D Stock: Is Dominion Energy a Buy? | Data Center Utility Play

Dominion Energy controls the grid in Virginia — America's data center capital — where hyperscale demand from AWS, Microsoft, and Google is driving the largest transmission buildout in the company's history, making it a direct tollbooth on the AI infrastructure boom.

The Business

Dominion Energy operates one of America's most strategic utility tollbooths — a regulated monopoly serving 7 million customers across Virginia, North Carolina, South Carolina, and parts of Ohio and West Virginia. The company owns 31,400 miles of electric distribution lines, 6,600 miles of transmission lines, and 26,500 MW of generation capacity. This isn't just any utility territory — it's the data center capital of the world, serving Northern Virginia's "Data Center Alley" where 70% of global internet traffic flows.

Dominion's revenue model is textbook tollbooth: rate-regulated returns on invested capital, where every dollar spent on grid infrastructure earns a state-guaranteed return. The Virginia State Corporation Commission sets rates that allow Dominion to earn roughly 9.2% on equity, creating a virtual printing press for predictable cash flows. With Virginia's explosive data center growth driving electricity demand up 85% since 2007, Dominion has become the infrastructure backbone for the digital economy.

The company's nuclear fleet — including North Anna and Surry stations — provides 3,300 MW of carbon-free baseload power, critical for data centers requiring 24/7 reliability. Dominion also holds development rights for 2,600 MW of offshore wind off Virginia's coast, positioning it to capture the state's clean energy transition while earning regulated returns on every turbine.

By the Numbers

The Tollbooth Thesis

Dominion sits at the epicenter of America's digital infrastructure boom. Virginia hosts Amazon Web Services' largest data center cluster, Microsoft's East Coast hub, and Google's primary cloud region. These facilities consume massive electricity — a single hyperscale data center uses as much power as 80,000 homes. Every new server rack means higher electricity demand flowing through Dominion's regulated monopoly grid.

The company has $35 billion in capital projects planned through 2028, including grid hardening, transmission upgrades, and the 2,600 MW Coastal Virginia Offshore Wind project. Each dollar invested grows the rate base — the asset foundation on which regulators guarantee returns. Virginia's supportive regulatory environment has approved every major Dominion project, creating a predictable growth machine. Rate base expansion of 6-8% annually translates directly to earnings growth, as reliable as compound interest.

Nuclear power provides another tollbooth advantage. With Virginia targeting carbon neutrality by 2045, Dominion's existing nuclear fleet becomes increasingly valuable. The company is exploring small modular reactors (SMRs) to meet data center demand for carbon-free power, potentially adding billions in rate base while serving the AI economy's voracious energy appetite.

The Risks

• Regulatory backlash: Virginia politicians occasionally challenge rate increases, though historically unsuccessful

• Data center slowdown: If cloud growth stalls, Dominion's exceptional demand growth could normalize

• Offshore wind delays: The 2,600 MW project faces supply chain and permitting risks that could push timelines

• Nuclear liability: Aging reactors require costly maintenance; SMR technology remains unproven at scale

• Interest rate sensitivity: High debt levels make the company vulnerable to rising borrowing costs

Income Angle

Dominion's 4.4% dividend yield reflects 25 consecutive years of increases, with growth averaging 2.5% annually. The 87% payout ratio is elevated but sustainable given the regulated utility model's predictable cash flows. Management targets 6% annual dividend growth through 2028, supported by rate base expansion and Virginia's data center boom.

For real-asset income portfolios, Dominion offers inflation-linked returns through automatic rate adjustments and infrastructure investments that grow with the economy. The dividend provides current income while the regulated business model protects against economic downturns — data centers and homes need power regardless of recession.

The Bottom Line

Dominion Energy is a pure-play tollbooth on America's digital infrastructure revolution, collecting regulated returns from the data center economy's explosive growth. The combination of supportive Virginia regulation, irreplaceable nuclear assets, and $35 billion in growth capital creates a compelling infrastructure income play. Buy below $58 for maximum margin of safety.

Related Research

• Virginia Power Grid Risk Assessment
• XLE: Energy Select Sector SPDR
• North Carolina Power Grid Risk Assessment
• Ohio Power Grid Risk Assessment
• Tennessee Power Grid Risk Assessment

Frequently Asked Questions

Is Dominion Energy (D) a good investment for data center growth?

Dominion is the most direct utility play on data center demand. Northern Virginia hosts the world's largest concentration of data centers, and Dominion's regulated utility earns guaranteed returns on every dollar spent connecting and powering them. The company's capital investment plan has roughly doubled since 2020, driven primarily by data center interconnection requests.

What is Dominion Energy's dividend yield?

Dominion currently yields around 4.5-5%, though the company cut its dividend in 2020 when it sold its gas transmission business. Since the reset, Dominion has resumed modest dividend growth of ~2-3% annually. The higher yield compensates for slower growth compared to peers like NextEra.

How does Dominion benefit from the AI infrastructure boom?

Every AI data center in Virginia needs grid connection, substations, and transmission capacity — all built and owned by Dominion under regulated returns. The company reports over 30 GW of data center interconnection requests in its queue, far exceeding current capacity. This creates a visible, multi-decade investment pipeline.

What are the risks to Dominion Energy?

Virginia's offshore wind project represents significant execution and cost risk. Regulatory uncertainty around rate recovery for massive capital spending, rising interest rates on the company's debt load, and the possibility that data center growth slows or relocates to other regions are the primary concerns.

This analysis is part of Energy Macro's Tollbooth Royalties research. For our complete infrastructure income framework, see The Blackout Fortune Playbook.

Last updated: February 1, 2026 | Data: Yahoo Finance, SEC filings, company investor presentations