Tuesday, January 9, 2018

Recent Buy, January 2018

Resting Easy Gremlin here to talk about a stock purchase I made.  The new year seems to be off to anything, but a slow start.  Markets are climbing higher, people won't stop talking about how they have all broken their resolutions already, people are returning the gifts the don't want or know how to use, work has resumed, and the cold has parked its butt right on my front lawn.  So many things to ponder, do, and forget about.  For myself the year has started off with a bang, with a mini promotion, some extra cash from work, and of course a meeting to talk about it all (insert sense of dread even if you know they like you).  So lets forget about all of those things and focus on what really matters, such as what I bought in pursuit of financial independence.

Today, I added a new position by purchasing shares of Dominion Energy (D) in my taxable account.  I bought 14 shares, with a total cost of $1,087.32 ($77.17 / share, plus commission).  The current yield is 3.97%.  The P/E ratio for D sits today at approximately 22.85, trailing.  These are above the historical 5 year average for the stock with the average yield being 3.65%, and significantly better than average P/E being 40.32.  D has a trailing payout ratio of approximately 87%.  D has 15 years of dividend growth and is a member of the Dividend Contenders.  This purchase will add $43.12 to my 12-month forward income.

D is my first utility stock.  It's metrics have become a lot sweeter of late, due to decreased belief in its value as it plans to take over Scana (SCG), a South Carolina utility.  This deal could be huge in terms of future gains, but also will come with short term headaches.  As a long term investor I am comfortable with this.  In addition, D sports a higher than usual payout ratio for me, however they are a utility and that is common within that space.  Being a mainly electric (but also gas) utility it is fairly understood what they do, however I will let them explain in detail:

"Based in Richmond, Virginia, Dominion Energy is an integrated energy company with approximately 25,000 megawatts of electric generation capacity; 15,000 miles of natural gas transmission, storage, distribution and gathering pipelines; and more than 63,000 miles of electric transmission and distribution lines. Dominion operates one of the nation's largest natural gas storage systems, is nearing completion of an LNG export facility in Maryland, and is 48% owner of the proposed Atlantic Coast Pipeline."

I am now both a shareholder and customer of D.  They have proven very good as my electric provider.  The area I live in, Northern Virginia, has been growing at an astounding rate over the past two decades.  Growth here and in the other major areas serviced by D currently has been very good and consistent.  So it is not a stretch to say that their growth will continue.  If the acquisition of SCG goes through, then it is just icing on the cake.

I will update my portfolio page at the end of the month.

What do you think of D? 

- Gremlin
- Long D

4 comments:

  1. Love the purchase! This stock is on my watch list. I ended up buying a few others first, but if this stock stays depressed a little longer I will certainly be picking it up.

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    1. MH,

      Thanks for the comment! There are several good purchases out there, keep on eating that money.

      Om nom nom.
      - Gremlin

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  2. Hello, Dividend Gremlin... my first time stopping by. If all goes according to plan, I'll end up being an owner of D by year's end, as I'm currently an owner of SCANA (SCG). I was happy with the buyout news, as it ended a great deal of the uncertainty surrounding SCG. SCG was the top laggard in my portfolio in 2017, as you might imagine. I'm not a big utility stock owner either, as SCG is my only one.

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    Replies
    1. ED,

      Thanks for stopping by! I really like the long term outlook of SCG transaction as a D shareholder. There might be some short term growing pains, but nothing that will hurt us. I am not big on the Utility sector, this is my first and only position there. I would like to add a few more, especially in the water group - however utilities are a low priority sector.

      - Gremlin

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