Dominion Energy: Coastal Wind + Strong Regulated Base - A Tactical Long

Hook - quick take

Dominion Energy (ticker: D) is a regulated utility with a growing renewables footprint anchored by a rate-regulated 5.2 GW offshore wind farm off Virginia Beach. The company reported a constructive Q3 2025 operating quarter - revenues of $4.53 billion, operating income of $1.34 billion and net income attributable to the parent of $1.006 billion - while continuing to invest heavily (net investing outflow of $3.116 billion in the quarter). Those numbers show the company can fund large regulated projects and still generate strong operating cash.

At roughly $62.36 a share (last trade) and an estimated market capitalization of about $53.3 billion (855.4 million diluted shares x $62.36), Dominion offers an annualized dividend of ~$2.67 (quarterly dividend $0.6675) for a yield near 4.3%. That combination - sizable rate-base growth via Coastal Virginia Offshore Wind (CVOW) plus a solid yield - makes a disciplined long trade attractive for investors who can stomach medium-term regulatory and construction risk.

Why the market should care - the fundamental driver

Dominion is an integrated energy company with over 30 GW of generation capacity and 90,000+ miles of T&D lines, but the reason to watch is the rate-regulated offshore wind project. CVOW is structured to be rate-regulated which gives the project predictable recovery mechanics - in theory turning large construction spending into a steady, regulated return on a growing asset base.

Look at the numbers from recent quarters to see the mechanics in action:

• Q3 2025 revenues: $4.527 billion.
• Q3 2025 operating income: $1.339 billion.
• Q3 2025 net income: $1.028 billion; net income attributable to parent: $1.006 billion; diluted EPS: $1.16 for the quarter.
• Operating cash flow (Q3 2025): $1.945 billion; investing cash flow (Q3 2025): -$3.116 billion - consistent with heavy project capex.
• Balance sheet (Q3 2025): total assets $111.60 billion; liabilities $79.87 billion; equity $31.73 billion; cash $932 million; noncurrent liabilities $70.14 billion.

Those figures show a company that is simultaneously growing its regulated asset base and producing substantial operating cash. The negative investing cash flow is not a bug - it is the feature of building CVOW and other utility capital projects that should be recovered through rate mechanisms.

Valuation framing

Using the most recent share count (diluted average shares ~855.4 million) and the last trade price of $62.36 (as of 02/09/2026), market capitalization is approximately $53.3 billion. The quarterly diluted EPS of $1.16 (Q3 2025) annualized gives an approximate EPS run-rate of ~$4.64 and a headline P/E in the mid-teens (roughly 13-14x). Annualizing quarterly net income (Q3 2025 net income $1.028 billion x 4 = ~$4.11 billion) produces a similar implied multiple around 13x market cap / annualized net income.

This is a pragmatic, back-of-the-envelope lens - Dominion's multi-year earnings profile will change as CVOW moves into rate recovery and as interest costs settle. But on a near-term basis the combination of a mid-teens P/E and a ~4.3% dividend yield is attractive for yield-seeking, income-oriented investors who want renewable upside tied to regulated returns.

Catalysts (what to watch)

• Permitting and state-level support for CVOW - any regulatory milestones or clarifying guidance materially de-risk the project on timelines and cost recovery.
• Quarterly reporting cadence - look for continued operating cash generation and updates on capital spending cadence (investing cash flow) and debt/financing plans.
• Rate-case outcomes - approvals that lock-in recovery terms for CVOW or other rate-base projects will likely re-rate the stock higher.
• Dividend announcements/ex-dividend cadence - quarterly dividend $0.6675, ex-dividend 02/27/2026 and pay-date 03/20/2026, demonstrates management’s capital allocation priorities.
• Macro rates and interest expense - Q3 2025 interest and debt expense was $527 million; any trend lower in rates or refinancing at better terms would improve net margins.

Trade idea - actionable plan

Recommendation: Initiate a long position - tactical position trade with a position horizon of 3-12 months (position). Manage size to a single-digit percentage of portfolio risk.

Position sizing: limit any single trade exposure to an appropriate fraction of total risk capital (for most retail investors 2-5% of portfolio capital). If headlines or new filings widen trading ranges, tighten stops or reduce size - do not average into a creeping loss without new positive information.

Risks and counterarguments

• Permitting and political risk - CVOW remains politically sensitive. Recent public calls to withdraw support from the Coastal Virginia Offshore Wind project highlight the risk that state-level opposition or federal environmental challenges could delay or alter recovery mechanics. If rate recovery timelines slip materially, equity returns could compress.
• Construction cost overruns and capex creep - investing cash flow in Q3 2025 was -$3.116 billion; large projects can face overruns. Additional capital needs financed at higher rates would pressure the balance sheet and could force equity dilution or dividend pressure.
• High leverage and interest cost sensitivity - noncurrent liabilities were $70.14 billion in Q3 2025 and interest expense was $527 million for the quarter. If rates remain elevated or refinancing terms deteriorate, interest expense will pinch earnings and cash available for dividends.
• Headline risk and stock volatility - as a large regulated utility undergoing a major energy transition, Dominion is prone to sharp moves on news about environmental issues (e.g., species concerns), legal challenges or political intervention.
• Counterargument - priced for progress - one could argue the stock already reflects a constructive path: mid-teens P/E, 4.3% yield and active share buyers likely price in CVOW's eventual rate recovery. If the market anticipates a smooth execution, upside may be limited versus the binary downside of a major regulatory setback.

What would change my mind

I would materially reduce conviction or flip to a cautious stance if any of the following happened:

• Clear evidence of a significant permitting reversal (state withdrawal of support or a binding legal injunction) that delays CVOW recovery timelines beyond 12-18 months.
• Sustained rise in interest expense or a downgrade in credit rating that forces more expensive refinancing and materially increases annual interest and debt servicing costs beyond the current run-rate ($527 million in Q3 2025).
• Management shifts capital allocation away from sustaining/regulatory capex and toward riskier merchant projects without a clear plan to protect the dividend and leverage metrics.

Bottom line

Dominion is a classic regulated utility with a large, rate-regulated renewable project expected to add long-term, predictable returns to the rate base. The business is producing strong operating cash (Q3 2025 operating cash flow $1.945 billion) while spending heavily to build the next generation asset (investing cash flow -$3.116 billion). That dynamic creates an asymmetry: steady cash and a 4.3% yield today, with upside if CVOW clears regulatory milestones and rate recovery timelines. The trade proposed here is a disciplined long with a tight stop to limit headline risk and multi-stage targets to lock in gains as execution becomes clearer.

Disclosure: This is not investment advice. This trade idea is a research-weighted view for discussion and should be sized to personal risk tolerance.

Key administrative dates to note

• Dataset as-of: 02/09/2026.
• Most recent declared quarterly dividend: $0.6675; ex-dividend date 02/27/2026; pay date 03/20/2026.