Dominion's Dividend: Generous or Just a Ponzi Scheme in Disguise?
Alright, let's get one thing straight: when I see a company dangling a fat dividend, my first thought ain't "generosity." It's "what are they hiding?" Dominion Energy, handing out $0.6675 per share? Sounds nice, right? A cool 4.5% yield, they say. "Fairly typical for the industry," they claim.
Typical? Maybe. Reassuring? Absolutely not.
The House of Cards They Call a Dividend
Here's the deal: this article says Dominion Energy is paying out a "fairly large proportion of earnings." Translation: they're scraping the barrel to keep shareholders happy. And it gets better – they're not even generating positive free cash flow. I mean, come on! That's like robbing Peter to pay Paul, except Peter is the company's future and Paul is some investor expecting a check. How long can they keep that up?
"This is a pretty unsustainable practice," the article admits. You think? It's a freakin' ticking time bomb. A Ponzi scheme with power lines. They're betting on future earnings to cover their asses. And what happens if those earnings don't materialize? You guessed it: dividend cut.
They expect us to believe this nonsense, and honestly...
Oh, and get this little gem: "The next year is set to see EPS grow by 31.2%." Right. Because forecasts always come true. What if the economy tanks? What if a rogue squirrel chews through a critical power cable? What if… Look, I don't trust forecasts. Especially when they're used to justify unsustainable payouts.
A History of Broken Promises
Let's talk about that dividend history. "Marked by instability," the article says. That's putting it mildly. They straight-up cut the dividend in the last 10 years. Since 2015, it's only grown by a measly 1.1% per year. Big whoop. That barely outpaces inflation. It is hard to live on a dividend income if the company's earnings are not consistent.
Modest growth? Give me a break. It's a joke. A slap in the face to anyone relying on that income. And here's the kicker: "It is hard to live on a dividend income if the company's earnings are not consistent." Well, duh.
You know what this reminds me of? That time I tried to build a deck with wood I found in a dumpster. Looked good at first, but it warped and collapsed after the first rain. This dividend is dumpster lumber.
Then again, maybe I'm the crazy one here. Maybe everyone else is cool with betting their retirement on a company that can't even fund its dividend from its own cash flow. Maybe I'm just too cynical. Nah.
Growth? Don't Hold Your Breath
Okay, so maybe they're just going through a rough patch. Maybe they'll turn things around and start showering us with cash. Don't count on it.
"Dominion Energy has seen EPS rising for the last five years, at 12% per annum." That's... okay, I guess. But then comes the hammer: "with the payout ratio on the higher end we don't think the dividend has many prospects for growth."
In other words, they're already maxed out. They're squeezing every last drop of profit to keep the dividend afloat. There's no room for expansion. No room for error. It's like trying to inflate a balloon that's already about to burst.
This Dividend Is a Trap
So, what's the real story? Dominion Energy is using its dividend to lure in unsuspecting investors. They're hoping you won't notice the shaky foundations, the unsustainable payout ratio, the history of cuts. They're selling you a dream of passive income, but the reality is a high-risk gamble. Don't fall for it.
