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Dividend growth investing, oil & gas, utilities
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Summary

  • Retirement investments require safety of principal, even during market collapses.
  • D has served me well during my retirement and provided extra funds for my children and grandchildren when times got tough.
  • D is a high-growth Dividend Contender with 11 years of increasing dividends.

I signed on with Virginia Electric & Power Company back in 1967, fresh out of Engineering School. It was a regulated utility, which provided electric power and distributed natural gas. This company became Dominion Resources (NYSE:D), and grew. During my career (closing in 2000 with retirement), I saw the natural gas portion of the company morph into one of the largest oil and natural gas exploration and production companies in the country, with an export terminal at Cove Point. It also operates one of the nation's largest natural gas storage systems. An excellent overview of the company is presented by Investing Insights: Dominion Well Positioned To Outperform. After this cold winter, it appears that energy has become a prominent global commodity, and there is a large differential in pricing between the United States and Europe. In fact, there is geopolitical action in Ukraine over the price of gas and source, especially Russia's pipeline through that country.

During my career, I raised a family and saved for retirement through the Dominion Resources thrift plan, which started as company stock purchases and company match, and morphed into a 401k plan by the time I retired. It was important for me to invest as much as possible each month into the company savings plan and company pension plan. The 401k allowed us to have other investments, including an S&P 500 Index mutual fund, in addition to Dominion stock. However, with the .com bust beginning as I retired, the S&P 500 (NYSEARCA:SPY) suffered a major pullback. Dominion had a much less pronounced drop, being a utility.

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I sold a few shares of Dominion during those rough days of early retirement (2000-2003), since both of my children had just married and needed all the help I could give them due to the economic downturn. As you can see from the chart above, the Great recession of 2008 also sank the S&P 500, but once again, Dominion held up rather well. I bet my retirement on D stock and Pension, and they came through for me twice! Now there is a speculative air about the stock based on global conditions, including climate change. I have always looked at Dominion as a dividend growth stock, and will present my analysis here:

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As you can see, Dominion has increased in price from $30 to the current level of $71.09. The forward P/E ratio is 18.98, while the price/book ratio is 3.54. The current yield is 3.38%, and it is a Dividend Contender with 11 years of increasing dividends.

StockDate of reinvestDiv Rate# SharesDividendDrip price# Shares purTotal ValueCurrent Yield
Totals 408.42$3,733.99 78.42
02/26/14$0.60404.94$242.96$69.763.48$28,491.603.44%
12/04/13$0.56401.42$226.00$64.133.52$25,968.823.51%
09/04/13$0.56397.53$223.81$57.623.88$23,129.603.91%
05/05/13$0.56393.47$221.52$54.564.06$21,689.344.13%
02/26/13$0.56389.50$219.29$55.283.97$21,751.124.07%
11/28/12$0.53385.48$203.15$50.434.03$19,642.734.18%
08/29/12$0.53381.67$201.52$52.973.80$20,418.693.99%
05/30/12$0.53377.83$199.49$51.863.85$19,793.514.07%
D02/29/12$0.53373.91$197.43$50.473.91$19,068.854.18%
11/30/11$0.49370.38$182.60$51.623.54$19,301.423.82%
08/24/11$0.49366.73$180.80$49.583.65$18,363.263.98%
05/25/11$0.49362.94$178.93$47.183.79$17,302.314.18%
03/02/11$0.49358.99$176.98$44.793.95$16,255.964.40%
11/24/10$0.46355.12$162.64$42.033.87$15,088.184.36%
08/25/10$0.46351.39$160.94$43.153.73$15,323.264.25%
05/26/10$0.46347.26$159.05$38.564.12$13,549.474.75%
02/24/10$0.46343.18$157.18$38.534.08$13,380.004.75%
11/25/09$0.44339.14$148.54$36.784.04$12,622.254.76%
08/26/09$0.44334.77$146.63$33.494.38$11,357.935.23%
05/27/09$0.44330.00$144.54$30.334.77$10,153.445.78%

As can be seen from the spreadsheet, an investment of $10,000 on 5/27/2009 with dividend reinvestment would have grown to $28,491 today. This is 23% annual growth.

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Is it overvalued? I continue to reinvest in it and note that the forward P/E is 18.98. With the run-up of 9.89% so far this year, I believe there is speculation about the proposed MLP spin-off and export of natural gas to Europe affecting the price. I have always dripped this stock through good times and bad, and only sold shares when my family needed the money.

Conclusion: Dominion Resources is a strong contender in the oil and gas business, with regulated electric and gas utilities on the side. This has been an extremely cold winter, and natural gas in storage has come down considerably from normal levels. There is global pressure for increased use of natural gas to limit climate change, as well as provide heat and energy for industry. This stock is a continuing buy for retirees, like myself.

Source: Dominion Resources: Will Natural Gas E&P Make This Stock A Winner For Retirees?