The Williams Companies, Inc. WMB recently raised its quarterly dividend by 50% but has reduced the quarterly dividend of its subsidiary Williams Partners LP WPZ by 30%. Also, the parent company announced its plans to increase its stake in the subsidiary to 72% and is likely to fund the purchase with equity.
Dividend Hike
Williams Companies will now pay a quarterly dividend of 30 cents per share as against 20 cents paid earlier, bringing the annual dividend yield to 3.6% from the prior level of 2.5%. Williams Partners, on the other hand, will now pay a quarterly dividend of 60 cents per share compared with 85 cents paid earlier, bringing the annual dividend yield to 7.5% from the prior level of 9.2%. The dividend is payable in Mar 2017 and Williams targets 10–15% annual growth over the next several years.
Share Issue Program
William Companies is planning to raise its stake in Williams Partners units to 72% from 60%. The company will be issuing 65 million shares of common stock to finance the purchase of some 289 million units of Williams Partners. The price of each unit of Williams Partners will be $36.09 and the entire transaction is estimated to be worth $11.4 billion.
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 transporting natural gas. The company has a widespread pipeline system and is one of the largest domestic transporters of natural gas by volume.
Over the past one year, the Zacks categorized Oil and Gas Production Pipeline industry has registered growth of 53.12%. However, the Williams Companies stock has outperformed the industry by gaining 70.84%.
Zacks Rank
Williams Companies currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players from the broader energy sector include Braskem S.A. BAK and Cheniere Energy Partners, L.P. CQP. Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.
In the last quarter, Cheniere Energy Partners posted a positive earnings surprise of 185.71%.
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