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Utility Provider Duke Energy Powers Bright Future Thanks In Part To AI

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Among top dividend stocks, utility provider Duke Energy (DUK) is in the spotlight with a robust growth trajectory and solid dividend.




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Headquartered in Charlotte, N.C., Duke Energy serves 8.2 million electricity customers and 1.6 million natural gas customers across the Eastern U.S.

Among the S&P sectors, utilities have been hot, up 14% and outperforming the stock market year-to-date.

One of the surprising reasons leading the move is a surge in artificial intelligence. That has heightened expectations for energy demand. For reference, even a simple ChatGPT task uses 10 times the energy a normal Google search does.

Earnings Growth of 5%-7% Seen For Dividend Stock

Duke Energy anticipates capitalizing on this increasing energy demand. During its May 7 first-quarter earnings call, CEO Lynn Good noted that she expects 5%-7% earnings growth over the next five years.

While this growth rate may not rival some tech giants, it is notably impressive for utility companies. They typically offer lower single-digit growth rates. After reporting earnings of $5.60 last year, analysts expect earnings of $5.97 and $6.32 in 2024 and 2025, respectively.

In addition to its growth prospects, Duke Energy boasts a quarterly dividend of $1.025 per share. That translates to a 4% annualized yield. The company has increased its dividend for 12 consecutive years. Another hike is likely on the horizon for August if current trends persist.

For conservative investors seeking stability, the dividend stock presents an attractive investment opportunity. The company holds a BBB+ credit rating from S&P Global, indicating its strong financial standing. Moreover, its volatility is expected to remain low, with 30-day annualized implied volatility sitting below 13%, aligning with other conservative stocks.

Duke Energy’s shares recently broke out of a flat base, surpassing a 99.92 buy point on May 1. Since then, share prices have continued higher, though they remain within a 5% buy range above the buy point, according to MarketSurge pattern recognition.

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