One of the biggest demands in the history of the world both in the past and in the future is energy. From the use of animals to the uses of oil and electricity, entrepreneurs are always innovating new ways to keep up with growing demands of humanity. One of those current-day innovations is natural gas. Companies like Questar Corporation (NYSE:STR) are finding new ways to implement natural gas as our primary source of energy, ultimately diminishing our dependency on the environmentally hazardous oil.
Who is Questar?
Questar Corporation is an integrated natural-gas company that develops, produces and delivers clean energy in the heart of the Rocky Mountains. This company has three major lines of business: retail gas distribution, interstate gas transportation and gas production, all of which are conducted through its three principal subsidiaries: Questar Gas, Questar Pipeline and Wexpro. Questar Gas provides retail natural gas-distribution services to almost 900,000 customers in Utah, southwestern Wyoming and a small portion of southeastern Idaho. Questar Pipeline owns and operates slightly more than 2,500 miles of pipeline with a total daily capacity of 2,530 Mdth (thousand decatherms). Questar Pipeline also operates and owns 50% of the White River Hub. Wexpro develops and produces gas reserves on behalf of Questar Gas, and delivers natural gas at its cost of service. Wexpro has over 900 risked locations yet to drill which provides estimates of over $1.4 billion of potential future investment, providing attractive cost of service through low finding and development costs. Wexpro has a proven track record of strong reserves and production growth year over year and one of the lowest cost structures of all E&P companies.
Questar Corporation is currently trading for $21.48, up $0.17 (0.8%) today and trading at a high of $21.67 and a low of $21.24. The 1 year price target for this corporation was $21.00. Today's volume clocks in around 1.6 million with its 90-day average around 1.1 million. The market cap is around $3.8 billion and the current price to earnings ratio is 18.36. The company reported 3Q earnings lost of 33.8 million, down 2.3 million from last quarter, yet steadily the stock moves. Why? Because it's a good stock to own. Questar has increased their dividends 40 times in the last 40 years and their risk management team doesn't plan to falter that tradition. With a dividend yield of 3.18% (0.68 / share), this is a very good stock to add to your dividend portfolio. It has consistently paid an increasing dividend without default, and that always complements a well-diversified portfolio. There are other energy companies that pay a nice dividend, CHK for example, but they don't possess the consistency that Questar does. Don't expect an astronomical stock increase to $25.00 any time soon, but do expect to receive your residual flow of income from the fidelity of their dividends. The stock price has steadily fluctuated between $19-21 the past year, so you can also assume that you're safe on any substantial losses.
The purpose of this article is to add some exposure of the Questar Corporation to investors who may be looking for a solid natural gas investment but weren't sure which company was fundamentally their better option. This company has been around since 1929 and is in the middle of an emerging energy crisis that the world has found themselves in. Natural gas is their specialty. We are slowly losing our dependency on oil and need a cleaner alternative. Everyone is aware of the needs to change to help our environment and it's only a matter of time before we commence a major switch from oil to natural gas. Many companies have designated their transportation vehicles from diesel to natural gas. Also, Utah's governor has authorized approval for the designation of Interstate 15 from Idaho to Arizona as a natural gas corridor. Through Questar's subsidiary Questar Gas, the state will begin encouraging the use of natural gas as a primary fuel source.
The need is apparent, and it is global. Our addictive dependency on oil will soon fade and it will be a bankrupted commodity. Investing in natural gas is investing for the purpose of a better, cleaner future. So, if you're looking for exposure to a natural gas sectored company that pays steady dividends and stays within a specific price range, then Questar Corporation could be a great addition to your portfolio.
Disclosure: I am long STR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have no affiliation with this company and have written this article based on personal interest and educational purposes.