Dominion Energy (D 0.05%) has had a long journey, but it appears the end of the effort is nearing. That’s a good thing for investors, and likely one of the reasons the stock is up about 15% over the past year. However, shares are still 35% below their 2020 highs, and the dividend isn’t expected to be increased for a short while as management focuses on paying down debt.

Here’s a quick look at why there’s still time to buy this high-yield utility stock.

A long and winding road

Dominion Energy was once a very different company, with assets ranging from energy production to pipelines to electricity and natural gas distribution. Over the past few decades, the company has been shedding assets to simplify its operations. The past few years have been particularly difficult for investors, as the sale of the pipeline business to Berkshire-Hathaway which would lead to a dividend cut.

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But that wasn’t the worst part. After the dividend cut, management said it was ready to grow the business again, including the dividend. That didn’t last long, however, as there was only one dividend increase before another major restructuring of the company was announced. This time, however, management didn’t surprise investors with an asset sale – it just told investors it was reviewing the business.

After leaving shareholders in suspense for about a year, the company began divesting assets, the largest of which was the sale of three regulated natural gas utilities to Canadian midstream giant EnbridgeThe proceeds from the sale will be used to repay debts and invest in the company.

At this point, Dominion has been reduced to a regulated electric utility. But that should be a good thing for investors, as it’s a major reason why the stock is up about 15% over the past year. Still, the yield remains relatively high at 4.7%. For comparison, the average utility yields 3%. SPDR ETF for selected utilities as a proxy.

D-Data from YCharts

What’s next for Dominion?

As the chart shows, Dominion has lagged far behind the average utility. And as far as it goes, the stock’s recent gains are about in line with the industry as a whole. All in all, then, there’s a gap to close, and that suggests there’s still time for income investors to buy this high-yielding utility. If management is correct in its assessment of the future, it’s likely shares will continue to close the gap with peers.

For dividend investors, the first big step will be debt reduction. That is happening now, with the last of the three sales to natural gas utilities expected to close in the third quarter.

After that, management wants to focus on earnings. They assume that they can achieve average earnings growth of 5 to 7 percent per year until at least 2029. That would be a fairly respectable result in the utility sector.

The company’s five-year capital expenditure plan, which totals about $43 billion, will be the engine of growth. Dominion has fairly good relationships with regulators, is investing in a large offshore wind project, and has significant demand in the regions it serves, including data centers.

Earnings growth, in turn, will lower Dominion Energy’s dividend payout ratio, which is currently high relative to peers. Once the payout ratio is back in line with peers, dividend growth is expected to resume at a pace roughly in line with earnings growth, between 5% and 7% per year. That would be a very attractive dividend growth rate for a utility company.

Anticipate the best news

A return to dividend growth will be the final step in Dominion’s restructuring, after which the stock will likely command a higher price multiple on Wall Street. Despite the recent price increase, investors who buy now have the chance of an above-average return and the potential for further share price gains as the company continues to move forward with its restructuring plan.