On the surface, Duke Energy Corporation (DUK -0.26%) is a boring old utility stock offering a robust 4.6% dividend yield. And, in this case, that's pretty close to the truth -- but it isn't the entire story. In fact, if you haven't taken a deep look at Duke in a few years, you might be surprised at how much it has changed. Here's a quick rundown of how Duke Energy makes most of its money today.

The big business

The core of Duke's business is its regulated electric utility assets, making up around 90% of its income in 2017. This business serves roughly 7.5 million retail electric customers in six states in the Southeast and Midwest, including notable footprints in Florida, the Carolinas, and Indiana. This division, however, should really be looked at as two parts: power generation and electric delivery. They live under one roof, but they have different dynamics. 

A man wearing a hard hat standing with the sun behind him in front of power equipment

Image source: Getty Images.

For example, of the $37 billion in capital spending the utility has planned across its entire business between 2018 and 2022, roughly 50% is going toward electric transmission and only about 20% toward power generation. The W.S. Lee Combined Cycle Gas Turbine power plant Duke is building in Florida is, indeed, a big deal, and will help to shift the company's production toward cleaner fuels, but it isn't in the biggest expense category. More money is going toward modernizing the grid, with things like smart meters and storm-hardened power lines.   

That speaks to the regulated nature of this business. Duke has to get its customer rates approved by the government. The best way to do that is to spend money on its business, with regulators currently appearing most fond of supporting the integrity of the power grid. Spending on the regulated electric utility side of the business, meanwhile, is expected to result in roughly 4% to 5% growth in this important division.   

Natural gas, a newcomer

The next largest division is the company's natural gas business (accounting for about 9% of income), which was created when Duke completed the purchase of Piedmont Natural Gas in late 2016. This business serves 1.5 million customers across five states. However, like the electric business, it isn't exactly one entity, since Duke also owns stakes in midstream natural gas assets in addition to its retail natural gas distribution business.  

The regulated distribution business, which sends gas into homes and businesses, is similar to the electric business. This portion of the natural gas division has to get rates approved by regulators, and spending to improve and expand distribution helps that along. That said, of the roughly $6 billion in capital spending that's going into the natural gas unit between 2018 and 2022 (roughly 15% of Duke's total spending), a little over half is going toward Duke's midstream segment.   

In the midstream space, an expanding asset base is the way that earnings are generally increased. That said, these assets usually operate under long-term contracts with large corporations, so it's a fairly stable business over time, much like Duke's retail-focused businesses. Overall, Duke's natural gas business, which is much smaller than its electric division, is projected to grow earnings by around 11% annually through 2022.

A new focus for an old timer

The last business is Duke's merchant power operations (around 1% of income), an area in which it has been involved for a long time. This division, however, changed materially when the utility sold its fossil fuel merchant assets in early 2015. It has since refocused on building renewable power generation, including solar and wind, with assets spread across the United States. The power it generates is generally sold under long-term contracts, making it a fairly stable business.   

A bar chart showing Duke's projection that it will be able to grow the dividend by as much as 6% a year

Duke has solid dividend-growth plans built on its capital spending. Image source: Duke Energy Corporation. 

Like the midstream operation, increasing the number of assets it controls is the path to growth here. On that score, Duke has plans to invest roughly $1.5 billion in this division between 2018 and 2022. That, in turn, is expected to result in growth of roughly 10% in this relatively tiny business.   

All together now

Although Duke's biggest business is a boring old electric utility, there's a lot of moving parts when you dig a bit deeper. Even the electric utility business is really more complex than you'd think when you look closely, with power generation and delivery increasingly looking like separate businesses. Then there's the relatively new natural gas division and the reshaped merchant power business, which are small but fast-growing. Overall, Duke is projecting that this combination -- and its capital spending plans -- will support earnings and dividend growth in the 4% to 6% range through 2022.