Dominion Energy D is trading above its 50-day and 200-day simple moving averages (SMAs), signaling a bullish trend. The company continues to make investments to expand existing electric and natural gas infrastructure, and focus on renewable energy. Contribution from its organic assets and rising demand from its expanding customer base act as tailwinds.

Dominion Energy has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure. Organic projects and acquired assets will further expand the company’s clean energy portfolio.

D's 50 & 200-Day SMAs

Image Source: Zacks Investment Research

The 50 and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of a stock’s uptrend or downtrend.

The D stock closed at $56.87 on Feb. 24. In the past one year, the company’s shares have gained 19.4% compared with the industry’s 23.9% rally. D has outperformed the S&P 500’s growth of 19.1% and the Zacks Utilities sector’s rise of 18.5%.

Price Performance (One Year)

Image Source: Zacks Investment Research

Should you consider adding Dominion Energy to your portfolio only based on positive price movements? Let us delve deeper and find out factors that can help investors decide whether it is a good entry point to add the D stock to their portfolios.

Factors Acting as Tailwinds for the D Stock

Dominion Energy’s portfolio realignment and focus on regulated assets are evident from its investments in regulated infrastructure, which will boost its operation term. To focus on its core operation, the company divested some of its merchant generation facilities and electric retail energy marketing business.

D is planning to invest $50 billion in 2025-2029, and nearly 83% of its planned investment will be directed toward strengthening its infrastructure and producing more electricity from clean sources to meet the rising demand from its customers.

Dominion Energy registered attractive customer growth across its Virginia and South Carolina service areas. The company’s utility rates are lower than the national average and its reliable services attract more customers.

D is enjoying the benefits of robust demand growth, driven by economic growth, electrification and data center expansion in its service region. Rising demand from data centers is likely to boost the performance of the company in the long term. Dominion Energy Virginia connected 15 data centers in 2024 and expects to connect 15 in 2025.

Dominion Energy plans to upgrade electric infrastructure by installing smart meters and grid devices, as well as enhance services to customers through the customer information platform. The company is also working on a project to underground 4,000 miles of distribution lines. It has already completed undergrounding nearly 2,000 miles of outage-prone overhead power distribution lines in Virginia. These initiatives will increase the resilience of its operation and enable it to serve the expanding customer base more efficiently.

Dominion Energy’s Earnings Estimates Trend Up

The company expects EPS of $3.28-$3.52 for 2025. The Zacks Consensus Estimate for D’s 2025 and 2026 earnings per share indicates increases of 0.6% and 0.3%, respectively, in the past 90 days.

Image Source: Zacks Investment Research

Dominion Energy’s Capital Return Program

The company has been distributing dividends to its shareholders for a long time. The current annual dividend of the company is $2.67. The current dividend yield is 4.65% better than the industry’s yield of 3.2%.

Dominion Energy has raised dividends for its shareholders two times in the past five years. Check D’s dividend history here.

D Stock Trades at Premium

Dominion Energy is currently valued at a premium compared with its industry on a forward 12-month P/E basis.

Image Source: Zacks Investment Research

Another utility in the same space, The Southern Company SO, is trading at a higher premium than the industry.

Dominion Energy Stock Returns Lower Than the Industry

D’s trailing 12-month return on equity of 9% is lower than the industry average of 10.87%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

Image Source: Zacks Investment Research

Summing Up

Dominion Energy's systematic investment in increasing clean energy production volumes and strengthening its grid will assist in providing reliable service to its customers. Rising demand for clean energy is a tailwind for the company.

Yet, its high valuation and lower ROE than its industry keep us cautious. Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolios and enjoy the benefits of dividends, while new investors can wait for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Southern Company (The) (SO) : Free Stock Analysis Report

Dominion Energy Inc. (D) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research