dow e-minis 1YMc1 were up 1.40% at 26,120. The top three NYSE percentage gainers premarket .PRPG.N: ** China Life Insurance Co , up 22.1% ** Nio Inc , up 15.0% ** Ladder Capital Corp , up 11.4% The top three NYSE percentage losers premarket .PRPL.N: ** Natuzzi Spa , down 29.8% ** Weidai Ltd , down 17.3% ** Culp Inc , down 9.2% The top two Nasdaq percentage gainers premarket .PRPG.O: ** LM Funding America , up 123.6% ** Urban One Inc , up 45.3% The top three Nasdaq percentage losers premarket .PRPL.O: ** Endologix Inc , down 35.1% ** BELLUS Health Inc , down 16.8% ** Lightbridge Corp , down 14.2% ** Dominion Energy D.N: up 5.8% premarket Rises on Berkshire Hathaway deal for gas assets Buffett's Berkshire to buy Dominion Energy gas assets for $4 bln ** Uber Technologies Inc UBER.N: up 5.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 17.2% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh U.S. stock index futures rose on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections over the long weekend. S&P 500 e-minis ESc1 were up 1.13% at 3,164.5, while Nasdaq 100 e-minis NQc1 were up 1.17% at 10,476.5. The top three NYSE percentage gainers premarket .PRPG.N: ** China Life Insurance Co , up 22.1% ** Nio Inc , up 15.0% ** Ladder Capital Corp , up 11.4% The top three NYSE percentage losers premarket .PRPL.N: ** Natuzzi Spa , down 29.8% ** Weidai Ltd , down 17.3% ** Culp Inc , down 9.2% The top two Nasdaq percentage gainers premarket .PRPG.O: ** LM Funding America , up 123.6% ** Urban One Inc , up 45.3% The top three Nasdaq percentage losers premarket .PRPL.O: ** Endologix Inc , down 35.1% ** BELLUS Health Inc , down 16.8% ** Lightbridge Corp , down 14.2% ** Dominion Energy D.N: up 5.8% premarket Rises on Berkshire Hathaway deal for gas assets Buffett's Berkshire to buy Dominion Energy gas assets for $4 bln ** Uber Technologies Inc UBER.N: up 5.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 17.2% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh U.S. stock index futures rose on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections over the long weekend. S&P 500 e-minis ESc1 were up 1.13% at 3,164.5, while Nasdaq 100 e-minis NQc1 were up 1.17% at 10,476.5. The top three NYSE percentage gainers premarket .PRPG.N: ** China Life Insurance Co , up 22.1% ** Nio Inc , up 15.0% ** Ladder Capital Corp , up 11.4% The top three NYSE percentage losers premarket .PRPL.N: ** Natuzzi Spa , down 29.8% ** Weidai Ltd , down 17.3% ** Culp Inc , down 9.2% The top two Nasdaq percentage gainers premarket .PRPG.O: ** LM Funding America , up 123.6% ** Urban One Inc , up 45.3% The top three Nasdaq percentage losers premarket .PRPL.O: ** Endologix Inc , down 35.1% ** BELLUS Health Inc , down 16.8% ** Lightbridge Corp , down 14.2% ** Dominion Energy D.N: up 5.8% premarket Rises on Berkshire Hathaway deal for gas assets Buffett's Berkshire to buy Dominion Energy gas assets for $4 bln ** Uber Technologies Inc UBER.N: up 5.4% premarket Uber, Postmates agree on $2.65 bln all-stock deal - Bloomberg News ** Safe-T Group SFET.OSFET.TA: up 17.2% premarket BUZZ-Safe-T Group: Jumps on upbeat Q2 revenue outlook (Compiled by Bharath Manjesh in Bengaluru) ((Bharath.ManjeshR@thomsonreuters.com; outside U.S. +91 80 6749 2703;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh U.S. stock index futures rose on Monday as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a domestic surge in new infections over the long weekend. .N At 6:51 ET, Dow e-minis 1YMc1 were up 1.40% at 26,120. S&P 500 e-minis ESc1 were up 1.13% at 3,164.5, while Nasdaq 100 e-minis NQc1 were up 1.17% at 10,476.5.
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699085.0
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2020-07-06 00:00:00 UTC
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The Stock Market Is Soaring as Berkshire, Uber Make Big Buys
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https://www.nasdaq.com/articles/the-stock-market-is-soaring-as-berkshire-uber-make-big-buys-2020-07-06
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Investors came back from the holiday weekend in a good mood, and they've apparently declared independence from any serious concerns about a rise in COVID-19 cases in some key states across the nation. Some of the bullishness came from overseas, where countries that have done a far better job at containing the coronavirus pandemic are starting to look more favorably on their economic prospects. Just before 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 376 points to 26,203. The S&P 500 (SNPINDEX: ^GSPC) gained 47 points to 3,177, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) picked up 215 points to 10,424.
One sign of optimism in the stock market is that companies are looking at opportunities to make strategic acquisitions. Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has been on the prowl for good purchases for a long time, and it finally found one over the weekend. Meanwhile, Uber Technologies (NYSE: UBER) got the green light to move forward with an acquisition of its own that should help it boost its market share in a key industry niche.
Buffett's cooking with gas
Berkshire Hathaway shares were up about 2% on news that Warren Buffett's insurance giant has found a target on which to deploy some of its vast cash hoard. Berkshire will pay $9.7 billion to purchase the natural gas transmission and storage business of utility company Dominion Energy (NYSE: D), which will involve about $4 billion in upfront cash payment and the assumption of the natural gas utility's debt worth about $5.7 billion.
The Berkshire Hathaway Energy subsidiary will acquire more than 7,700 miles of natural gas transmission lines, allowing it to move 20.8 billion cubic feet of natural gas every day. Dominion will also sell its rights to 900 billion cubic feet of operated natural gas storage capacity, of which about 40% is owned outright. The Berkshire unit will buy a 25% ownership stake in the Cove Point liquefied natural gas export, import, and storage facility in Maryland as well, with Dominion retaining a 50% stake.
Image source: Getty Images.
Bill Fehrman, who runs Buffett's energy subsidiary, was pleased with the deal. The move should help the company expand in some valuable markets in both Eastern and Western states, as well as giving it more international scope.
Berkshire still has well over $100 billion in cash to deploy, so the Dominion deal doesn't entirely solve Buffett's investment challenges. Nevertheless, investors seem to be pleased that the Oracle of Omaha found a deal to put at least some of Berkshire's cash to work.
Uber finds a 'mate
Shares of Uber Technologies were higher by 5% Monday morning. The ride-hailing service made good on its promise to boost its delivery business, even if its eventual partner wasn't necessarily the first company it had in mind.
Uber will pay $2.65 billion to buy food delivery rival Postmates, which is privately held. Postmates was reportedly considering going public to take advantage of a strong initial public offering (IPO) market, but instead it chose to avoid the hassle and uncertainty of tapping the public markets directly by selling out to the company behind the competing Uber Eats service.
The move came shortly after Uber failed in its attempt to purchase the much larger Grubhub, which instead chose to sell itself to a European food delivery business. Uber hopes that, with the coronavirus pandemic having hurt its primary ride business but boosting the amount of food delivery, the acquisition will help it preserve its growth.
Uber has recovered much of its lost ground, but even after today's rise, it's still well below its best levels from early 2020. Shareholders hope that buying Postmates will give Uber the confidence it needs to weather the COVID-19 storm and keep moving forward.
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Dan Caplinger owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Investors came back from the holiday weekend in a good mood, and they've apparently declared independence from any serious concerns about a rise in COVID-19 cases in some key states across the nation. The ride-hailing service made good on its promise to boost its delivery business, even if its eventual partner wasn't necessarily the first company it had in mind. Uber hopes that, with the coronavirus pandemic having hurt its primary ride business but boosting the amount of food delivery, the acquisition will help it preserve its growth.
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Berkshire will pay $9.7 billion to purchase the natural gas transmission and storage business of utility company Dominion Energy (NYSE: D), which will involve about $4 billion in upfront cash payment and the assumption of the natural gas utility's debt worth about $5.7 billion. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Berkshire will pay $9.7 billion to purchase the natural gas transmission and storage business of utility company Dominion Energy (NYSE: D), which will involve about $4 billion in upfront cash payment and the assumption of the natural gas utility's debt worth about $5.7 billion. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Dan Caplinger owns shares of Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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Uber hopes that, with the coronavirus pandemic having hurt its primary ride business but boosting the amount of food delivery, the acquisition will help it preserve its growth. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Dominion Energy, Inc and Uber Technologies and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).
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699086.0
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2020-07-06 00:00:00 UTC
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Energy Sector Update for 07/06/2020: FET, LONE, D, DUK, XLE, USO, UNG
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https://www.nasdaq.com/articles/energy-sector-update-for-07-06-2020%3A-fet-lone-d-duk-xle-uso-ung-2020-07-06
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Energy firms were advancing pre-bell Monday as the Energy Select Sector SPDR (XLE) was up more than 1% in recent trading. The United States Oil Fund (USO) was over 0.5% higher and the United States Natural Gas Fund (UNG) was up more than 5%. West Texas Intermediate crude oil was down $0.17 at $40.48 per barrel at the New York Mercantile Exchange. The global benchmark Brent crude gained $0.06 to $42.84 per barrel and natural gas futures were 8 cents higher at $1.96 per 1 million British Thermal Units.
Forum Energy Technologies (FET) was retreating by more than 17% after saying it will "need to consider other restructuring alternatives, including bankruptcy," if recent cost cutting efforts in response to reduced demand for its oilfield products and an exchange transaction to improve its maturity profile and enhance its financial flexibility aren't successful.
Lonestar Resources (LONE) was up over 5% even after it reported a Q1 net loss of $4.52 per share, compared with Q1 2019 net loss per share of $2.45.
Dominion Energy (D) and Duke Energy (DUK) cancelled the Atlantic Coast Pipeline, according to a press release. The companies cancelled the pipeline due to ongoing legal delays and increasing cost uncertainty which threatened the project's economic viability. Both companies were over 2% lower in recent trading.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The global benchmark Brent crude gained $0.06 to $42.84 per barrel and natural gas futures were 8 cents higher at $1.96 per 1 million British Thermal Units. Forum Energy Technologies (FET) was retreating by more than 17% after saying it will "need to consider other restructuring alternatives, including bankruptcy," if recent cost cutting efforts in response to reduced demand for its oilfield products and an exchange transaction to improve its maturity profile and enhance its financial flexibility aren't successful. The companies cancelled the pipeline due to ongoing legal delays and increasing cost uncertainty which threatened the project's economic viability.
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The United States Oil Fund (USO) was over 0.5% higher and the United States Natural Gas Fund (UNG) was up more than 5%. Lonestar Resources (LONE) was up over 5% even after it reported a Q1 net loss of $4.52 per share, compared with Q1 2019 net loss per share of $2.45. The companies cancelled the pipeline due to ongoing legal delays and increasing cost uncertainty which threatened the project's economic viability.
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Energy firms were advancing pre-bell Monday as the Energy Select Sector SPDR (XLE) was up more than 1% in recent trading. The United States Oil Fund (USO) was over 0.5% higher and the United States Natural Gas Fund (UNG) was up more than 5%. Forum Energy Technologies (FET) was retreating by more than 17% after saying it will "need to consider other restructuring alternatives, including bankruptcy," if recent cost cutting efforts in response to reduced demand for its oilfield products and an exchange transaction to improve its maturity profile and enhance its financial flexibility aren't successful.
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Energy firms were advancing pre-bell Monday as the Energy Select Sector SPDR (XLE) was up more than 1% in recent trading. The global benchmark Brent crude gained $0.06 to $42.84 per barrel and natural gas futures were 8 cents higher at $1.96 per 1 million British Thermal Units. Forum Energy Technologies (FET) was retreating by more than 17% after saying it will "need to consider other restructuring alternatives, including bankruptcy," if recent cost cutting efforts in response to reduced demand for its oilfield products and an exchange transaction to improve its maturity profile and enhance its financial flexibility aren't successful.
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699087.0
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2020-07-05 00:00:00 UTC
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Dominion Energy, Duke Energy Cancel $8 Bln Atlantic Coast Pipeline Project
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https://www.nasdaq.com/articles/dominion-energy-duke-energy-cancel-%248-bln-atlantic-coast-pipeline-project-2020-07-05
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(RTTNews) - Dominion Energy (D) and Duke Energy (DUK) said that they have cancelled proposed $8 billion Atlantic Coast Pipeline project, citing ongoing delays and increasing cost uncertainty, even after a favorable Supreme Court ruling last month.
The pipeline aimed to carry natural gas 600 miles through West Virginia, Virginia and North Carolina and underneath the Appalachian Trail. The Atlantic Coast Pipeline project was initially announced in 2014.
Dominion Energy said that a series of legal challenges to the project's federal and state permits has caused significant project cost increases and timing delays. The recent public guidance of project cost has increased to $8 billion from the original estimate of $4.5 billion to $5.0 billion.
In addition, the most recent public estimate of commercial in-service in early 2022 represents a nearly three-and- a-half-year delay with uncertainty remaining.
Separately, Duke Energy said that it will continue advancing its ambitious clean energy goals without the Atlantic Coast Pipeline by investing in renewables, battery storage, energy efficiency programs and grid projects.
Duke Energy said its five-year $56 billion capital investment plan will balance affordability for customers and create value for communities.
Duke Energy noted that it has reduced its carbon emissions by 39% from 2005 and remains on track to cut its carbon emissions by at least 50% by 2030. The company also has an ambitious clean energy goal of reaching net-zero emissions from electricity generation by 2050.
In September 2020, Duke Energy plans to file its Integrated Resource Plans (IRP) for the Carolinas after an extensive process of working with the state's leaders, policymakers, customers and other stakeholders. The IRPs will include multiple scenarios to support a path to a cleaner energy future in the Carolinas.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In addition, the most recent public estimate of commercial in-service in early 2022 represents a nearly three-and- a-half-year delay with uncertainty remaining. Duke Energy said its five-year $56 billion capital investment plan will balance affordability for customers and create value for communities. (RTTNews) - Dominion Energy (D) and Duke Energy (DUK) said that they have cancelled proposed $8 billion Atlantic Coast Pipeline project, citing ongoing delays and increasing cost uncertainty, even after a favorable Supreme Court ruling last month.
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(RTTNews) - Dominion Energy (D) and Duke Energy (DUK) said that they have cancelled proposed $8 billion Atlantic Coast Pipeline project, citing ongoing delays and increasing cost uncertainty, even after a favorable Supreme Court ruling last month. The recent public guidance of project cost has increased to $8 billion from the original estimate of $4.5 billion to $5.0 billion. Separately, Duke Energy said that it will continue advancing its ambitious clean energy goals without the Atlantic Coast Pipeline by investing in renewables, battery storage, energy efficiency programs and grid projects.
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(RTTNews) - Dominion Energy (D) and Duke Energy (DUK) said that they have cancelled proposed $8 billion Atlantic Coast Pipeline project, citing ongoing delays and increasing cost uncertainty, even after a favorable Supreme Court ruling last month. Dominion Energy said that a series of legal challenges to the project's federal and state permits has caused significant project cost increases and timing delays. Separately, Duke Energy said that it will continue advancing its ambitious clean energy goals without the Atlantic Coast Pipeline by investing in renewables, battery storage, energy efficiency programs and grid projects.
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(RTTNews) - Dominion Energy (D) and Duke Energy (DUK) said that they have cancelled proposed $8 billion Atlantic Coast Pipeline project, citing ongoing delays and increasing cost uncertainty, even after a favorable Supreme Court ruling last month. The recent public guidance of project cost has increased to $8 billion from the original estimate of $4.5 billion to $5.0 billion. Separately, Duke Energy said that it will continue advancing its ambitious clean energy goals without the Atlantic Coast Pipeline by investing in renewables, battery storage, energy efficiency programs and grid projects.
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699088.0
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2020-07-05 00:00:00 UTC
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Dominion Energy To Sell Gas Transmission & Storage Assets To Berkshire For $9.7 Bln, Incl. Debt
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https://www.nasdaq.com/articles/dominion-energy-to-sell-gas-transmission-storage-assets-to-berkshire-for-%249.7-bln-incl.
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(RTTNews) - Dominion Energy (D) agreed to sell substantially all of its Gas Transmission & Storage segment assets to an affiliate of Berkshire Hathaway Inc. (BRK-B, BRK-A) in a transaction valued at $9.7 billion, including the assumption of $5.7 billion of existing indebtedness.
The deal includes more than 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage that the company currently operates.
Thomas Farrell, II, Dominion Energy chairman, president, and chief executive officer, said, "Today's announcement further reflects Dominion Energy's focus on its premier state-regulated, sustainability-focused utilities that operate in some of the most attractive regions in the country."
Dominion Energy noted that assets covered by the sale agreement include the company's ownership interests in Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, Iroquois Gas Transmission System (50 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent operating interest in Cove Point. The company's interest in the Atlantic Coast Pipeline is not included in the transaction.
The transaction is expected to close during the fourth quarter.
Dominion Energy board has authorized the company to repurchase its common shares using after-tax adjusted transaction proceeds which the company estimates could total about $3 billion. The new authority has immediate effect and material repurchases are planned for late 2020 following transaction closing.
Dominion Energy said that over the next 15 years it plans to invest up to $55 billion in emissions reduction technologies including zero-carbon generation and energy storage, gas distribution line replacement, and renewable natural gas.
In addition, the company expects to retire more than four gigawatts of coal- and oil-fired electric generation between 2018 and 2025.
Dominion Energy now expects 2020 operating earnings to be in the range of $3.37 to $3.63 per share, compared to the previous guidance of $4.25 to $4.60 per share. On average, 18 analysts polled by Thomson Reuters expect the company to report profit of $4.35 per share for fiscal year 2020. Analysts' estimates typically exclude special items.
Dominion Energy expects 2021 operating earnings per share to grow around 10 to 11 percent over 2020, reflecting the full-year impact of planned share repurchases, and by about 6.5 percent annually starting in 2022, off a 2021 base. It represents a 1.5 percentage point, or about 30 percent, increase from previous long-term earnings per share growth guidance.
The company now expects to target an about 65 percent payout ratio to be effective upon completion of the transaction. The new payout ratio implies a 2021 dividend payment of around $2.50 per share.
Beginning in 2022, the company expects annual dividend-per-share increases of about 6 percent per year. It represents a significant increase from previous long-term dividend per-share growth guidance of 2.5 percent.
For 2020, the company has made two quarterly payments of 94 cents per share in March and June. The company expects to make an additional payment of 94 cents per share in September and currently expects a fourth payment in December 2020 of approximately 63 cents reflecting the expected timing of transaction closing.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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On average, 18 analysts polled by Thomson Reuters expect the company to report profit of $4.35 per share for fiscal year 2020. It represents a 1.5 percentage point, or about 30 percent, increase from previous long-term earnings per share growth guidance. It represents a significant increase from previous long-term dividend per-share growth guidance of 2.5 percent.
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The deal includes more than 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage that the company currently operates. Dominion Energy noted that assets covered by the sale agreement include the company's ownership interests in Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, Iroquois Gas Transmission System (50 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent operating interest in Cove Point. It represents a 1.5 percentage point, or about 30 percent, increase from previous long-term earnings per share growth guidance.
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Dominion Energy noted that assets covered by the sale agreement include the company's ownership interests in Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, Iroquois Gas Transmission System (50 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent operating interest in Cove Point. Dominion Energy expects 2021 operating earnings per share to grow around 10 to 11 percent over 2020, reflecting the full-year impact of planned share repurchases, and by about 6.5 percent annually starting in 2022, off a 2021 base. The company expects to make an additional payment of 94 cents per share in September and currently expects a fourth payment in December 2020 of approximately 63 cents reflecting the expected timing of transaction closing.
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Dominion Energy noted that assets covered by the sale agreement include the company's ownership interests in Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, Iroquois Gas Transmission System (50 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent operating interest in Cove Point. Dominion Energy now expects 2020 operating earnings to be in the range of $3.37 to $3.63 per share, compared to the previous guidance of $4.25 to $4.60 per share. The company expects to make an additional payment of 94 cents per share in September and currently expects a fourth payment in December 2020 of approximately 63 cents reflecting the expected timing of transaction closing.
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699089.0
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2020-07-05 00:00:00 UTC
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Dominion, Duke exit pipeline project after years of delays
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https://www.nasdaq.com/articles/dominion-duke-exit-pipeline-project-after-years-of-delays-2020-07-05
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Recasts, adds comments from environmental groups, U.S. energy secretary, deal with Berkshire Hathaway Energy
July 5 (Reuters) - Dominion Energy Inc D.N and Duke Energy Corp DUK.N said on Sunday they decided to abandon the $8 billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost.
Despite a favorable ruling by the United States Supreme Court in June, the two companies said it was not enough to justify the project's economic viability given the increased legal uncertainty and anticipated delays.
The court ruling, which granted the federal government authority to allow the natural gas pipeline to cross under the popular Appalachian Trail in rural Virginia, was a solution to only one of several hurdles facing the project.
"This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States," the statement added, quoting Dominion Chief Executive Thomas Farrell and Duke CEO Lynn Good.
According to Dominion and Duke, the cost for the ACP project increased to $8 billion from the original estimate of $4.5 to $5.0 billion.
Last year, the Trump administration's move to speed up major energy projects had backfired amid challenges by environmentalists and others who opposed three of the biggest U.S. pipelines, one of which was ACP.
Over the years, judges had halted construction on these projects, ruling that the administration granted permits without conducting adequate studies or providing enough alternatives to protect endangered species or national forests.
"VICTORY," environmental group Southern Environmental Law Center (SELC) said. "SELC is relieved to see Duke and Dominion make the right decision to walk away from it," said Greg Buppert, a senior attorney at SELC.
Michael Brune, executive director of the Sierra Club said that Duke and Dominion did not decide to cancel the project but that people and frontline organizations that led this fight for years "forced" them to walk away.
Sierra Club and SELC were two of the environmental groups that sued to stop the pipeline after the U.S. Forest Service gave the green light for the project to run through the George Washington National Forest.
"The well-funded, obstructionist environmental lobby has successfully killed the Atlantic Coast Pipeline," U.S. Secretary of Energy Dan Brouillette said in a statement. The project would have lowered energy costs for consumers in North Carolina and Virginia, he said.
ACP was first announced in 2014 to tackle lack of energy supply across North Carolina and Virginia. Dominion expected to complete it in early 2022.
In a separate announcement on Sunday, Richmond-based Dominion said it agreed to sell its natural gas transmission and storage network for $4 billion to Berkshire Hathaway Inc's BRKa.N energy unit.
(Reporting by Maria Ponnezhath in Bengaluru; editing by Diane Craft)
((Maria.Ponnezhath@thomsonreuters.com; +91 8061822749;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The court ruling, which granted the federal government authority to allow the natural gas pipeline to cross under the popular Appalachian Trail in rural Virginia, was a solution to only one of several hurdles facing the project. "This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States," the statement added, quoting Dominion Chief Executive Thomas Farrell and Duke CEO Lynn Good. Michael Brune, executive director of the Sierra Club said that Duke and Dominion did not decide to cancel the project but that people and frontline organizations that led this fight for years "forced" them to walk away.
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Recasts, adds comments from environmental groups, U.S. energy secretary, deal with Berkshire Hathaway Energy July 5 (Reuters) - Dominion Energy Inc D.N and Duke Energy Corp DUK.N said on Sunday they decided to abandon the $8 billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost. According to Dominion and Duke, the cost for the ACP project increased to $8 billion from the original estimate of $4.5 to $5.0 billion. "The well-funded, obstructionist environmental lobby has successfully killed the Atlantic Coast Pipeline," U.S. Secretary of Energy Dan Brouillette said in a statement.
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Recasts, adds comments from environmental groups, U.S. energy secretary, deal with Berkshire Hathaway Energy July 5 (Reuters) - Dominion Energy Inc D.N and Duke Energy Corp DUK.N said on Sunday they decided to abandon the $8 billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost. "This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States," the statement added, quoting Dominion Chief Executive Thomas Farrell and Duke CEO Lynn Good. Sierra Club and SELC were two of the environmental groups that sued to stop the pipeline after the U.S. Forest Service gave the green light for the project to run through the George Washington National Forest.
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Recasts, adds comments from environmental groups, U.S. energy secretary, deal with Berkshire Hathaway Energy July 5 (Reuters) - Dominion Energy Inc D.N and Duke Energy Corp DUK.N said on Sunday they decided to abandon the $8 billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost. The project would have lowered energy costs for consumers in North Carolina and Virginia, he said. In a separate announcement on Sunday, Richmond-based Dominion said it agreed to sell its natural gas transmission and storage network for $4 billion to Berkshire Hathaway Inc's BRKa.N energy unit.
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699090.0
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2020-07-05 00:00:00 UTC
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Buffett's Berkshire to buy Dominion Energy gas assets for $4 bln
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https://www.nasdaq.com/articles/buffetts-berkshire-to-buy-dominion-energy-gas-assets-for-%244-bln-2020-07-05
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By Jonathan Stempel
July 5 (Reuters) - Berkshire Hathaway Inc BRKa.Nsaid its energy unit will buy Dominion Energy Inc's D.N natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate's cash pile while letting Dominion focus on utilities operations.
The transaction announced on Sunday includes more than 7,700 miles (12,390 km) of natural gas transmission lines and 900 billion cubic feet of gas storage.
Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System, and 25% of the Cove Point liquefied natural gas facility in Maryland.
Dominion will retain 50% of Cove Point. Brookfield Asset Management Inc BAMa.TO owns 25%.
The Berkshire unit will also assume $5.7 billion of debt,giving the transaction a $9.7 billion enterprise value. It expects a fourth-quarter closing, pending regulatory approvals.
"We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business," Buffett said in a statement.
Dominion expects up to 90% of future operating earnings to come from utilities.
The company and Duke Energy Inc DUK.N separately announced on Sunday they would abandon their $8 billion Atlantic Coast Pipeline, running under the Appalachian Trail and through West Virginia, Virginia and North Carolina.
Dominion and Duke cited delays and uncertain costs, despite a favorable U.S. Supreme Court decision last month.L1N2DS0X2
Berkshire controls 91.1% of Berkshire Hathaway Energy, which owns the MidAmerican Energy, NV Energy and PacifiCorp utilities, natural gas pipelines, wind power assets and electricity businesses in Britain and Canada.
The unit accounted for 12% of Berkshire's $23.97 billion of operating profit in 2019. Its chairman, Greg Abel, is also a Berkshire vice chairman.
Berkshire ended March with $137.2 billion of cash, reflecting Buffett's four-year inability to find major acquisitions, even as the coronavirus pandemic took hold and stock prices plunged.
Berkshire Hathaway Energy declined additional comment.
(Reporting by Maria Ponnezhath in Bengaluru and Jonathan Stempel in New York; Editing by Peter Cooney)
((Maria.Ponnezhath@thomsonreuters.com; +91 8061822749;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By Jonathan Stempel July 5 (Reuters) - Berkshire Hathaway Inc BRKa.Nsaid its energy unit will buy Dominion Energy Inc's D.N natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate's cash pile while letting Dominion focus on utilities operations. "We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business," Buffett said in a statement. Berkshire ended March with $137.2 billion of cash, reflecting Buffett's four-year inability to find major acquisitions, even as the coronavirus pandemic took hold and stock prices plunged.
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By Jonathan Stempel July 5 (Reuters) - Berkshire Hathaway Inc BRKa.Nsaid its energy unit will buy Dominion Energy Inc's D.N natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate's cash pile while letting Dominion focus on utilities operations. Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System, and 25% of the Cove Point liquefied natural gas facility in Maryland. Dominion and Duke cited delays and uncertain costs, despite a favorable U.S. Supreme Court decision last month.L1N2DS0X2 Berkshire controls 91.1% of Berkshire Hathaway Energy, which owns the MidAmerican Energy, NV Energy and PacifiCorp utilities, natural gas pipelines, wind power assets and electricity businesses in Britain and Canada.
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By Jonathan Stempel July 5 (Reuters) - Berkshire Hathaway Inc BRKa.Nsaid its energy unit will buy Dominion Energy Inc's D.N natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate's cash pile while letting Dominion focus on utilities operations. Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System, and 25% of the Cove Point liquefied natural gas facility in Maryland. Dominion and Duke cited delays and uncertain costs, despite a favorable U.S. Supreme Court decision last month.L1N2DS0X2 Berkshire controls 91.1% of Berkshire Hathaway Energy, which owns the MidAmerican Energy, NV Energy and PacifiCorp utilities, natural gas pipelines, wind power assets and electricity businesses in Britain and Canada.
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By Jonathan Stempel July 5 (Reuters) - Berkshire Hathaway Inc BRKa.Nsaid its energy unit will buy Dominion Energy Inc's D.N natural gas transmission and storage network for $4 billion, helping billionaire Chairman Warren Buffett reduce his conglomerate's cash pile while letting Dominion focus on utilities operations. Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System, and 25% of the Cove Point liquefied natural gas facility in Maryland. Dominion and Duke cited delays and uncertain costs, despite a favorable U.S. Supreme Court decision last month.L1N2DS0X2 Berkshire controls 91.1% of Berkshire Hathaway Energy, which owns the MidAmerican Energy, NV Energy and PacifiCorp utilities, natural gas pipelines, wind power assets and electricity businesses in Britain and Canada.
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699091.0
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2020-07-02 00:00:00 UTC
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Dominion Wins Big at the Supreme Court
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https://www.nasdaq.com/articles/dominion-wins-big-at-the-supreme-court-2020-07-02
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Dominion Energy (NYSE: D) hit a major legal wall as it sought to complete a big capital project. It was a long, drawn-out fight that went all the way to the Supreme Court, but the battle is now over. Here's what happened and what it means for Dominion's multibillion-dollar Atlantic Coast Pipeline project.
The project and the fight
To simplify things a bit, natural gas has increasingly been used to replace coal in the nation's electric power grid. It's a cleaner-burning fuel, and considered a transition energy source as the world shifts toward less carbon-intensive power. But the real push was economic, since building and operating a natural gas power plant has been very cheap lately because of low fuel costs.
Image source: Getty Images.
The problem is that you can easily put coal on a truck or boat, you need pipelines to transport natural gas from where it's dug up to where it gets used. Building a pipeline is not an easy thing. That's been a problem for Dominion, which has material operations on the East Coast -- an area of the country with limited access to natural gas. The Atlantic Coast Pipeline, a project it is working on with similarly situated utility peer Duke Energy (NYSE: DUK), was meant to fix that. It's a 600 mile underground pipeline running from West Virginia, through Virginia, and ending finally in North Carolina. That's a lot of ground to cover, especially since environmentalists were searching every inch for a reason to stop the project.
An opportunity to stymie the pipeline arose because it was scheduled to pass beneath the Appalachian Trail. The dispute, which was a bit arcane, traveled all the way to the Supreme Court. The question was what legal entity got to decide whether the crossing, which represents just about 1/10th of a mile, was approved. Dominion said the U.S. Forest Service had the right to make the call, and the court agreed. This was the biggest obstacle facing the project, and now it's gone.
Now what happens
The easy next step is that Dominion puts a pipe under the Appalachian Trail. However, there's still a lot more work to be done. To put a timeline on it, the company expects to have the pipeline completed by the first half of 2022. That means there's roughly two years to go before the project is in service.
Along the way it needs to get additional approvals. It should get news from the U.S. Fish and Wildlife Service any day now. Note that the goal was a first half of 2020 approval, which appears to have been missed. In the second half of the year, Dominion is expecting key approvals from the Virginia Air Control Board. And it's also working with the U.S. Army Corps of Engineers on additional permits. There will be environmental groups at every step of the way fighting against the pipeline. The pushback isn't expected to be as big an issue on any of these approvals.
Although the delays related to the Supreme Court case increased costs about 17% (roughly $1 billion), the company's most recent update on the project held the final tally steady at $8 billion. Still, there are some time-sensitive issues involved. For example, the permit from the U.S. Army Corps of Engineers will dictate whether Dominion can remove trees during a multimonth window that starts in November 2020, or if it will have to wait until, perhaps, November 2021 to begin the process. Obviously, if that approval is delayed, the project's completion date could get pushed back and costs will go up.
A big win, but not done yet
Dominion's Supreme Court win was a huge relief. If it had lost the case, there were other avenues to travel down, but they would have been even more complicated and time-consuming. For now, however, this multibillion-dollar project is back on track, which is very good news for Dominion and its shareholders. That said, the Atlantic Coast Pipeline is far from complete. With that giant hurdle behind it, investors can breathe easier, but it's still important to keep an eye on the project's progress even as the company's newer, clean-power capital investments start to grab headlines.
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Reuben Gregg Brewer owns shares of Dominion Energy, Inc. The Motley Fool recommends Dominion Energy, Inc and Duke Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The project and the fight To simplify things a bit, natural gas has increasingly been used to replace coal in the nation's electric power grid. The Atlantic Coast Pipeline, a project it is working on with similarly situated utility peer Duke Energy (NYSE: DUK), was meant to fix that. With that giant hurdle behind it, investors can breathe easier, but it's still important to keep an eye on the project's progress even as the company's newer, clean-power capital investments start to grab headlines.
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Here's what happened and what it means for Dominion's multibillion-dollar Atlantic Coast Pipeline project. Although the delays related to the Supreme Court case increased costs about 17% (roughly $1 billion), the company's most recent update on the project held the final tally steady at $8 billion. A big win, but not done yet Dominion's Supreme Court win was a huge relief.
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Dominion Energy (NYSE: D) hit a major legal wall as it sought to complete a big capital project. Here's what happened and what it means for Dominion's multibillion-dollar Atlantic Coast Pipeline project. The Atlantic Coast Pipeline, a project it is working on with similarly situated utility peer Duke Energy (NYSE: DUK), was meant to fix that.
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The dispute, which was a bit arcane, traveled all the way to the Supreme Court. The pushback isn't expected to be as big an issue on any of these approvals. The Motley Fool recommends Dominion Energy, Inc and Duke Energy.
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699092.0
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2020-07-01 00:00:00 UTC
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7 Utilities Stocks to Buy With Reassuring Dividends
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https://www.nasdaq.com/articles/7-utilities-stocks-to-buy-with-reassuring-dividends-2020-07-01
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
With the markets still uncertain, where should you invest? Do you “buy the dip” in hard-hit stocks, hoping they rebound to past highs? Or do you chase the seemingly-endless rally in big tech names right now? Granted, it might feel like you’re stuck between a rock and a hard place. But what if there was an alternative to both these high-potential, but high-risk, areas?
I’m talking about utilities stocks. You know, those venerable names that offer dependable dividends and low volatility, but aren’t exactly setting the world on fire appreciation-wise.
Sure, you aren’t going to see the 25%, 50%, or even 100% returns of big growth stocks in any of these names. But increasing novel coronavirus case counts could lead to a repeat of the March sell-off. It may be wise to take some risk off the table.
That is to say, low-volatility names could be the place to be. But this isn’t just sage advice for those deeply invested in tech or “V-shaped recovery” names. Income investors should consider the many benefits of utilities stocks right now.
9 Florida Stocks to Avoid as Coronavirus Rates Spike
As REITs, energy production and other sectors still face uncertainty, fulfill your thirst for yield with high-percent utilities names. Screening across large caps in this sector, these 7 come to mind as opportunities with reassuring dividends:
Consolidated Edison (NYSE:ED)
Dominion Energy (NYSE:D)
Duke Energy (NYSE:DUK)
Edison International (NYSE:EIX)
Exelon Corporation (NASDAQ:EXC)
PPL Corporation (NYSE:PPL)
The Southern Company (NYSE:SO)
All seven offer dividends of 4% or greater, a strong selling point in a zero-interest rate world. But more importantly, these low-volatility names with stable dividends are a lower risk area to invest, as market turmoil may or may not continue.
Utilities Stocks With Reassuring Dividends: Consolidated Edison (ED)
Source: Shutterstock
This utility, which provides electricity and gas to customers in the New York metropolitan area, hasn’t been immune to the pandemic. Back in May, the company lowered its guidance, after first quarter earnings dipped to $1.13 per share from $1.31 per share the year prior.
Yet this short-term earnings hiccup is mostly reflected in the current share price. Pre-pandemic, ED stock changed hands at prices above $90 per share. Today, even after bouncing off the lows set in March, the stock trades for around $71.50 per share.
In short, there’s plenty of room for shares to go higher, if things wind up turning around much sooner than what’s currently anticipated. But quick gains aren’t the goal here with Con Ed: it’s the high 4.3% dividend yield that should reassure investors.
With a high, but not too high payout ratio (71.6%), and historically modest dividend increases (average of 3.3% over the past five years), expect this venerable name to continue raising its dividend. Especially given the fact that the company has raised it 46 years in a row.
Bottom line: consider this slow-and-steady name one of the best utilities stocks to buy as uncertainty persists in the near-term.
Dominion Energy (D)
Source: ying / Shutterstock.com
As InvestorPlace’s David Moadel wrote May 21, this utilities name has held up relatively well during this crisis. Bouncing back from its March sell-off lows, D stock trades around the same place it was before the pandemic hit the United States.
That doesn’t mean it’s too late to buy into Dominion Energy. The utility giant, which provides power and gas to customers in Virginia and the Carolinas, remains one of the highest-yielding utility stocks out there, with a forward yield of 4.7%. And shares could move higher, as a low-interest rate environment increases demand for stable dividend stocks by income investors.
However, keep in mind the company’s very high dividend payout ratio (86.3%). With so much of the company’s earnings already going towards dividends, there’s a chance the company stops raising its dividend as much as it has in recent years.
9 Florida Stocks to Avoid as Coronavirus Rates Spike
But as market uncertainty continues, this is still one of the best lower risk opportunities out there. Consider shares a buy at today’s prices around $80 per share, and a screaming buy if the stock heads lower from here.
Utilities Stocks: Duke Energy (DUK)
Source: Shutterstock
Like its neighbor Dominion, this utility name also provides power in the southeastern United States. And similar to its aforementioned peer, DUK stock sports a fairly high dividend yield (4.8%).
Yet Duke Energy remains below its high-water mark set pre-outbreak. Before the crisis, this stock traded above $100 per share. Today? Around $79 per share. So as with Con Ed, this is another dividend play that could bounce back in a quick recovery.
But what if we don’t see a quick recovery? Recent coronavirus news doesn’t bode well for the fading “V-shaped recovery” thesis. But with near-term headwinds like the pandemic priced in, this is yet another stable dividend play to buy in case market turmoil continues.
With a 73.5% payout ratio, there’s still room to grow the current payout. Sure, the company’s consecutive 9 years of dividend growth isn’t exactly impressive. But with a modest dividend growth rate (3.5% over the past five years), the company can easily raise its payout.
Edison International (EIX)
Source: Riccardo Annandale Via Unsplash
Providing power to Southern California, EIX stock has a lot of fleas, despite a strong dividend yield of 4.7%.
As commentators noted back in April, a lack of market growth, along with California wildfire risks, make this a riskier name, especially when compares to the other utilities stocks mentioned in this article.
That being said, Edison International may be a worthy buy for income investors. First, the company’s payout ratio of 57.6% is fairly low, considering other utilities have payout ratios above 70%. The company’s dividend growth rate remains strong, with a five-year average growth rate of 10.8%.
In other words, if the actual risk winds up being lower than it has been perceived, expect this name to bounce back to its pre-pandemic price levels. Before the crisis, shares traded just above $75 per share. With the stock now changing hands around $55 per share, that’s major potential share price upside in a recovery.
9 Florida Stocks to Avoid as Coronavirus Rates Spike
Granted, this may be the riskiest name on this list. But if you are hungry for yield and willing to trade some stability for appreciation potential, keep EIX stock on your shortlist.
Utilities Stocks: Exelon Corporation (EXC)
Source: Shutterstock
Like Con Ed and Edison International, EXC stock is another utility name that has yet to recover from its coronavirus lows. Yet, despite also announcing a guidance cut earlier this year, this is another company to keep an eye on.
Why? With a 4.4% dividend yield, low payout ratio of 51.7% and slow but stable dividend growth (3.2% over the past five years), this is another “heads I win, tails I don’t lose as much” opportunity.
That is to say, if things recover sooner than expected, shares could bounce back from today’s prices ($34.75 per share) back to prior levels ($50 per share). If markets continue to trade sideways (or lower), much of the downside risk is priced into shares, meaning it can’t fall much further from here.
In short, another strong consideration for income investors looking for stability, with the potential for appreciation as well.
PPL Corporation (PPL)
Source: Shutterstock
As I wrote in a recent article, PPL stock is a strong dividend play, sporting a generous yield. In fact, with its forward yield of 6.6%, this is one of the highest-yielding utilities stocks out there.
So what’s the reason for the discrepancy? Is there more risk with PPL than the 4%-5% yielding names mentioned above?
Yes and no. As I discussed previously, there’s some risk involved with its U.K. operations. The company is U.S.-based, with operations in Pennsylvania and Kentucky. But the operations across the pond make up the largest part of its business.
Nevertheless, with shares today ($25 per share) still trading for 30% below its prior price level ($36 per share), risks may be more than priced into the stock. Like with some of the other names mentioned here, you can get paid while you wait for shares to bounce back. If things recover sooner than later, you could see shares bounce 44% from today’s prices.
If not? Collect the 6.6% yield and bide your time. And don’t worry too much about the dividend heading lower from here.
9 Florida Stocks to Avoid as Coronavirus Rates Spike
With a payout ratio of 68% and 20 years of consecutive dividend growth, today’s high yield isn’t the market telling you something’s wrong with this stock. Simply put, it’s fair to call this a deep value utilities stock.
Utilities Stocks: The Southern Company (SO)
Source: Shutterstock
Last but not least, SO stock is another stable but high-yielding dividend play for your portfolio. Providing electricity and gas in yes, the southern United States, shares today yield more than 5%.
Yet with this high yield come some concerns. The company’s current payout ratio is 81.6%, which may mean slow dividend growth going forward.
And as our own Louis Navellier wrote last month, The Southern Company has faced hiccups in the past, such as its failed attempt to build the first new nuclear power plant in decades. But with a stable legacy business and the company pursuing opportunities in natural gas and alternative energy, you can’t say future prospects are bleak with this name.
Still more than 25% off its pre-pandemic highs, there’s upside potential to boot with this high-yielding stock as well. In short, SO is another strong contender for investors looking for stable dividends and growth opportunities.
Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.
The post 7 Utilities Stocks to Buy With Reassuring Dividends appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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9 Florida Stocks to Avoid as Coronavirus Rates Spike As REITs, energy production and other sectors still face uncertainty, fulfill your thirst for yield with high-percent utilities names. As commentators noted back in April, a lack of market growth, along with California wildfire risks, make this a riskier name, especially when compares to the other utilities stocks mentioned in this article. And as our own Louis Navellier wrote last month, The Southern Company has faced hiccups in the past, such as its failed attempt to build the first new nuclear power plant in decades.
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Screening across large caps in this sector, these 7 come to mind as opportunities with reassuring dividends: Consolidated Edison (NYSE:ED) Dominion Energy (NYSE:D) Duke Energy (NYSE:DUK) Edison International (NYSE:EIX) Exelon Corporation (NASDAQ:EXC) PPL Corporation (NYSE:PPL) The Southern Company (NYSE:SO) All seven offer dividends of 4% or greater, a strong selling point in a zero-interest rate world. Utilities Stocks: Exelon Corporation (EXC) Source: Shutterstock Like Con Ed and Edison International, EXC stock is another utility name that has yet to recover from its coronavirus lows. 9 Florida Stocks to Avoid as Coronavirus Rates Spike With a payout ratio of 68% and 20 years of consecutive dividend growth, today’s high yield isn’t the market telling you something’s wrong with this stock.
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Screening across large caps in this sector, these 7 come to mind as opportunities with reassuring dividends: Consolidated Edison (NYSE:ED) Dominion Energy (NYSE:D) Duke Energy (NYSE:DUK) Edison International (NYSE:EIX) Exelon Corporation (NASDAQ:EXC) PPL Corporation (NYSE:PPL) The Southern Company (NYSE:SO) All seven offer dividends of 4% or greater, a strong selling point in a zero-interest rate world. Nevertheless, with shares today ($25 per share) still trading for 30% below its prior price level ($36 per share), risks may be more than priced into the stock. 9 Florida Stocks to Avoid as Coronavirus Rates Spike With a payout ratio of 68% and 20 years of consecutive dividend growth, today’s high yield isn’t the market telling you something’s wrong with this stock.
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Yet this short-term earnings hiccup is mostly reflected in the current share price. Today, even after bouncing off the lows set in March, the stock trades for around $71.50 per share. Is there more risk with PPL than the 4%-5% yielding names mentioned above?
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699093.0
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2020-07-01 00:00:00 UTC
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The Utilities Select Sector SPDR Fund Experiences Big Inflow
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https://www.nasdaq.com/articles/the-utilities-select-sector-spdr-fund-experiences-big-inflow-2020-07-01
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $575.6 million dollar inflow -- that's a 5.4% increase week over week in outstanding units (from 188,070,000 to 198,270,000). Among the largest underlying components of XLU, in trading today Dominion Energy Inc (Symbol: D) is up about 1%, Duke Energy Corp (Symbol: DUK) is up about 1.4%, and Southern Company (Symbol: SO) is up by about 1%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average:
Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.23. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Click here to find out which 9 other ETFs had notable inflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $575.6 million dollar inflow -- that's a 5.4% increase week over week in outstanding units (from 188,070,000 to 198,270,000). These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Among the largest underlying components of XLU, in trading today Dominion Energy Inc (Symbol: D) is up about 1%, Duke Energy Corp (Symbol: DUK) is up about 1.4%, and Southern Company (Symbol: SO) is up by about 1%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.23. Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $575.6 million dollar inflow -- that's a 5.4% increase week over week in outstanding units (from 188,070,000 to 198,270,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.23. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $575.6 million dollar inflow -- that's a 5.4% increase week over week in outstanding units (from 188,070,000 to 198,270,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.23. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand.
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699094.0
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2020-06-26 00:00:00 UTC
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Is Southern Company Stock a Buy?
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https://www.nasdaq.com/articles/is-southern-company-stock-a-buy-2020-06-26
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The Southern Company (NYSE: SO) is one of the largest utilities in the United States. It currently offers investors a yield of roughly 4.6%, toward the high end in the utility sector. However, it has significantly underperformed both the S&P 500 and the Utilities Select Sector ETF (NYSEMKT: XLU) on a total return basis in large part because of a huge albatross around its neck: Developing the Vogtle nuclear plant. What's going on there, and is this enough of a risk that investors should look elsewhere? Here's what you need to understand before deciding if Southern Company is a buy or not.
1. Basically boring
When you step back and look at The Southern Company, it is, at its core, a pretty simple utility company. It owns a collection of regulated electric and natural gas utilities, with a modest investment in fee-based businesses like contracted renewable power assets. In fact, it has increased its dividend or held it steady for an incredible 72 consecutive years. If you do the math on that, the company has been reliably returning cash to investors since 1948.
Image source: Getty Images
You need a very conservative and consistent business to achieve that kind of record, and that's what Southern has. It won't likely be an exciting investment, though. The monopoly it has been granted in the areas it serves requires it to get regulator approval for rate changes. But slow and steady (the average annual dividend hike over the past decade was roughly 3.5%) isn't a bad thing, and it's one of the reasons why utilities are viewed as safe-haven investments when market turmoil is high.
2. Spending on the future
Regulation has its downside, but it also has many positives. A resilient monopoly business model is clearly one, but there's another angle here that investors should understand: Regulators don't focus on the ups and downs of Wall Street when determining rates -- they look at things like reliability, the size of the customer base, and customer costs. In order to ensure it continues to provide the best possible service, Southern has to spend money on its system. That spending, meanwhile, is what backstops its rate requests. The approval of those capital investments, and thus rate changes, basically takes place outside of the broader investment world. It's complex, but as a result Southern's spending is fairly resilient.
Southern's current five-year plan calls for roughly $40 billion in spending. Notably, it didn't change that number when it announced first-quarter earnings, despite the expected economic impact of the COVID-19 health crisis. At this point, it still expects long-term earnings growth to run between 6% and 8%. That, in turn, should allow continued dividend increases.
3. A couple of problems to consider
So why wouldn't investors want to grab Southern's 4.6% yield? The first reason can be found on the company's balance sheet. The utility's financial debt to equity ratio of roughly 0.78 times is toward the high end of its closest peers. That ratio, meanwhile, isn't out of line with historical trends, but it is toward the high end of the range. The utility business is capital-intensive, so leverage is a normal part of the industry, but Southern definitely isn't the most conservative name you can buy. And yet, the payout ratio is roughly in line with those of peers, so there's no particular reason to be overly worried about the dividend. And the company was able to cover its trailing interest expenses by 3.3 times in the first quarter, better than its closest peers. Yes, leverage is something to monitor, but it isn't necessarily as big an issue as it may at first seem.
SO Financial Debt to Equity (Quarterly) data by YCharts
Then there's the nuclear power plants, collectively known as the Vogtle project. This investment is behind schedule and over budget, but there are two sides to the story. There's no question that Vogtle got off to a rough start. But after Westinghouse, the original contractor, declared bankruptcy, Southern stepped in to manage the build. Since that point, things have been going better. That said, an independent entity tasked with monitoring Vogtle's project suggests it is again falling behind and pushing beyond budget.
Southern, at this point, says the project remains on track to have the new nuclear units online in 2021 and 2022 and hasn't adjusted its cost estimates. COVID-19 may push the dates around a little bit, but that has nothing to do with what has, so far, been much improved execution on Southern's part. Meanwhile, this project is really just a small piece (about 7.5%) of the company's larger five-year spending plans. Yes, Vogtle has a terrible record behind it, and nuclear power is a controversial energy source. But the project is largely back on track, and not enough on its own to derail Southern Company's business. That said, any additional cost overruns, noting that COVID-19 is likely to present some headwinds here, are likely to fall on the shoulders of Southern and its shareholders, so the Vogtle story is far from over just yet.
4. What about other options
Even if Vogtle isn't as big a risk as it may seem, Southern still needs to stand up as an investment versus other options. For example, similarly large peers Duke Energy (NYSE: DUK) and Dominion Energy (NYSE: D) both have material yields, at 4.7% and 4.5%, respectively, and similar financial debt to equity ratios. That said, Dominion and Duke are partners on a controversial project of their own, the Atlantic Coast Pipeline. That project just won a positive judgement from the Supreme Court, allowing it to move forward, but it isn't yet complete and still faces additional regulatory and environmental scrutiny. There's less execution risk with a pipeline, for sure, but neither Duke nor Dominion is risk-free. When you add in Southern's long history of placing investor returns, via the dividend, at a high priority, Southern holds up well by comparison for investors looking for a reliable dividend. Southern's PE, meanwhile, is at the low end of the group, albeit by a small margin, suggesting it's a decent value.
You could also punt and buy a utility focused exchange traded fund (ETF). This is a bit more complicated as a comparison, since an ETF like Utilities Select Sector ETF. Southern's yield is more than a full percentage point higher, which should entice investors seeking to maximize current income. The diversification benefits provided by an index-based ETF, however, would offset many of the company specific risks inherent in buying a stock like Southern. Over time, meanwhile, Utilities Select Sector ETF has done quite well relative to Southern. But, over the past five years, Southern and Utilities Select Sector ETF have very similar total returns, both of which are ahead of Duke and Dominion. That's thanks largely to Southern getting Vogtle moving in a better direction following the Westinghouse bankruptcy. If you are a conservative investor, an ETF makes a lot of sense. However, if you are looking to be more engaged in your investment selections or are specifically seeking to generate current income, Southern still comes out looking pretty good. And once the Vogtle project is over, the company's future should be much less complicated.
Worth a look
If you are a dividend-focused investor looking to add some diversification to your portfolio via a utility investment, The Southern Company should be on your short list. It's not a perfect investment. But the relatively generous yield, coupled with a solid business and great history of returning value to shareholders via regular dividend increases, is worth the modest added risks here. There are other options, as with any investment, but at the end of the day, Southern stands up well compared to its closest peers and a broadly diversified index ETF.
10 stocks we like better than Southern Company
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Southern Company wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 2, 2020
Reuben Gregg Brewer owns shares of Dominion Energy, Inc and Southern Company. The Motley Fool recommends Dominion Energy, Inc and Duke Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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However, it has significantly underperformed both the S&P 500 and the Utilities Select Sector ETF (NYSEMKT: XLU) on a total return basis in large part because of a huge albatross around its neck: Developing the Vogtle nuclear plant. But slow and steady (the average annual dividend hike over the past decade was roughly 3.5%) isn't a bad thing, and it's one of the reasons why utilities are viewed as safe-haven investments when market turmoil is high. But the relatively generous yield, coupled with a solid business and great history of returning value to shareholders via regular dividend increases, is worth the modest added risks here.
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The utility's financial debt to equity ratio of roughly 0.78 times is toward the high end of its closest peers. For example, similarly large peers Duke Energy (NYSE: DUK) and Dominion Energy (NYSE: D) both have material yields, at 4.7% and 4.5%, respectively, and similar financial debt to equity ratios. But, over the past five years, Southern and Utilities Select Sector ETF have very similar total returns, both of which are ahead of Duke and Dominion.
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When you add in Southern's long history of placing investor returns, via the dividend, at a high priority, Southern holds up well by comparison for investors looking for a reliable dividend. Worth a look If you are a dividend-focused investor looking to add some diversification to your portfolio via a utility investment, The Southern Company should be on your short list. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Southern Company wasn't one of them!
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What's going on there, and is this enough of a risk that investors should look elsewhere? This is a bit more complicated as a comparison, since an ETF like Utilities Select Sector ETF. The diversification benefits provided by an index-based ETF, however, would offset many of the company specific risks inherent in buying a stock like Southern.
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2020-06-26 00:00:00 UTC
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5 Stocks That Will Prosper in a Bear Market
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The stock market’s wild swings over the past few months have some calling for a swift V-shaped recovery and others forecasting the start of a new bear market. Of course, it’s impossible to know for certain who’s correct, but it doesn’t hurt to prepare for either eventuality by shoring up your portfolio with some defensive, bear market stocks.
Any seasoned trader will tell you that a bear market is an opportunity. They tend to be shorter than bull markets, making them worth investing in if you can wait it out. With that said, there are plenty of risks that come along with a bear market.
Perhaps the best strategy for bear market investors is to keep some powder dry to take advantage of opportunities. As the summer earnings season approaches, uncertainty will start to creep in. Second-quarter results will mark the first time investors have had something concrete to price stocks on since the March drop.
10 Consumer Stocks to Buy to Ride the Post-Covid-19 Wave
Encouraging data could lead the market into another rally. But worse-than-expected figures could cause another nosedive. With that in mind, investors prepping their portfolios for a prolonged bear market should pick up big, reliable names that can weather the storm. Here are five great bear market stocks to help get you started:
CVS Health (NYSE:CVS)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
Teladoc Health (NYSE:TDOC)
Dominion Energy (NYSE:D)
Facebook (NASDAQ:FB)
Bear Market Stocks: CVS Health (CVS)
Source: Susan Montgomery / Shutterstock.com
Healthcare is one industry that makes sense as a long-term play — especially as the population ages. CVS stock and its peers could have some volatility ahead as the U.S. presidential election heats up and healthcare reform moves back into the headlines. But CVS is a unique take on the healthcare industry because the company has become a one-stop shop for all things healthcare.
While that much control could raise questions, it also has the potential to reduce healthcare costs and put more focus on preventative care. The firm’s acquisition of Aetna has given CVS a powerful insurance arm which it will presumably use to direct clients to its walk-in clinics.
By directing more people to its HealthHub clinics, CVS will increase store traffic and potential sales as well. For that reason, CVS stock makes for one of the best bear market stocks because the firm will see the benefits of its Aetna acquisition materialize over the next year.
Alphabet (GOOG, GOOGL)
Source: Benny Marty / Shutterstock.com
When it comes to reliable, big-name stocks that will remain relevant in the long term, there is no better choice than Alphabet. The firm is best known for its Google search engine, but GOOG stock offers more than just an online advertising play.
For now, that’s the firm’s bread and butter, something that will insulate Google throughout the duration of the pandemic. Advertisers have no choice but to reach customers via Google’s search engine, so even if spending falls, Google is going to remain a top advertising choice.
5 Housing Stocks to Buy Before the Housing Market Bounces Back
In the longer term, though, Alphabet’s other business arms are what make this stock worth holding onto. From healthcare technology to autonomous driving, Alphabet stock has its finger on the pulse of the future.
Teladoc Health (TDOC)
Source: Piotr Swat / Shutterstock.com
The pandemic has accelerated several developing technology trends as it forced the world to adapt to doing pretty much everything from home. But no sector looks more promising in the post-pandemic reality than that of virtual healthcare.
Teladoc Health is a virtual healthcare company that allows people to contact a doctor for a wide range of health concerns without ever leaving their homes. This kind of treatment was already on the rise before the novel coronavirus struck, but its services have seen a spike as people avoid high-risk transmission areas like doctors’ offices.
Plus, Teladoc claims it can reduce healthcare costs by 28%, meaning that even if coronavirus concerns are totally eliminated over the next six months, people will still have a reason to continue using virtual healthcare.
Dominion Energy (D)
Source: ying / Shutterstock.com
Another good place to look for bear market stocks is in the utilities sector. Companies like Dominion Energy are worth holding throughout periods of economic downturn. Why? Because no matter what, people are going to do everything they can to keep the lights on.
D stock has the benefit of reoccurring revenue. And this makes it much easier for management to plan accordingly for the years ahead. That kind of stability is hard to find at the best of times, let alone during a pandemic.
10 Stocks to Watch in the Second Half
Dominion offers investors a 4.4% dividend yield, which should help make any market volatility more bearable. While that figure is unlikely to rise anytime soon, much of the firm’s revenue comes from state-regulated utilities. That gives the company a lot of strength for the foreseeable future.
Facebook (FB)
Source: TY Lim / Shutterstock.com
Facebook, alongside many of its Big Tech peers, has risen to all-time highs amid the pandemic. Admittedly that makes FB one of the riskier bear market stocks on this list. But starting to build up a position in Facebook is a wise long-term play because the company is on the verge of challenging e-commerce juggernaut Amazon (NASDAQ:AMZN) at its own game.
Facebook’s new Shops platform has the potential to pose a real threat to Amazon in the coming years. It makes it easier for people to buy things without ever leaving the platform. Facebook and Instagram already help people discover products. But giving consumers an easier way to buy those products gives Facebook serious power.
Facebook’s privacy issues and ongoing criticism of the way it handles free speech are likely to continue driving volatility. That’s especially true in the lead-up to November’s election. However, FB stock is a buy-and-hold investment that will pay off for years to come.
Laura Hoy has a finance degree from Duquesne University and has been writing about financial markets for the past eight years. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN. As of this writing, she did not hold a position in any of the aforementioned securities.
The post 5 Stocks That Will Prosper in a Bear Market appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Teladoc Health (TDOC) Source: Piotr Swat / Shutterstock.com The pandemic has accelerated several developing technology trends as it forced the world to adapt to doing pretty much everything from home. This kind of treatment was already on the rise before the novel coronavirus struck, but its services have seen a spike as people avoid high-risk transmission areas like doctors’ offices. But starting to build up a position in Facebook is a wise long-term play because the company is on the verge of challenging e-commerce juggernaut Amazon (NASDAQ:AMZN) at its own game.
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Here are five great bear market stocks to help get you started: CVS Health (NYSE:CVS) Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) Teladoc Health (NYSE:TDOC) Dominion Energy (NYSE:D) Facebook (NASDAQ:FB) Bear Market Stocks: CVS Health (CVS) Source: Susan Montgomery / Shutterstock.com Healthcare is one industry that makes sense as a long-term play — especially as the population ages. The firm is best known for its Google search engine, but GOOG stock offers more than just an online advertising play. 5 Housing Stocks to Buy Before the Housing Market Bounces Back In the longer term, though, Alphabet’s other business arms are what make this stock worth holding onto.
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips The stock market’s wild swings over the past few months have some calling for a swift V-shaped recovery and others forecasting the start of a new bear market. Here are five great bear market stocks to help get you started: CVS Health (NYSE:CVS) Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) Teladoc Health (NYSE:TDOC) Dominion Energy (NYSE:D) Facebook (NASDAQ:FB) Bear Market Stocks: CVS Health (CVS) Source: Susan Montgomery / Shutterstock.com Healthcare is one industry that makes sense as a long-term play — especially as the population ages. Of course, it’s impossible to know for certain who’s correct, but it doesn’t hurt to prepare for either eventuality by shoring up your portfolio with some defensive, bear market stocks.
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Here are five great bear market stocks to help get you started: CVS Health (NYSE:CVS) Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) Teladoc Health (NYSE:TDOC) Dominion Energy (NYSE:D) Facebook (NASDAQ:FB) Bear Market Stocks: CVS Health (CVS) Source: Susan Montgomery / Shutterstock.com Healthcare is one industry that makes sense as a long-term play — especially as the population ages. The firm is best known for its Google search engine, but GOOG stock offers more than just an online advertising play. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The stock market’s wild swings over the past few months have some calling for a swift V-shaped recovery and others forecasting the start of a new bear market.
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2020-06-23 00:00:00 UTC
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Noteworthy ETF Outflows: XLU, D, DUK, SO
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $241.8 million dollar outflow -- that's a 2.2% decrease week over week (from 192,270,000 to 188,070,000). Among the largest underlying components of XLU, in trading today Dominion Energy Inc (Symbol: D) is up about 0.4%, Duke Energy Corp (Symbol: DUK) is down about 0.1%, and Southern Company (Symbol: SO) is lower by about 1.1%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average:
Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.60. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Click here to find out which 9 other ETFs experienced notable outflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $241.8 million dollar outflow -- that's a 2.2% decrease week over week (from 192,270,000 to 188,070,000). These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.60. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Click here to find out which 9 other ETFs experienced notable outflows » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $241.8 million dollar outflow -- that's a 2.2% decrease week over week (from 192,270,000 to 188,070,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.60. Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Utilities Select Sector SPDR— Fund (Symbol: XLU) where we have detected an approximate $241.8 million dollar outflow -- that's a 2.2% decrease week over week (from 192,270,000 to 188,070,000). For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average: Looking at the chart above, XLU's low point in its 52 week range is $43.435 per share, with $71.10 as the 52 week high point — that compares with a last trade of $57.60. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed).
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2020-06-22 00:00:00 UTC
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IWM, JXI: Big ETF Outflows
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the iShares Russell 2000 ETF, where 14,300,000 units were destroyed, or a 5.4% decrease week over week. Among the largest underlying components of IWM, in morning trading today Teladoc Health is up about 0.9%, and Quidel is lower by about 1.1%.
And on a percentage change basis, the ETF with the biggest outflow was the iShares Global Utilities ETF, which lost 1,500,000 of its units, representing a 35.3% decline in outstanding units compared to the week prior. Among the largest underlying components of JXI, in morning trading today Nextera Energy is up about 2%, and Dominion Energy is up by about 2.2%.
VIDEO: IWM, JXI: Big ETF Outflows
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Among the largest underlying components of IWM, in morning trading today Teladoc Health is up about 0.9%, and Quidel is lower by about 1.1%. And on a percentage change basis, the ETF with the biggest outflow was the iShares Global Utilities ETF, which lost 1,500,000 of its units, representing a 35.3% decline in outstanding units compared to the week prior. VIDEO: IWM, JXI: Big ETF Outflows The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Among the largest underlying components of IWM, in morning trading today Teladoc Health is up about 0.9%, and Quidel is lower by about 1.1%. Among the largest underlying components of JXI, in morning trading today Nextera Energy is up about 2%, and Dominion Energy is up by about 2.2%. VIDEO: IWM, JXI: Big ETF Outflows The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the iShares Russell 2000 ETF, where 14,300,000 units were destroyed, or a 5.4% decrease week over week. And on a percentage change basis, the ETF with the biggest outflow was the iShares Global Utilities ETF, which lost 1,500,000 of its units, representing a 35.3% decline in outstanding units compared to the week prior. Among the largest underlying components of JXI, in morning trading today Nextera Energy is up about 2%, and Dominion Energy is up by about 2.2%.
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the iShares Russell 2000 ETF, where 14,300,000 units were destroyed, or a 5.4% decrease week over week. Among the largest underlying components of IWM, in morning trading today Teladoc Health is up about 0.9%, and Quidel is lower by about 1.1%. And on a percentage change basis, the ETF with the biggest outflow was the iShares Global Utilities ETF, which lost 1,500,000 of its units, representing a 35.3% decline in outstanding units compared to the week prior.
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2020-06-21 00:00:00 UTC
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3 Types of Stock That Can Withstand Another Market Crash
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With the stock market nearly all the way back to where it started the year, some may think the rally of the last few months may be running out of steam. While I'm not sure that's the case -- it's virtually impossible to predict the near-term movements of the markets -- there are any number of ways stocks could be primed for another downturn, especially if a second wave of COVID-19 affects the economy.
But even if you're fearful of another market downturn, it still shouldn't deter you from sticking to your long-term investing plan. If you're putting new money to work today, or reallocating from "out-of-home" stocks after their recent rally, here are the three types of safe stocks you should be looking at to protect the downside in your portfolio.
Image source: Getty Images.
Cash-cow stocks
Looking for rock-star stocks that can power through a downturn? The search for prime recession-resistant stocks shouldn't necessarily start with the income statement, where revenue and profits are recorded, but rather the balance sheet, where a company's assets are matched up against its liabilities.
Companies with lots of cash and little or no debt are a great place to start recession-resistant investing. That's because a healthy balance sheet allows companies to continue operating during a cash crunch, without having to raise capital -- often expensively -- or even worse, declare bankruptcy.
But the advantages of a solid balance sheet go even further than that. Oftentimes, a recession or depression allows cash-rich companies with strong balance sheets to acquire assets or entire companies at big discounts, and these recession buys can often pay off big years down the road. Doubling down on internal investments as cash-strapped competitors struggle could also lead to market share gains.
Finally, a healthy balance sheet is often not necessarily the cause but the result of a great business in general. As they say, "success leaves clues," and if a company has lots of cash to work with, it likely has a winning business model that can mint high profits with great returns on capital.
A good example of a cash-cow stock is Google parent company Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), which had a whopping $117 billion of cash on its balance sheet against only $5 billion in debt as of last quarter. While Alphabet's core digital advertising business is taking a hit amid the recession, the company should remain profitable, all while being able to continue investing in newer initiatives such as cloud computing and even stepping up repurchases of its own stock.
Another example is Warren Buffett conglomerate Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), which had about $133 billion in cash against just $37.5 billion in debt last quarter (outside of the $66 billion in non-recourse debt against its energy, railroad, and utility assets). The famously conservative Berkshire has been hesitant to invest in this downturn, and has missed much of the subsequent rally. However, should another market or economic downturn aftershock hit, shareholders will be glad that Berkshire has such a large cash cushion to deploy in the company's trademark patient, risk-off manner.
Recurring-revenue stocks
In addition to cash cow stocks, another type of company likely to withstand a recession are recurring-revenue stocks. Recurring revenue occurs when customers pay for a necessary service month after month, instead of one large payment every so often. This model often works for businesses such as software-as-a-service, streaming video, broadband, and utilities. Incidentally, these necessary services are also likely to be least-affected by coronavirus, and are thus doubly compelling today.
One powerful type of recurring revenue is the subscription model, in which companies often charge for an entire year upfront, giving their management teams clear visibility for the year ahead to plan accordingly. There are lots of compelling software-as-a-service stocks in the emerging cloud enterprise software sector today. These include financial and human capital management software company Workday (NASDAQ: WDAY), database disruptor MongoDB (NASDAQ: MDB), cybersecurity software company CrowdStrike (NASDAQ: CRWD), or the larger customer relationship management giant Salesforce.com (NYSE: CRM). Each of these stocks has already made back, or even exceeded, their prices at the beginning of the year, because of their steady and predictable revenue streams from enterprise clients that need them to run their businesses.
Other recurring revenue businesses might include your monthly broadband subscription, which may go to a Charter Communications (NASDAQ: CHTR) or Comcast (NASDAQ: CMCSA). The same goes for top utility stocks, which deliver necessary water and power to homes and businesses. Utilities often pay attractive dividends, which look very good in a low-interest rate world. Examples of top utilities include NextEra Energy (NYSE: NEE) or Duke Energy (NYSE: D).
Food and health stocks
Both broadband and utility stocks also double as necessary goods and services, which people still need to buy in order to stay alive and well amid nationwide quarantines, recession or not. And first among the hierarchy of needs are food and healthcare. Top companies that deliver these essential goods and services should hold up just fine in another economic downturn.
Should a recession hit, access to groceries will remain key, which should keep the dividend-paying grocery stocks like Kroger (NYSE: KR) and Walmart (NYSE: WMT) afloat. Both companies have also been investing heavily in their digital capabilities in recent years, allowing customers to receive delivery or curbside pickup in many locations. In case of a second wave and economic downturn, people aren't going to stop eating, so staying home from restaurants will necessitate more grocery-buying, benefiting these two consumer staples retailers.
Like food, people also can't afford to put off buying necessary medical treatments and drugs for their ailments. That should put a floor under many healthcare stocks -- especially as health concerns come to the forefront in these times. Two Fool favorites in the healthcare space to put on your list are Vertex Pharmaceuticals (NASDAQ: VRTX) and Teledoc Health (NYSE: TDOC).
Vertex Pharmaceuticals is a specialist in genetic diseases, and currently has a monopoly on its best-in-class treatment for cystic fibrosis, Trikafta. Trikafta just had its first full quarter of U.S. sales, and is set for European approval later this year, which should power growth for the rest of the year and beyond. Vertex is also investing in its pipeline for other genetic diseases as well, such as alpha-1 antitrypsin deficiency (AATD), and APOL1-mediated kidney disease.
Meanwhile, Teladoc Health's stock has exploded this year, helped by the increasing need for remote health services, as people continue to adopt tele-medicine for all but the most serious problems, since going into a hospital poses risks amid COVID-19. Teladoc's valuation is very high today, as investors have jumped on the tele-medicine train, but in case of a second wave and recession, Teladoc is primed to benefit from the increasing need for remote health. In a COVID-induced recession, Teladoc is potent combination of healthcare and stay-at-home digital innovation, making it a good candidate to weather another COVID-19-inspired downturn.
Know what you're buying
Cash-cow stocks, recurring-revenue stocks, and necessary goods and services stocks all have significant cushions against recession, either through a strong balance sheet, predictable revenue, or counter-cyclical elements in their products and services.
Whether or not the economy opens up this summer or a second wave hits, these three types of stocks are good candidates to at least maintain their financial strength and your investment principal along with it -- even should the worst occur.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Billy Duberstein owns shares of Alphabet (C shares), Berkshire Hathaway (B shares), Charter Communications, CrowdStrike Holdings, Inc., Kroger, and MongoDB and has the following options: short August 2020 $1000 puts on Alphabet (C shares) and short July 2020 $145 puts on Berkshire Hathaway (B shares). His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Berkshire Hathaway (B shares), CrowdStrike Holdings, Inc., MongoDB, Salesforce.com, Teladoc Health, and Workday. The Motley Fool recommends Comcast, Dominion Energy, Inc, NextEra Energy, and Vertex Pharmaceuticals and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The search for prime recession-resistant stocks shouldn't necessarily start with the income statement, where revenue and profits are recorded, but rather the balance sheet, where a company's assets are matched up against its liabilities. While Alphabet's core digital advertising business is taking a hit amid the recession, the company should remain profitable, all while being able to continue investing in newer initiatives such as cloud computing and even stepping up repurchases of its own stock. However, should another market or economic downturn aftershock hit, shareholders will be glad that Berkshire has such a large cash cushion to deploy in the company's trademark patient, risk-off manner.
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Billy Duberstein owns shares of Alphabet (C shares), Berkshire Hathaway (B shares), Charter Communications, CrowdStrike Holdings, Inc., Kroger, and MongoDB and has the following options: short August 2020 $1000 puts on Alphabet (C shares) and short July 2020 $145 puts on Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Berkshire Hathaway (B shares), CrowdStrike Holdings, Inc., MongoDB, Salesforce.com, Teladoc Health, and Workday. The Motley Fool recommends Comcast, Dominion Energy, Inc, NextEra Energy, and Vertex Pharmaceuticals and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares).
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Recurring-revenue stocks In addition to cash cow stocks, another type of company likely to withstand a recession are recurring-revenue stocks. Food and health stocks Both broadband and utility stocks also double as necessary goods and services, which people still need to buy in order to stay alive and well amid nationwide quarantines, recession or not. Know what you're buying Cash-cow stocks, recurring-revenue stocks, and necessary goods and services stocks all have significant cushions against recession, either through a strong balance sheet, predictable revenue, or counter-cyclical elements in their products and services.
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With the stock market nearly all the way back to where it started the year, some may think the rally of the last few months may be running out of steam. Know what you're buying Cash-cow stocks, recurring-revenue stocks, and necessary goods and services stocks all have significant cushions against recession, either through a strong balance sheet, predictable revenue, or counter-cyclical elements in their products and services. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Berkshire Hathaway (B shares), CrowdStrike Holdings, Inc., MongoDB, Salesforce.com, Teladoc Health, and Workday.
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699099.0
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2020-06-19 00:00:00 UTC
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3 Top Dividend Stocks With Yields Over 4%
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https://www.nasdaq.com/articles/3-top-dividend-stocks-with-yields-over-4-2020-06-19
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Dividend yields spiked during the market collapse early in the year as investors feared that COVID-19 would upend the world as we know it. While the coronavirus has led to dramatic changes, Wall Street seems to think that there is a light at the end of the tunnel. That's still an open question, so investors need to be selective with their investments. Here are three stocks that each combine scale and diversification to offer investors generous 4%-plus dividends. All of these top dividend stocks are worth closer looks right now.
1. A diversified REIT
Net-lease real estate investment trust (REIT) W.P. Carey (NYSE: WPC) just raised its dividend 0.2%, which seems rather anemic until you consider that scores of REITs have cut their dividends in the face of COVID-19. It's basically a show of strength for a company with a business model that's really shining today.
Image source: Getty Images
The biggest example of that is that Carey was able to collect 95% of its April and May rents, while other REITs were struggling to collect any rent at all (some retail REITs collected less than 50% of their April rent). A key factor here is the company's broad diversification. The company's portfolio is broken down between industrial (24% of rents), office (23%), warehouse (22%), retail (19%), self storage (5%), and other (7%). It takes diversification a step further, however, with roughly a third of its rent roll coming from Europe. This level of diversification, combined with its size ($12 billion market cap), makes W.P. Carey a unique REIT.
Add in the fact that W.P. Carey's tenants are responsible for most of the costs of the properties they occupy (which is what a net-lease is), and the REIT's business model looks even more attractive. With a 5.6% yield backed by 23 years worth of annual dividend increases, long-term dividend investors should like what they see here.
2. Electricity and more
Next up is Dominion Energy (NYSE: D), one of the largest utility companies in the United States. Over the past decade or so it has made a notable transition, shifting out of volatile industries like oil drilling and refocusing on regulated and fee-based businesses. Today the company is broken down into four broad segments: regulated electric utilities (55% of earnings), natural gas transmission and storage (25%), natural gas distribution (10%), and contracted power generation (5%). There's a little overlap in some of the segments, but the big takeaway is that it has multiple streams of income. Meanwhile, roughly 70% of its business is regulated at the state level, with the rest largely backed by long-term contracts.
Regulation is a mixed blessing, because it puts a cap on Dominion's growth. However, that regulation exists because the company has been granted a monopoly in the regions it serves. The ups and downs on Wall Street are an issue for the company, but when it comes to future growth, the big driver is the capital investment plans that it works with the states it serves to create. Right now it has roughly $26 billion in investment planned between 2019 and 2023. That spending is highly likely to take place regardless of what happens in the market, with investments spread across things like utility upgrades, renewable power, and midstream pipelines. As it spends, it expands its ability to earn.
CVX Dividend Yield data by YCharts
Dominion's yield is a generous 4.4% today, backed by 17 years worth of annual dividend increases. Yes, demand for energy could wane in the near term because of COVID-19, but the long-term picture is still very bright here.
3. Taking a little oil risk
The final opportunity is probably the one that will require the strongest stomach: Chevron (NYSE: CVX). The company is one of the largest and most diversified energy names on Wall Street. Demand for oil plummeted when economies around the world shut down to slow the spread of COVID-19. The supply/demand imbalance that created has pushed oil prices to historic lows, and it will take a long time to get back to some semblance of normal again. But that's presenting an opportunity for long-term dividend investors, because it has pushed Chevron's yield up to an attractive 5.5%.
There are a couple of things to note here. First, Chevron has one of the strongest balance sheets in the oil patch, with financial debt to equity at around 0.25 times -- the lowest among its closest peers. That gives it a huge amount of leeway to muddle through tough periods, as it has done before. That's where the company's 33 consecutive years' worth of annual dividend increases comes in. Oil is highly volatile, so Chevron's ability to keep raising its payout speaks to both its shareholder commitment and its ability to navigate a highly cyclical industry. Lastly, Chevron is very clear that it thinks long-term when it makes investment decisions. That doesn't mean that it won't adjust to current market conditions, but its big goals are long-term in nature, and they don't change dramatically over time.
To that end, the company remains committed to oil and natural gas, because even the worst case scenarios for demand show these vital fuels will be important commodities for years to come. To be fair, oil prices are so low that Chevron is struggling, just like everyone else in the energy patch. So this is a more aggressive investment. But it has a high likelihood of surviving this period in relative stride -- unlike smaller players, many of which are on the verge of bankruptcy or have already sought out court protections. If you can stomach some uncertainty, Chevron is worth a deep dive.
Three dividend giants to consider
This trio of high-yield dividend stocks spans across a broad spectrum, but they all have something to offer for the right type of investor. If you take the time to understand W.P. Carey, Dominion Energy, and Chevron, it's highly likely that one, or more, could end up in your portfolio today.
10 stocks we like better than Chevron
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Chevron wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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Reuben Gregg Brewer owns shares of Dominion Energy, Inc and W. P. Carey. The Motley Fool recommends Dominion Energy, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The ups and downs on Wall Street are an issue for the company, but when it comes to future growth, the big driver is the capital investment plans that it works with the states it serves to create. That spending is highly likely to take place regardless of what happens in the market, with investments spread across things like utility upgrades, renewable power, and midstream pipelines. To that end, the company remains committed to oil and natural gas, because even the worst case scenarios for demand show these vital fuels will be important commodities for years to come.
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With a 5.6% yield backed by 23 years worth of annual dividend increases, long-term dividend investors should like what they see here. Today the company is broken down into four broad segments: regulated electric utilities (55% of earnings), natural gas transmission and storage (25%), natural gas distribution (10%), and contracted power generation (5%). CVX Dividend Yield data by YCharts Dominion's yield is a generous 4.4% today, backed by 17 years worth of annual dividend increases.
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With a 5.6% yield backed by 23 years worth of annual dividend increases, long-term dividend investors should like what they see here. Today the company is broken down into four broad segments: regulated electric utilities (55% of earnings), natural gas transmission and storage (25%), natural gas distribution (10%), and contracted power generation (5%). CVX Dividend Yield data by YCharts Dominion's yield is a generous 4.4% today, backed by 17 years worth of annual dividend increases.
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Today the company is broken down into four broad segments: regulated electric utilities (55% of earnings), natural gas transmission and storage (25%), natural gas distribution (10%), and contracted power generation (5%). But that's presenting an opportunity for long-term dividend investors, because it has pushed Chevron's yield up to an attractive 5.5%. Carey, Dominion Energy, and Chevron, it's highly likely that one, or more, could end up in your portfolio today.
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