Another Example with Dividends Added, Dominion Resources (D)

In my last couple of posts I covered Apple as a trade subject. While that may smack of what the trading community calls "curve fitting", making the trade work according to the chart, I like to select a plan that would be flexible enough to work over any circumstance and do some quick analysis of the period preceding the trade period to see if my plan would have been executable and supported through the continuance. Basically, determine if the trades would have been taken based on my rules.

The Apple trades were based on the 50SMA crossing over the 200SMA and using that as a guide for the following trend. Not much curve fitting there, just straight trend trading. Recognizing the initial trend early may be key but acting on the information is even more critical as is sticking to the plan.

Here's another example of a very similar setup and follow through. I won't get into various methodologies of the trades but it is pretty obvious that using a similar trade plan as I outlined for AAPL would have worked here. $1,000 incremental buys based on a simple trend following strategy that sets up after the crossover.

Dominion Resources Inc. (D)

The short analysis result:

Adjusted Cost Base (ACB) = $38.86
Total invested  = $7887.90 (203 shares)
Current price = $53.08
Total value = $10,775.24
Capital gains (on paper) = $2,887.34 or 36.6%


While a little more sedate than the Apple run up it is still a pretty good return based solely on capital appreciation.

Then add the dividends and the results get a slight tweak of about 6.5% or $506.

Their next dividend should be $0.4925 and they have a full DRIP which leads me to the real topic of this post.

Assuming that I just send in a regular quarterly cheque for $1,000 and buy the stocks directly shortly before the ex-dividend date (the date that they count the shares as mine for dividend payment for that quarter) and assuming that the dividends are just re-invested.


Adjusted Cost Base (ACB) = $39.38 (slightly higher than the $38.86 above)
Total invested  = $10,000 (269 shares with re-investments, up from the previous  count of 203 shares)
Current price = $53.08
Total value = $14,313 (again, up from $10,775.24)
Total gains (on paper) = $4,313 or 43.1% (compared to $2,887.34 or 36.6%)
Current dividend payout = $121.72

Keep in mind that the current dividend payout that would be re-invested is up to $121.72 per quarter, a far cry from an income level payout but certainly a solid start for a two and a half year investment. I've done some extrapolations based on 30 year investments and smaller contributions with wildly fluctuating prices and the long term numbers, even if the stock tanks, are often very good due to the dividend creating a sort of residual income.

Jeff.