Williams Companies Hikes Payout

Tulsa, Oklahoma-based Williams Companies, Inc. (WMB - Analyst Report) recently increased its quarterly common stock dividend by 4% to 32.5 cents ($1.30 per share annualized). The new dividend will be paid on December 24, 2012 to shareholders of record as of December 7.

The strength of William’s business model reflects the company’s commitment toward returning value to shareholders with its strong cash generation capabilities. Prior to this revision, the company had increased its quarterly dividend by 1.25 cents per share in July 2012.

Williams has already paid common stock dividends amounting to $538.0 million to shareholders up to third quarter of 2012.

The latest dividend hike not only highlights the company’s commitment to create value for shareholders but also underlines Williams’ new policy – a continued 20% annual dividend growth over the next few years.

We believe that the increase in dividend will boost investor confidence in the stock, thereby driving share value.

Williams Companies, Inc. is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas. Boasting a widespread pipeline system, Williams is one of the largest domestic transporters of natural gas by volume.

Williams divides its business into three segments: Williams Partners that includes the company’s 72% owned master limited partnership Williams Partners L.P. (WPZ - Snapshot Report), Midstream Canada & Olefins, and Other.

Overall, we believe the company will be able to generate meaningful earnings and dividend growth in the coming years.

Shares of William Companies currently carry a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.