Data Centers & Dividends: A Modest Proposal

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The current infatuation with all things “AI” has, predictably, sent investors scrambling for the latest digital elixir. Chipmakers, cloud providers – a veritable stampede. But allow me to suggest a slightly less… frenzied approach. While everyone is chasing the phantom of the algorithm, a rather more grounded opportunity is quietly amassing power – literally. We’re speaking, of course, of electricity. And those who supply it, with a particular eye toward the ravenous appetite of these data cathedrals.

Dominion Energy [D +0.50%] presents itself as a rather sensible proposition. Not a rocket ship to Mars, mind you, but a sturdy barge, reliably transporting wealth. A dividend yield of 4.4% is hardly a revolutionary concept, but in an age of vaporware and promises, it feels remarkably…substantial.

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The Geography of Greed: A Strategic Location

Northern Virginia, it turns out, is not merely a suburb of Washington D.C., but the epicenter of the digital universe. “Data Center Alley,” they call it. A rather prosaic name for a place where fortunes are being built, and kilowatt-hours consumed at an alarming rate. Over 35% of the world’s hyperscale data centers reside within the state. Dominion Energy, as it happens, is rather adept at delivering the juice. It’s a bit like controlling the water supply to a gold rush – a distinctly advantageous position.

One might even suggest a certain foresight on the part of Dominion. While others were chasing the mirage of the information superhighway, they were quietly laying the infrastructure. A touch of practicality, you see, is often more profitable than grand pronouncements.

Data Centers as a Business Model: A Growing Dependency

Dominion isn’t merely a utility; it’s a facilitator of the digital age. They understand the peculiar demands of these data behemoths – the need for speed, the relentless expansion, the unwavering power supply. The company’s CEO, Robert Blue, casually notes that these hyperscalers “always want to go fast.” A remarkably accurate observation, and one that suggests a certain understanding of the client’s motivations. It’s a simple equation, really: time is money, and uninterrupted power is crucial.

Currently, over 25% of Dominion’s Virginia sales stem from these data centers. Four hundred and fifty already connected, and the demand continues to swell. A rather impressive statistic, and one that suggests a degree of…stickiness. These data centers aren’t likely to simply uproot themselves and move to another power grid, are they?

Earnings & Valuation: A Modest Return, Sensibly Priced

The third quarter saw operating earnings rise by a respectable 10.2%. Not a spectacular surge, perhaps, but a steady, predictable climb. Management anticipates annual EPS growth of 5-7% through 2029. One shouldn’t expect miracles, naturally. We’re dealing with electricity, not alchemy.

At the current share price, the stock’s dividend yield of 4.4% is a welcome sight. And the valuation, frankly, is rather sensible. A P/E ratio of 19.9 compares favorably to the frothy valuations of the Nasdaq-100 (34) and the S&P 500 (28.1). It’s a bit like discovering a well-made shoe in a shop full of glittering trinkets. Practical, reliable, and surprisingly comfortable.

Naturally, this isn’t a guaranteed path to riches. But in a world obsessed with the next big thing, a steady, reliable source of power – and a decent dividend – feels like a rather sensible proposition. A modest return, perhaps, but one earned with a minimum of fuss and a maximum of…electricity.

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2026-02-05 18:22