And… yet another company might leave Delaware behind.
On April 24, Delaware Online showed how financial technology company Affirm Holdings (AFRM) “is reportedly contemplating reincorporating its business” elsewhere. That would make it the latest – though not the greatest – multibillion-dollar enterprise to sour on the state.
AMC Networks, Madison Square Garden Entertainment and, of course, Tesla, have all enacted their own moves. “Other companies like DropBox and Roblox also are in the process of reincorporating.” And Walmart and Meta have mentioned mulling the idea as well.
The article’s author seems to think this dissent is ultimately no big deal – that Delaware’s appeal of “judicial expertise in business dealings and corporate-friendly tax code” remains intact. But I have to disagree.
When a state judge invalidated Tesla CEO Elon Musk’s shareholder-approved $56 billion pay package last year, it made international news. And not just because Musk made a major fuss about it.
Whatever you think of that ruling, just know that it overrode an agreement between Musk and the Tesla board which included specific milestones (which were hit) for the pay package to be awarded.
Deal’s a deal… until it wasn’t.
I could even argue the ruling was lawfare – a way to “get back” at Musk after he acquired Twitter, to the dismay of many.
Whatever the reason, scores of businesses that incorporate in Delaware – including more than 60% of the Fortune 500 – got the message: They’re not really in charge of their own operations.
That alone is an enormous reason to find greener pastures. So I understand why Affirm would consider Nevada or Texas as its new corporate home.
However, there’s another state well worth considering in this regard. And that’s my home state of South Carolina.
It’s already an investment dream and, the way I see it, it’s only going to get better from here.
It’s Easy to Sell South Carolina
The larger U.S. economy may have contracted 0.3% last quarter. But here in my home state, business is booming.
Our state senate just passed a bill for a new power plant to meet our growing energy needs from the influx of new residents and burgeoning businesses. And our governor just declared May 4 through 10 to be South Carolina Travel and Tourism Week 2025 in recognition of that rising industry as well.
There’s economic optimism almost everywhere I look in South Carolina, and I understand why. It’s a great place to be.
As Business Facilities pointed out in its March/April 2025 issue, “Being in the middle of the eastern seaboard on the coast of the Atlantic Ocean, South Carolina is a prime location to develop and distribute products around the U.S. and globally.”
But that’s just part of its appeal. Equally as important is the state’s lower cost of living, complete with competitive construction, production, and utilities costs.
South Carolina is also covered with worthwhile colleges and universities that provide plenty of workforce recruitment opportunities. Plus, as a right-to-work state, we don’t have overwhelming union issues.
For the record, I respect the purpose of unions. However, we all know examples that they don’t actually seek to improve employees’ lives. They’re out to enrich themselves and their backers – who are often politicians.
That’s not an issue South Carolina suffers under overall. Which, once again, helps keep costs down for businesses and residents alike.
That’s why so many businesses have been establishing themselves, moving themselves, or building large bases here over the last five years. One recent example is NorthMark Strategies, which just chose my hometown of Spartanburg for a $2.8 billion state-of-the-art, high-performance computing center for engineering and tech support.
Whether they’re relocating from Delaware or somewhere else, I expect far more companies to choose South Carolina from here.
Duke Energy on Display
As companies continue to make South Carolina their home, individuals will too. They already are, which is why the U-Haul Growth Index marked it as last year’s No. 1 growth state.
To quote HereHiltonHead.com (a division of the HereCity.com network):
According to the 2024 World Population Report, South Carolina is experiencing a growth rate of 1.06%. And it doesn’t stop there; projections indicate that by 2042, the state could welcome around 1 million more residents, bringing the total population to about 6.4 million. Just imagine the vibrancy of a state full of fresh faces!
Of course, those fresh faces – and all the rising number of businesses that employ them – will need a rising amount of power to fuel their daily needs. That’s why I’m very bullish on Duke Energy (DUK).
Duke Energy, which provides regulated electric and gas utilities, and renewable energy assets, is actually a North Carolina-based company. But it has a significant presence in my state, as well as in Florida, Indiana, Ohio, and Kentucky.
With over 8.4 million customers, it’s one of the largest utilities in the nation. And it knows it’s going to get even larger still, particularly after next year. That’s why Duke’s been busy making significant upgrades to its grid modernization, renewables, and overall infrastructure reliability.
It’s also well-placed financially, with a robust capital allocation plan that includes around 12% from its last five-year blueprint. All told, Duke Energy boasts an $83 billion capital budget – which should grow further as the company expects 7% earnings growth going forward.
I also like its 3.4% dividend yield and long-term earnings-per-share growth of 5%. Based on all these factors, I think we’re looking at 10% risk-adjusted total shareholder return from here.
Wide Moat Research has owned shares of Duke Energy in our core portfolio since July 20, 2023… where it has beaten the S&P 500 by approximately 10%.
I expect to see even more outperformance, especially with South Carolina-style growth fueling it for years to come.
Regards,
Brad Thomas
Editor, Wide Moat Daily
PS: If you’re interested in adding utilities to your portfolio in general, you need to check out today’s Wide Moat Show on YouTube. Nick and I discuss a total of 10 sleep-well-at-night stocks there – including one of Duke Energy’s peers with an excellent track record of safety and success.
MAILBAG
Do you agree with Brad that South Carolina is an investment dream? Write us at feedback@widemoatresearch.com.