America's push for energy
has been good news for income investors.
As the U.S. strives to become energy independent by 2020,
demand for strong domestic oil and gas production has never been
greater. Simultaneously, new technologies such as fracking and
horizontal drilling have enabled exploration and production
companies to access hard-to-get shale oil and natural gas that
was previously inaccessible.
The combination of new technologies and increased demand has
made U.S. energy companies more flush with cash than ever before.
As a result, energy stocks and master limited partnerships (MLPs)
are ramping up dividends at a rapid clip.
Three energy MLPs in particular have stood out in recent
Williams Partners (
whose network of pipelines holds 14% of all natural gas consumed
in the U.S., has already upped its dividend four times in the
last year. In fact, the company's payout has increased every
quarter since May 2010. The regular dividend increases have
pushed Williams Partners' yield up to a very attractive 6.6%.
MarkWest Energy Partners (
Access Midstream Partners (
are other strong dividend growers in the energy sector. Both MLPs
boast yields above 4%. And like Williams Partners, each of those
limited partnerships has been upping its dividend on a quarterly
MarkWest Energy, a leading provider of midstream services in
the natural gas industry, has increased its dividend every
quarter since February 2011. During that time, the dividend has
Access Midstream Partners, a natural gas producer with gas
pipelines and processing facilities in 12 states, has more than
doubled its dividend since February 2011.
MLPs in the natural gas sector appear particularly well
positioned to continue rewarding their shareholders. U.S. natural
gas production has increased 24% in the last decade, reaching
nearly 30 trillion cubic feet in 2012. Production of dry natural
gas - which is essentially methane - also hit a record high last
year at 24 trillion cubic feet.
The production ramp-up has pushed U.S. natural gas prices to a
17-year low on an inflation-adjusted basis. That makes it a far
cheaper, cleaner alternative to foreign oil. In fact, natural gas
is roughly one-quarter the cost of oil on a per-unit basis. And
while energy independence is the end goal, U.S. natural gas
production has grown so rapidly that it may soon begin exporting
to Europe and Japan.
After years of almost no natural gas exports, the U.S. Energy
Department recently approved two new natural gas export
facilities. U.S. natural gas companies currently derive almost
none of their revenues from overseas exports. Should more
facilities be approved, the increased exports would introduce a
whole new avenue through which U.S. natural gas producers can
grow their profits.
Even without more natural gas exporting facilities, U.S.
energy companies should benefit as America distances itself from
foreign oil. In June, the U.S. trade deficit - the difference
between exports and imports - hit its lowest level since October
2009 in large part because of declining oil imports.
Judging by those numbers, it seems like the U.S. may yet
achieve its energy independence goals.
If so, U.S. energy companies - natural gas producers and
otherwise - should continue to see a boost in their cash flow.
And that should mean further dividend growth from some of the
country's largest energy stocks and MLPs.
That's precisely what my colleagues Ian Wyatt and Tyler
Laundon will be talking about this Thursday in a live investing
U.S. Energy Alert: 3 Profit Plays for 2014 and
Ian and Tyler will be discussing America's push toward energy
independence - and how to profit from it.
Specifically, they'll reveal which U.S. oil fields are the
best profit opportunities. Plus, they'll give away two of their
top investment ideas. This live investing seminar that will take
place over the phone, and will include a Q&A session.
The free event will take place this
Thursday, October 3 at 2 p.m. eastern time.
Space is limited - so
to reserve your spot.