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Analyst Blog

North American energy firm, Williams Companies Inc. (WMB - Analyst Report) recently increased its quarterly common stock dividend by 4% to 35.25 cents. The new dividend will be paid on Jun 24, 2012 to shareholders of record as of Jun 7.

The dividend hike reflects continued strong performance by Williams, backed by solid operating results, good investments and a diligent execution of its strategic plan. Based on the closing price of $50.83 as on May 16, 2013, the expected annual dividend of $1.44 affirms a yield of 2.8%. A steady dividend payout facilitates the long-term strategy of the company to provide attractive risk-adjusted returns to its stockholders.

We believe that the company will be able to generate sufficient cash flows for its shareholders in the coming years, which will likely be backed by strong operating performances and good management decisions. Prior to this revision, in Jan, Williams increased its quarterly dividend by 4.2%.

Williams has been regularly paying a quarterly cash dividend since 1974. 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.

The company currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Williams 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.

However, Williams reported weak first-quarter 2013 results, hamstrung by a significant fall in natural gas liquid (NGL) margins. Earnings per share – excluding special items – came in at 22 cents, below the Zacks Consensus Estimate of 24 cents and also down from the year-ago period adjusted profit of 39 cents.

Meanwhile, one can look at other energy production/pipeline entities like EQT Midstream Partners LP (EQM - Snapshot Report), SemGroup Corp. (SEMG - Snapshot Report) and Oiltanking Partners LP (OILT - Snapshot Report) as attractive investments. All these firms sport a Zacks Rank #1 (Strong Buy).
 

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