Shares of Williams Companies, Inc. (NYSE:WMB) have been in a solid uptrend ever since bottoming out in October, 2011. In fact, the stock hit a new 52-week high on May 1. The trend higher has been supported by many factors and it is likely to continue rising. Investors should consider buying this stock, especially on dips for its solid dividend yield and capital gains potential. Here is a closer look at the history and current plans for this company:
Williams owns and operates around 13,700 miles of natural gas pipeline which runs through Texas, Louisiana, Mississippi, Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Pennsylvania, and others. It also operates a pipeline network of around 3,900 miles in New Mexico, Colorado, Utah, Wyoming, Idaho, Oregon, Washington, and Canada. The company is expanding its pipeline network to the Kokopelli Fields in Colorado. This will allow Williams to transport fuels from its own projects nearby as well as for companies like Dejour Energy (DEJ) which recently received a $14 million commitment to begin drilling at its Kokopelli NGL and oil project. Dejour Energy's Kokopelli project is expected to generate $1 billion in future revenues and it plans to access the Williams pipeline when it is completed around the third quarter of 2012. This could help make the pipeline extension very successful from the start.
Williams has a good working relationship with WPX Energy (NYSE:WPX) because it was part of the Williams Companies and it was spun-off at the end of 2011. WPX is engaged in exploration and production and it has a portfolio of natural gas, oil and NGL reserves. This spin-off allowed Williams to be focused on pipelines and it reduced the risk of exploration. WPX is targeting oil and Natural Gas Liquids in 2012. More info and facts on WPX can be seen here. WPX does not offer a dividend and the stock has not been in an uptrend.
Williams appears to be a much better value and with a 3.2% dividend yield and plans to seek growth by expanding its pipelines, there could be plenty of upside left in the shares. Williams has a history of dividend increases and it raised the dividend in 2012 to .25875 per share, per quarter. Williams is a more focused company with reduced exposure to exploration risks thanks to the WPX spin-off. Investors should consider buying it on dips for the dividend and growth potential.
Here are some key points for WMB:
Current share price: $32.54
The 52 week range is $21.90 to $34.63
Earnings estimates for 2012: $1.45 per share
Earnings estimates for 2013: $1.63 per share
Annual dividend: $1.04 per share for a yield of 3.2%
Here are some key points for WPX:
Current share price: $17.43
The 52 week range is $14.20 to $23.42
Earnings estimates for 2012: 3 cents per share
Earnings estimates for 2013: a loss of 4 cents per share
Annual dividend: None
Data is sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.