Inergy LP (NRGY) a propane distributor and natural gas midstream operator has announced its 4th quarter dividend of 64.5¢. This is a penny more than the 3rd quarter payout and 6.6% higher than the distribution of a year earlier. As I noted in the headline this is the 29th consecutive dividend increase for Inergy.
Inergy has grown its business through acquisition of local propane distributors and some creative growth in its midstream business. For example, in 2008 the company acquired a salt production company that will allow them to use the salt caverns to store billions of cubic feet of natural gas.
The cold winter should bode well for propane sales. The current lower prices for propane will make the customers less afraid of their energy bill as they heat their homes to fight the cold. The majority of Inergy’s propane business is to retail customers. This allows the company to maintain its margins no matter what the level of energy prices.
The new dividend rate gives NRGY a yield of over 11%. It is hard to believe that during the market lows in November this stock had a yield of over 20%. Kudos to any investors who picked up some shares at that time.
Disclosure: NRGY is a component of my site’s Income Portfolio.