|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Growth Spotlight: Dominion Resources
Posted by: Roger Conrad (IP Logged)
Date: April 18, 2012 05:03PM
Dominion Resources (D) has been a big winner since I added it to the Portfolio in April 1989, the very first issue of my advisory service, Utility Forecaster. And the best is yet to come, thanks to its unique position in North America’s shale gas bonanza.
Dominion’s 7,800-mile gas pipeline and storage network connects six states in the heart of the Marcellus and Utica shale formations, now home to the continent’s cheapest gas. It also owns 5,400 miles of gathering pipeline, the largest natural gas liquids extraction-fractionation operation in the Eastern US and Dominion Cove Point LNG, which is close to making good on its export potential.
Profits from this growing group of assets are assured by long-term contracts that don’t depend on gas and oil prices. Meanwhile, Dominion is adding gas-fired power plants to its Virginia electric utility rate base, including a 1,300-megawatt combined-cycle facility announced in late February.
The plant will help Dominion meet robust local demand growth. It also reduces potential environmental liabilities, as cleaner gas will replace coal as feedstock.
And thanks to proximity to Marcellus and ownership of gas infrastructure, Dominion should be able to control its future fuel costs, even when gas prices inevitably recover.
Dominion’s five-year annualized dividend growth rate is a robust 7.6 percent. Meeting management’s 5 percent to 6 percent growth target over the next five years looks assured thanks to numerous opportunities to invest and strong regulatory support.
Even the merchant power unit, a drag on recent years’ results, appears to have stabilized.
Dividend growth of 5% to 6% plus a 4% to 4.5% current yield add up to 10% annual returns in this high-percentage business. Check out my free report, 5 High-Dividend Stocks That the Prudent Dividend Investor Must Own, for more great dividend picks.
Stocks Discussed: D,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.