Today, let's look at three things investors should be watching regarding Duke Energy, as they will provide us better insight into the company.
1. Duke's pending merger with Progress Energy
It's taken a year-and-a-half in the making, but it finally appears that Duke Energy's merger with Progress Energy
The deal is expected immediately to be accretive to the combined company's earnings and costs should fall, ultimately translating into stable, or perhaps even lower, costs for consumers. The combined entity will have 7.1 million customers and become the nation's largest electric utility. Even with FERC's demands, don't underestimate the price control that the combined entity will exert either. Although Duke has nuclear plants of its own, its pricing power and diversity of energy fuel sources will allow it to grow faster than Exelon
2. Duke's use of renewable energy
Between the rising cost of commodities and increased awareness concerning the environmental, green initiatives to improve the environment and lower corporate costs are no longer an option for utilities -- they are a must. Duke has been a pioneer in utilizing renewable energy sources to fuel its growth for years and further efforts will be needed to impress hardline environmentalists.
Duke Energy has invested $2.5 billion over the past five years to build-out its wind farms which are capable of generating in excess of 1,000 MW of production. Another key aspect to Duke's clean-energy initiatives are its reliance on hydroelectric power as it slowly commits to closing some of its older coal-powered plants. While not as large as California's PG&E
3. That delectable dividend
Let's face it, there're really only three reasons to buy a utility company: Either you're investing in necessity products, you're vehemently against volatility, or you're craving a safe, high-yielding, dividend (or perhaps you're chasing all three?). That's why it's more important than ever for Duke to focus on rewarding its shareholders after merger discussions with Progress have dragged on seemingly forever!
Thankfully this is another area where Duke has generally excelled. Outside of its spinoff of Spectra Energy
Now that you know what to watch for, it should be easier to analyze Duke Energy's successes and pitfalls in the future and hopefully give you a competitive investing edge.
If you're still craving even more info on Duke Energy, I would recommend adding the stock to your free and personalized watchlist so you can keep up on all of the latest news with the company.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on Motley Fool CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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