We recently published a list of 10 Best Energy Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where Duke Energy Corporation (NYSE:DUK) stands against other best energy dividend stocks to buy right now.
The energy sector’s presence within the broader US stock market has fluctuated over time. In the 1970s, it accounted for around 15% of the market, whereas today, it represents just 3.2% of the broader index, as reported by U.S. Bancorp Investments. However, energy consumption has increased since the 1970s, and its significance has not diminished. According to analysts, from an economic standpoint, energy stocks hold a more substantial role in the broader market than their current index weighting suggests.
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Towards the end of 2024, energy sector stocks saw considerable fluctuations, rising by over 6% in November before declining nearly 10% in December. By the close of the year, the broader market’s energy sector, which had been up nearly 20% at its highest point, finished 2024 with a return of just 5.72%. This performance fell well behind the wider market. Rob Haworth, senior investment strategy director with U.S. Bank Asset Management, made the following comment about the performance of energy stocks:
“As 2024 came to a close, markets responded to the environment for energy prices. In part, it reflects concern that Oil Petroleum Exporting Countries+ (OPEC+) may soon boost production, which would add to an already solid supply situation. The oil market is one that remains well supplied but isn’t well demanded. Although the U.S. economy is strong, other major oil users like China and Europe are experiencing economic challenges. As a result, global oil demand is lagging.”
Although energy stocks fell short of investor expectations, global investment in the low-carbon energy transition grew by 11% in 2024, reaching a record $2.1 trillion, according to BloombergNEF’s (BNEF) Energy Transition Investment Trends 2025 report. This growth was largely driven by increased investment in electrified transportation, renewable energy, power grids, and energy storage, all of which hit new highs last year. However, while total investment in energy transition technologies set a new record, its growth rate was slower than in the previous three years, when annual increases ranged from 24% to 29%.
BNEF’s report also highlighted a clear divide between investment in well-established and emerging clean energy sectors. Proven technologies with scalable business models—such as renewables, energy storage, electric vehicles, and power grids—accounted for the bulk of 2024’s investment, totaling $1.93 trillion, a 14.7% increase. This growth persisted despite challenges from policy changes, higher interest rates, and an expected slowdown in consumer demand.
Even as oil prices decline, an increasing number of fossil fuel companies are allocating a larger share of their profits to shareholders, indicating a shift in focus away from reinvesting in oilfield development. Some major oil firms have even taken on debt to maintain shareholder payouts. According to Bloomberg, four of the world’s five oil supermajors borrowed a combined $15 billion between July and September 2024 to fund share buybacks, underscoring their commitment to rewarding investors. In addition, companies in the energy sector distributed over $49 billion in dividends during the third quarter of 2024, up from $32.2 billion three years ago, as reported by Janus Henderson.
Our Methodology
For this list, we first scanned Insider Monkey’s database of 900 hedge funds, as of the third quarter of 2024. Our focus was on selecting energy companies across various sectors within the energy industry, including exploration and production, utilities, renewable energy, and oil refining and marketing. From this pool of companies, we identified 10 companies that prioritize distributing dividends to their shareholders and ranked them in ascending order of the number of hedge funds having stakes in them at the end of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Aerial view of a power plant near a lake lit up at night, showing off the company’s expansive electricity generation capabilities.
Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 46
Duke Energy Corporation (NYSE:DUK) is an American electric power and natural gas holding company that is primarily involved in the generation, transmission, distribution, and sale of electricity. The company’s utility portfolio operates under government regulation, which determines its rates and guarantees a stable revenue stream. This consistency provides dependable cash flow to support both dividend distributions and business expansion. The company is making strategic investments to enhance its operations while also working to reduce carbon emissions. Analysts expect that these initiatives will drive annual earnings per share growth of 5% to 7% through 2028, a solid rate for a leading utility. This positive growth trajectory strengthens Duke Energy’s ability to maintain and gradually raise its dividend over time.
Duke Energy Corporation (NYSE:DUK) is making significant investments in strengthening and modernizing its power grid. In 2023 alone, the company allocated over $4 billion toward grid improvements, including selective undergrounding of power lines, upgrading utility poles, and implementing self-healing technology. These upgrades have enhanced grid reliability, preventing nearly 550,000 customer outages and reducing downtime by 7 million hours during recent hurricanes. Moving forward, the company intends to maintain its focus on infrastructure upgrades, with grid-related projects making up half of its planned $73 billion capital expenditures over the next five years.
Duke Energy Corporation (NYSE:DUK) is a reliable stock for income investors because of its stable cash position. In its most recent quarter, the company had $376 million available in cash and cash equivalents. In the first nine months of FY24, it generated $8.95 billion in operating cash flow, showing an increase from $7.31 billion in the same period last year. The company has never missed a dividend in 98 years and also maintains a 13-year streak of consistent dividend growth, which makes DUK one of the best dividend stocks on our list. Its quarterly dividend comes in at $1.045 per share and has a dividend yield of 3.64%, as of February 8.
The hedge fund sentiment around Duke Energy Corporation (NYSE:DUK) remained positive in Q3 2024 as 46 funds tracked by Insider Monkey held stakes in the company, up from 37 in the previous quarter. The consolidated value of these stakes is over $1.66 billion. Among these hedge funds, GQG Partners was the company’s leading stakeholder in Q3.
Overall, DUK ranks 7th on our list of best energy dividend stocks to buy right now. While we acknowledge the potential for DUK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DUK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.