Duke Energy (DUK): $6B Brookfield Pact and an $87B Capex Sprint Reshape the Balance Sheet

Brookfield’s $6.0B investment and a $2.48B Spire sale are the headline shifts#

Duke Energy's most consequential move this summer is a $6.0 billion minority equity investment by Brookfield into Duke Energy Florida and the parallel sale of its Tennessee Piedmont natural gas business to Spire for $2.48 billion — transactions management says will fund an expanded five‑year capital program sized at $87 billion and materially tighten holding‑company leverage. The Brookfield agreement, announced in August 2025, transfers a 19.7% indirect stake in Duke Energy Florida to Brookfield while leaving Duke as operator and majority owner, and the Spire transaction is a cash sale that isolates a non‑core gas distribution footprint and injects immediate liquidity into the holding company balance sheet Duke Energy press release - Brookfield investment and capex expansion PR Newswire - Spire acquisition.

Those discrete monetizations are the engine behind the strategic narrative: monetize selective assets at valuation premiums, preserve operating control of regulated franchises, and redeploy proceeds into accelerated grid modernization and growth markets. Taken together, the transactions supply near‑term funding while leaving Duke positioned to capture the long‑run rate‑base upside that the company argues will deliver sustainable earnings accretion.

The market reaction has been mixed and muted relative to the headline size: Duke's latest snapshot shows a share price near $122.63 (latest intraday quote in the dataset), reflecting investor focus on execution and cash flow implications even as the strategic direction becomes clearer. The rest of this report connects those strategic moves to Duke’s financial profile — recalculating leverage, cash flow, and the returns hurdle for the expanded capex plan — and sets out the principal upside drivers and execution risks.

Where the money sits today: recalculating leverage and cash generation#

Duke's consolidated FY2024 results show $30.36 billion of revenue and $4.51 billion of net income (reported for the year ended 2024), with consolidated EBITDA of $15.0 billion per the company filings for FY2024 (filed Feb. 27, 2025) Duke Energy FY2024 filings / investor materials. On the balance sheet, total debt is $85.23 billion and net debt is $84.92 billion at year‑end 2024; total stockholders’ equity stood at $50.13 billion.

Using those line items, our independent calculations produce the following core leverage and cash‑flow ratios. Net debt to EBITDA: 84.92 / 15.00 = 5.66x. Debt to equity: 85.23 / 50.13 = 1.70x (or 170.12%). Enterprise value (EV) calculated as market capitalization ($95.36B) plus net debt ($84.92B) gives an EV of $180.28B, which implies an EV/EBITDA multiple of 12.02x (180.28 / 15.00). The dataset includes a published EV/EBITDA of 11.73x; that lower figure is materially close but not identical to our calculation — the difference likely stems from timing or alternative EBITDA definitions, and we flag the discrepancy here while using the market‑cap/net‑debt method for transparency.

Free cash flow is the binding constraint. FY2024 free cash flow was $48 million, versus a negative -$2.73 billion in FY2023; capital expenditure in 2024 totaled -$12.28 billion, up from prior years. That scale of capex — roughly 40.46% of FY2024 revenue (12.28 / 30.36) — drives rate‑base growth but also suppresses near‑term free cash generation, which in turn is the rationale for monetizations such as the Brookfield and Spire transactions [Duke Energy cash flow statements (FY2024)].

Financial tables: income statement and balance sheet trends#

The two tables below summarize the company’s last four full fiscal years using the company‑reported numbers and our independent calculations for key ratios.

These tables show two persistent trends: steadily rising regulatory asset bases and debt levels that have increased in absolute terms but only modestly as a share of the balance sheet. Importantly, the jump in capex and related investments is consistent with management’s expanded five‑year plan; absent monetizations, that investment pace would have continued to constrain free cash flow and elevate net leverage.

Capital allocation: monetizations, dividend policy and the balancing act#

Duke's dividend remains a central lever. The company paid $5.245 per share in dividends on a TTM basis (dividend per share TTM) with a dividend yield near 4.28% based on the most recent prices in the dataset. The payout ratio on reported metrics stands above 80% (payout ratio 82.75% in the dataset), meaning the dividend is large relative to operating earnings and free cash flow generation absent monetizations or other financing actions.

That dynamic explains management’s capital‑allocation choreography: the Brookfield minority sale provides immediate equity‑style capital without full divestiture, lowering holding‑company leverage and funding near‑term capital needs while preserving long‑run regulated earnings upside. Similarly, selling the Tennessee Piedmont gas business to Spire converts a non‑core asset into cash, with management indicating portions of proceeds will be used to reduce Piedmont‑specific debt and support capex. The company has explicitly linked these actions to a target improvement in FFO/Debt — a move management says should lift long‑term FFO/Debt by roughly 100 basis points toward a ~15% target Duke Energy press release - Brookfield investment and capex expansion.

Our recalculation of leverage after the announced monetizations is illustrative. Pro forma for the reported $6.0B Brookfield proceeds and the $2.48B Spire cash sale (assuming those proceeds reduce net debt), net debt would fall by roughly $8.48B to about $76.44B (84.92 - 8.48), all else equal. Using the same FY2024 EBITDA of 15.0B, pro‑forma net debt/EBITDA would fall to 5.10x (76.44 / 15.00). That is a meaningful improvement in headline leverage and moves the company closer to the mid‑5x to 4x leverage bands investors expect for investment‑grade regulated utilities — but still above many peers that trade at lower leverage ratios. These back‑of‑envelope calculations assume the proceeds are applied to debt and capex as management indicated and ignore transaction costs or alternative uses.

Strategic transformation: the $87B capex plan and the Carolinas merger#

Duke’s expanded five‑year capex plan at $87 billion is the central plank of management’s growth case. The plan reallocates capital toward grid modernization, resilience, and capacity additions concentrated in growth markets such as Florida and the Carolinas. Duke’s strategy blends internally generated cash, selective monetizations and minority investments to fund this buildout, while expecting regulatory mechanisms to translate capital in service into rate‑base recovery and earnings accretion.

An adjacent structural change is the proposed combination of Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP). Management projects more than $1.0 billion in cumulative customer savings through 2038 from that consolidation, driven by avoided duplicative investments and operational scale. The merger is intended to accelerate unified resource planning and reduce cost per customer, but it requires multi‑jurisdictional regulatory approvals (North Carolina and South Carolina commissions, and potentially FERC). The timing management cites targets a consolidated utility operational by January 1, 2027, contingent on approvals Duke Energy release - projected savings from combining DEC and DEP.

Quantifying returns on the capex plan requires two things to hold: (1) projects are included in rate base with timely recovery and (2) execution stays within cost and schedule expectations. Regulated returns tend to be predictable once projects reach in‑service status, but upfront execution risk and prudency reviews by regulators create timing and earnings volatility. The Brookfield minority equity sale is explicitly structured to preserve Duke's long‑term rate‑base upside in Florida while importing third‑party capital to share near‑term funding risk.

Earnings quality: cash flow vs reported income#

Duke’s reported net income improved year‑over‑year (FY2024 net income $4.51B vs FY2023 $4.30B), and operating margins have strengthened (operating income margin rose to 26.11% in 2024 from 24.33% in 2023). However, the key constraint for earnings quality is the conversion of those accounting earnings into free cash flow after heavy capex. FY2024 free cash flow of $48M versus operating cash flow of $12.33B highlights that depreciation and regulatory accounting flows boost operating cash while capex timing depresses free cash flow generation.

Investors should treat reported net income and operating cash flow as complementary but distinct signals: the regulated business generates stable operating cash, but sustained capital intensity means the company will rely on external financing or monetizations to preserve flexibility and dividends during the build phase. The recent monetizations materially reduce that reliance in the near term, but the sustainability of free cash flow once the $87B plan is fully underway depends on project pacing, rate recovery, and interest‑rate trends.

Risks: regulatory timing, execution, and interest rates#

The largest single risk is regulatory: the Brookfield transaction, the Spire sale, and the DEC/DEP merger each require multiple approvals. Regulators can impose conditions, extend timelines, or require mitigation measures that erode projected savings. Execution risk on an $87B capex program is non‑trivial — supply chain, labor, permitting and escalating construction costs can compress returns.

Interest rates and the broader financing environment are also critical. Even if Duke reduces holding‑company leverage through monetizations, the cost of new debt used to finance the buildout or to refinance existing maturities will shape net interest expense and FFO coverage. A sustained period of higher rates would increase financing costs and could require recalibration of project pacing or capital structure levers.

Finally, demand variability — for example, a slowdown in data center growth or electrification trends — would reduce incremental load that justifies portions of the capex plan. Duke’s plan relies in part on secular tailwinds in its growth markets; those tailwinds have been strong but are not guaranteed.

What this means for investors#

Duke has chosen a path that tries to thread a narrow needle: preserve long‑term regulated earnings upside while repairing the holding‑company balance sheet through partial monetizations and minority investments. The Brookfield and Spire transactions materially improve short‑term liquidity and will lower headline leverage pro‑forma by an estimated ~0.56x of EBITDA on our back‑of‑envelope math (from 5.66x to roughly 5.10x, assuming the 15.0B EBITDA base and full application of proceeds to debt). That improvement increases financial flexibility and reduces the immediate pressure on free cash flow to fund both dividends and capex.

However, the strategic outcome hinges on execution and regulatory success. If regulators approve the DEC/DEP combination and agree to timely rate recovery for the expanded capex program, the company can convert a large portion of the $87B into rate base and predictable earnings over time — consistent with management’s stated 5–7% EPS growth objective through 2029. Conversely, regulatory delays or adverse conditions, slower project execution, or sustained high interest rates would compress returns and lengthen the timeline for balance‑sheet repair.

For income‑focused stakeholders, the dividend is supported today by a stable regulated cash flow profile and the near‑term monetizations, but the payout remains a high share of reported earnings and cash flow absent continued monetizations or a sustained step‑up in free cash flow from in‑service projects. The company’s explicit plan to target a higher FFO/Debt ratio is a constructive indicator of management prioritizing credit metrics alongside growth.

Conclusion: strategic clarity, execution now decides the payoff#

Duke Energy has pivoted from a pure internal‑funding capex program to a hybrid financing model that blends minority equity, selective asset sales, and rate‑base growth to fund an expanded $87 billion five‑year investment program. The $6.0B Brookfield investment and the $2.48B Spire sale materially improve the company’s near‑term financing profile and preserve operational control of core regulated assets while buying down holding‑company leverage. Our independent calculations show pro‑forma leverage improvements (net debt/EBITDA moving from 5.66x to roughly 5.10x under simple assumptions) and an EV/EBITDA of 12.02x using the company’s reported market cap and net debt.

The strategic narrative is coherent: monetize non‑core or partial stakes at favorable valuations, accelerate regulated capex in growth markets, and use regulatory recovery to translate capex into earnings. The investment payoff, however, is conditional. Regulatory approvals, timely project execution, and the interest‑rate environment remain the deciding variables. Duke’s recent transactions reduce immediate financing strain and provide breathing room for execution; the value compounder going forward will be how quickly in‑service capex converts into regulated earnings and free cash flow.

Every major financial pivot now ties back to execution: regulators must accept the prudence and timing, Duke must manage the construction and operational risks of a large grid modernization program, and capital markets must supply reasonably priced financing for the remaining build. If those conditions hold, the company’s five‑year plan can generate durable rate base growth and incrementally higher earnings. If they do not, leverage and cash conversion remain the primary watch items.

What remains clear is that the Brookfield and Spire transactions change the geometry of the plan — they do not eliminate the execution challenge. Investors and stakeholders should track regulatory milestones, capex pacing and monthly/quarterly free cash flow development as the next key indicators of whether the strategic intent converts to the financial outcomes management projects.

Key takeaways: Duke’s strategic pivot increases near‑term financial flexibility through monetizations (Brookfield $6.0B; Spire $2.48B) and funds an $87B five‑year capex program. Pro‑forma leverage improves materially but remains elevated versus lower‑leveraged utility peers. The critical path from here is regulatory approvals and execution on the capex program — those factors will determine whether the company realizes the targeted EPS and dividend outcomes.