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I own Suburban Propane Partners (SPH) and love the dividend and the long-term and constant price appreciation!

This is a no lose stock as it is always going to kick out a dividend and give stability to your portfolio. And, who knows, maybe it will be a takeover candidate one day for some hungry private equity firm looking for a cash cow. Suburban Propane, a limited partnership, is a nationwide marketer and distributor of an array of fuel products -- from propane to fuel oil and other refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. It also installs and services heating, ventilation and air conditioning [HVAC], though the company has announced it will be streamlining these areas to focus more on the core business.

Its core business is propane, and it services roughly 830,000 customers in the East and West Coast of the U.S. It also distributes fuel oil and other refined fuels to 180,000 other customers in the Northeast. Because it is a real pain to switch fuel companies -- often it involves changing tanks and other equipment -- Suburban’s customers can be counted on as repeat business.

Last week’s quarterly results announcement far exceeded analyst predictions, with the company chalking it up in part to their decision to eliminate the fuel oil cap program that pre- established a maximum price per gallon, beginning with the fiscal 2006 heating season. They also underwent a field realignment process to drive efficiencies and announced they are getting out of certain lower margin businesses in the propane and refined fuels segments.

With SPH’s elimination of the price cap program, there is a risk that customers will defect more than usual, but with the cost of fuel continuing to drive upwards, I think any risk will be offset by gain. SPH will be likely be looking ahead to a solid heating season.

Type of stock:
A small-cap gem in the public utilities sector, Suburban Propane’s core business is supplying fuel products to customers in the US. It also pays a nice dividend of $2.45.

Price target:
Last week, Suburban Propane announced significantly improved earnings for last quarter, causing its share price, which has been on the rise all year, to head near its year high in the upper $34 range. Even so, I think it is worth picking this one up and watching it hit the $37 range by year’s end.

Source: Suburban Propane Offers Portfolios Solid Fuel