Widows and orphans are no longer the primary purchasers of utility securities. In fact, investors in utility companies had to increase their risk appetite, as some firms moved away from regulation and dabbled into the unregulated retailing segments.
Dominion Resources has made a strategic move away from deregulation, and expects to have only 10% of operations in this segment. This should be a relief for investors who depend on the company’s 4% dividend. In addition to focusing on regulated power generation and supply, Dominion has been shedding non-core businesses, allowing the firm to fund its operations internally, and aligning capital expenditures with growth. This new structure has supplied Dominion with steady operating earnings per share growth, which supported management's idea to increase the company’s dividend payout ratio by 5%.
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