Spectra Energy Hikes Dividend - Analyst Blog


Premier natural gas company, Spectra Energy Corp. ( SE ) has declared a quarterly cash dividend on its common stock of 33.5 cents per share, or $1.34 per share on an annualized basis. The dividend is payable on Mar 10, 2014 to shareholders of record at the close of business on Feb 14, 2014.

Spectra Energy is one of North America's premier natural gas infrastructure plays and has strong business positions in growth markets. Based in Houston, Texas, the company's operations in the United States and Canada include more than 22,000 miles of natural gas, natural gas liquids, and crude oil pipelines, approximately 305 billion cubic feet (Bcf) of natural gas storage, as well as natural gas gathering and processing, and local distribution operations. The company also has a 50% ownership in DCP Midstream Partners, LP ( DPM ), the largest producer of natural gas liquids and the largest natural gas processor in the United States.

On Nov 1, 2013, the company completed the drop-down of its U.S. Storage and Transmission assets to its Master Limited Partnership (MLP) Spectra Energy Partners LP ( SEP ). The transaction transforms Spectra Energy Partners into one of the largest fee-based MLPs in North America with an enterprise value of almost $20 billion.

Spectra plans to invest about $25 billion over the next decade on fee-based gas infrastructure growth projects. The company also plans to allocate $25 billion in growth projects through the end of the decade.

Like most of its peers, the company faced several challenges from volatile commodity prices, which impacted its bottom line in the recent quarters. But with an improving price scenario, Spectra is enjoying growth momentum. The company has an upbeat 2014 outlook both on organic as well as inorganic growth.

Our outlook is based on the steady revenue stream provided by its predominately natural gas pipeline business. Additionally, our view also incorporates the benefits of SEP's recently expanded and diversified asset portfolio as a result of SE's drop-down of its remaining U.S. pipeline and storage assets not already in the MLP.

Spectra Energy 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 1 to 3 months.    

However, there are better-ranked stocks in the oil and gas sector like LRR Energy L.P. ( LRE ), which hold a Zacks Rank #1 (Strong Buy) and are expected to outperform the market.

DCP MIDSTREAM (DPM): Free Stock Analysis Report

LRR ENERGY LP (LRE): Free Stock Analysis Report

SPECTRA ENERGY (SE): Free Stock Analysis Report

SPECTRA EGY PTR (SEP): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DPM , LRE , MLP , SE , SEP



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