Recent Buy – D

Hi Readers,

A Happy New Year! We are already in 2016 in Japan and I made the first purchase in 2016 (technically speaking the order was processed on December 31 in the US).

I initiated my position in Dominion Resources (D) with 30 shares @ $67.70. My entry YOC is 4.14% adding $84 to my annual dividend income in 2016.

Corporate Profile
From Yahoo! Finance

Dominion Resources, Inc. is a privately owned investment manager. Dominion Resources, Inc. produces and transports energy in the United States. The company operates through three segments: Dominion Virginia Power (DVP), Dominion Generation, and Dominion Energy

Why I bought
(1) Consistency: The company is a dividend contender having raised dividends for 13 consecutive years, with a 5-year dividend CAGR of 7.3%. This is a very good dividend growth rate among the utilities. Assuming Dominion Resources does earn $3.85 a share for 2016,the forward payout ratio will be still 73%.

(2) Pricing: During the past 13 years, the highest Trailing Annual Dividend Yield of Dominion Resources Inc was 5.77%. The lowest was 2.99%. And the median was 3.68%. Therefore over 4% yield at this point is attractive.

(3) Competitive advantages : A combined gas-and-electric utility business has been identified in the industry as the path to growth going forward. Dominion owning its own natural gas infrastructure, has a competitive advantage in this sense over its competitors, and while they play catch up, Dominion is investing to incrementally upgrade and better the infrastructure totaling upto $19.2B between 2015 and 2020. Going forward this should bode well for the earnings growth.

Disclosure: Long D



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