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Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 11:08 am
by bedraggled
My father distributed Dominion Resources to his three kids and said "don't sell it unless the proceeds were to pay for grandchildren college tuition."

I received the stock April 15, 1997 and sold on December 27, 2013. The checks to the colleges cleared shortly after.

It seems the start price was approx. 10 and the sale price 55.

Question: since my skills have rusted, what is my nominal annual return for these 16 plus years? If anyone is interested, since dividends were reinvested, what is that return with the reinvested dividends.

I may put "D" in a Variable Portfolio. It treated me well.

Thank you.

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 12:22 pm
by eufo
If I'm understanding what you're looking for... and if my math isn't too rusty...

55 / 10 = 5.5 = 550%

The 16.5 (roughly) root of 5.5 = ~1.109

Annual Return of ~10.9%

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 2:20 pm
by dualstow
11.24% annualized over the sixteen years.
10.88% if 16 1/2 years. // matches eufo’s answer
10.77% for 16 yrs, 8 mos.

Not sure about the dividends.

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 2:56 pm
by TennPaGa
More generally:

Image

t2 and t1 are expressed in units of years.

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 3:02 pm
by eufo
Not sure why I was approximating at 6 months instead of 8... 12-4=6? Lol! Would you believe I didn't miss a question in the Math portion of the ACT? Now look at me... shameful! :P

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 3:14 pm
by bedraggled
Eufo,
You feel shamed? I posted the question!

So, does it seem "D" is fit for a VP?

I started reading HB's books in 1980. My father never heard of HB. Yet Dad had a "set and forget" attitude without knowing about 35/15 bands. Gracious, returns of 10% and more and I never thought about the stuff.

Tenn,
I was thinking of those formulas. Thanks. I need to reacquaint.

BTW, folks, thanks for the responses, so far.

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 3:49 pm
by dualstow
bedraggled wrote:
So, does it seem "D" is fit for a VP?

I mean, a single stock is always a gamble.
“Don’t fall in love with a stock”, “Past performance is no indicator...”
and all that.

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 6:45 pm
by Pet Hog
Considering reinvested dividends, according to Yahoo Finance the adjusted close for D was $7.08 on April 15, 1997 (actual close was $17.25). On December 27, 2013 the adjusted close was $56.13. That's a 7.93-fold gain over 16 years, 8 months, 12 days (16.70 years). Comes to 13.2% annualized.



In case anyone is interested, I think the simplest way to do these sorts of problems is with logarithms. From TennPaGa's formula:

TotalReturn = (1 + AnnualReturn/100)^YearsElapsed

Take the log of both sides [natural log in this case, recall that ln(a^b) = (b)ln(a)]:

ln(TR) = YE ln(1 + AR/100)

Divide both sides by YearsElapsed (YE):

ln(TR)/YE = ln(1 + AR/100)

Now raise e to the power of both sides:

e^[ln(TR)/YE] = e^[ln(1 + AR/100)]

The right-hand side simplifies (e and ln cancel out):

e^[ln(TR)/YE] = 1 + AR/100

Now the right-hand side would be something like 1.15 for a 15% annual return. Looks complicated, but it's just three steps on the calculator. In this case, we know the total return is 7.93. Take the log: ln(7.93) is 2.07. Divide by years elapsed (16.7), gives 0.124. Raise e to that power (use "e^x" button): e^0.124 equals 1.132. So the annual return is 13.2%.

(You can use "log10" and "10^x" instead to get the same answer.)

Re: Dominion Resources "D", utility stock.

Posted: Sat Oct 28, 2017 7:17 pm
by bedraggled
Pet Hug,

Thanks for the great post.

I would think "D" would be a nice addition to a VP: 100 shares and be sure to add other "buy and forget" stocks.

The responses are greatly appreciated.

Re: Dominion Resources "D", utility stock.

Posted: Sun Oct 29, 2017 6:43 am
by ochotona
Congratulations on decades of success!

Re: Dominion Resources "D", utility stock.

Posted: Sun Oct 29, 2017 8:43 am
by bedraggled
The real hoot?

During the crash in 2008-2009, I did not think about "D" as Dad said "don't touch" and "forget you have it." Life was pleasant- except for some of the descending beauties I picked on my own.

Gee Whiz, 11%+!!!

Dad also distributed some ED, NI and DUK. Life was peaceful and, alas, the colleges got it all.

Re: Dominion Resources "D", utility stock.

Posted: Tue Nov 28, 2017 7:05 pm
by bedraggled
Do electric utilities have a future?

As this thread explored "D," we Iearned the return from 1997 to 2013 was excellent.

I read a short piece that big utilities may go the way of the dinosaurs with home solar becoming available. Also, wind.

How much longer can regulation save "big electric" from new technology, if regulation does play a role?

So, are electric utilities worthy of a place in a VP? Is a position in "D" one that has a chance?

BTW, Kramer in Mad Money loves "D" but he got burned 8-9 years ago.

Thanks.