Inergy: Secure for a Growing Income Stream

| About: Crestwood Midstream (CMLP)

Last week Inergy, L.P. (NRGY) declared its 29th consecutive distribution increase and now the company is backing that up with a nice earnings report. NRGY is one energy related company where low energy prices can provide a benefit to the bottom line.

NRGY is primarily a retail propane provider with a growing midstream natural gas business. The retail propane side benefited from lower prices as their customers were less concerned about conservation during the cold last quarter of 2008. As a result, gross propane profits increased by $35.5 million to $152.7 million. Currently propane operations account for about 80% of revenues.

As a result of the strong quarter (Q1 for fiscal 2009) the company’s management increased their outlook for the year’s EBITDA by about 10%. Continued growth of the distribution seems to be pretty secure.

For the income investor, NRGY looks like a secure place for a growing income stream. The shares are still sporting a yield of almost 11%. I think this company should yield closer to 8%, giving a share price potential of $32.

Disclosure: NRGY is a component of my site’s hypothetical Income Portfolio.