North American energy firm,
Williams Companies Inc.
) has hiked its third-quarter common stock dividend to 56 cents as
per its plan which was announced on Jun 15, 2014. The new dividend,
which represents a year-over-year increase of 53% and a sequential
hike of 32%, will be paid on Sep 29, 2014 to shareholders of record
as of Sep 12. Based on the closing price of $58.32 as of Aug 21,
2014, the expected annual dividend of $2.24 affirms a yield of
Williams Companies has been able to increase its third-quarter
dividend as it concluded the acquisition of the remaining 50%
general partner (GP) interest and 55.1 million limited partner (LP)
units in Access Midstream Partners LP (
) on Jul 1, 2014 - thereby gaining full GP ownership and 50% LP
interest in the Oklahoma City-based partnership. Williams has
significantly strengthen its midstream assets after the
acquisition, as Access Midstream holds a strong portfolio of
natural gas pipelines and gathering assets in the Marcellus,
Barnett, Utica, Haynesville, Eagle Ford, Mid-continent and Niobrara
shale regions (read our blog:
Williams Companies Buys Access Midstream, to Merge
Moreover, Williams Companies retained its previous dividend
projection of $1.96 and $2.46 for 2014 and 2015, respectively. For
2015 through 2017, the company plans a 15% dividend hike, as
Tulsa, OK-based Williams Companies is a premier energy
infrastructure provider in North America. The company's core
operations include finding, producing, gathering, processing, and
transportation of natural gas. We believe that the company's
midstream assets are less sensitive to commodity prices and help to
maintain a steady stream of revenue and cash flow even if
stay at low levels.
However, we remain concerned about Williams Companies' high debt
levels, which leave it vulnerable to an extended drop in commodity
prices. As of Jun 30, 2014, Williams Companies had long-term debt
of $15.5 billion, representing a debt-to-capitalization ratio of
As a result, the company 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.
Meanwhile, one can consider better-ranked players in the oil and
gas sector like Cameron International Corporation (
) and VOC Energy Trust (
). Both stocks sport a Zacks Rank #1 (Strong Buy).
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