Dominion Energy: Backing the Coastal Wind Bet While Collecting Yield

Hook & thesis

Dominion Energy is simultaneously a regulated utility, a large regional power supplier and a builder of what could be the East Coast's largest offshore wind footprint. The company is trading near $62.36 after a run that has left it close to its 52-week high; investors are now deciding whether the Coastal Virginia Offshore Wind (CVOW) program and accelerating data-center demand justify a modest re-rating.

My take: buy a tactical position in Dominion for a mid-term swing (45 trading days) around $62 as the market awaits regulatory clarity on CVOW and near-term rate-case and data-center updates. The stock offers a ~4.6% yield, a market cap of roughly $53.2 billion and a valuation (P/E ~20-21, EV/EBITDA ~13.85) that looks fair if the company avoids major offshore cost overruns or a material regulatory setback.

Business snapshot - why the market should care

Dominion operates largely as a regulated electric utility in Virginia with sizable contracted generation capacity feeding a region that is becoming a national hub for data centers. That structural demand matters: data centers require enormous, steady power and tend to sign long-term contracts that support utility rate base and earnings visibility.

At the same time, Dominion is executing a multi-year offshore wind program. CVOW is the crown jewel of that effort; its progress or setbacks have outsized earnings and cash-flow implications because the company has been funding large capital outlays. The result is a company that blends predictable utility cash flow, yield support and growth optionality from renewables and data-center-driven load growth.

Numbers that matter

Two numbers demand attention: negative free cash flow (around -$7.8 billion) and a leverage ratio (debt/equity ~1.75). Both reflect heavy capital spending tied to projects like CVOW and transmission work tied to new generation. Those figures are balanced by a healthy dividend (near 4.6%) and steady earnings (EPS roughly $3.04), which gives investors income while growth investments play out.

Valuation framing

At a market cap of roughly $53.2 billion and EV of about $100.8 billion, Dominion sits at P/E ~20-21 and EV/EBITDA ~13.9. Those metrics imply the market is pricing in modest growth rather than steep deterioration. The company claims an expected rate-base CAGR in the high single digits over coming years, and with favorable Virginia regulation and long-term data-center contracts, that case is plausible.

Put simply: you are paying for yield plus the optionality that large renewable projects and data-center demand will be accretive rather than dilutive. If projects are executed near plan and regulatory recovery is timely, the current multiples are reasonable. If not, the stock will likely trade lower as cash-flow pressure and financing needs become visible.

Catalysts to watch (2-5)

• Regulatory clarity on CVOW - the Interior Department announced a 90-day pause last December; any positive movement or formal continuation/cancellation decision will move the stock.
• Ex-dividend date 02/27/2026 and payable date 03/20/2026 - near-term payments can support the yield narrative and attract income buyers.
• Quarterly results and rate-case updates - quarterly commentary on capital spending, project timelines and rate-base recovery will be key.
• Data-center contracting updates in Virginia - more long-term power purchase agreements or capacity contracts underpin the growth story.

Trade plan (actionable)

Trade idea: Initiate a long position with a buy limit at $62.00, a stop loss at $58.00 and a primary target of $70.00. This is a swing trade for the mid term (45 trading days). The idea is to own the name through near-term regulatory announcements and the ex-dividend date while keeping exposure limited in case the CVOW review leads to negative headlines.

Why this horizon? Mid term (45 trading days) captures the most likely window for initial regulatory signals, the ex-dividend date (02/27/2026) and first-quarter commentary. It’s long enough for headlines to resolve and for the market to re-price based on new information, but short enough that the trade does not require committing to multi-year execution risk on offshore wind.

Risk management: set the stop at $58 to limit downside if negative regulatory developments or liquidity/credit pressure surfaces. The $70 target reflects an upside of roughly 12-13% from entry, consistent with a modest re-rating toward higher P/E in a more constructive regulatory environment and better cash-flow signals.

Supporting technical context

Momentum indicators are constructive: the 10- and 20-day SMAs and EMAs sit below the current price, RSI is ~63 (bullish but not yet overbought), and MACD shows bullish momentum. Short interest has been declining from earlier peaks and days-to-cover sits near ~4.2, reducing the risk of abrupt squeeze-driven moves but still signaling active short-side interest.

Risk section - what can go wrong (and counterarguments)

• Regulatory and political risk: CVOW faces a federal review and legal challenges citing environmental and national security concerns. A prolonged pause or cancellation would likely force write-downs, slow rate-base growth and pressure the stock.
• Execution and cost-overrun risk: Offshore wind projects are capital intensive and historically subject to cost overruns and delays. Any large overrun would worsen already-negative free cash flow and strain financing plans.
• Cash-flow & leverage risk: Free cash flow of roughly -$7.8B and a debt/equity ratio around 1.75 mean the balance sheet is under pressure. If project spending accelerates without matching regulatory recovery, the company may need more debt or equity at unattractive prices.
• Legal/litigation risk: Environmental lawsuits (including endangered-species claims) targeting CVOW could create lengthy delays and additional costs.
• Commodity & demand risk: Although data centers drive secular demand, broader energy market conditions (e.g., weak pricing for wholesale power, changes in gas prices) can affect margins and timing of recoveries.

Counterargument to the trade thesis: The opposite case is credible. If regulators or courts force significant changes to CVOW, Dominion could face prolonged cash-flow pressure that forces equity issuance or dividend trimming. In that scenario, multiples compress and the dividend yield alone may not compensate for capital losses. That outcome is the core risk that the stop loss is designed to limit.

How I'll be proven wrong

I will change my view and exit the trade if any of the following occur: a formal governmental decision that effectively halts CVOW, evidence that capital costs have materially exceeded budgets with no regulatory path to timely recovery, or a management action that suggests the dividend is at material risk (e.g., a one-off statement on liquidity needs or an announced pause on dividend policy). Conversely, clear contractual wins with data-center operators or quick regulatory signals that restore CVOW momentum would reinforce the bullish stance.

Conclusion

Dominion is a nuanced investment: it pairs stable regulated earnings and a 4.6% yield with meaningful execution risk tied to a large offshore wind program and heavy capex. The mid-term trade recommended here - buy at $62.00, stop $58.00, target $70.00 for a 45-trading-day horizon - seeks to capture constructive regulatory signals and dividend carry while controlling downside if the CVOW review or project execution turns adverse.

In short: this is a calculated long where the income and near-term catalysts justify exposure, but success depends entirely on how CVOW and financing dynamics play out over the next several weeks. Treat the position as tactical, size it accordingly and follow rate-case and regulatory updates closely.

Key dates

• Ex-dividend date: 02/27/2026
• Payable date: 03/20/2026
• Recent ratios snapshot date: 02/06/2026