Seeking Alpha

Williams +18% as dividend hike sweetens Access Midstream deal

  • "This is all certainly being driven by the dividend," says BMO analyst Carl Kirst on the Williams Cos. (WMB +18.4%) promises a 32% dividend hike after it buys control of Access Midstream Partners (ACMP +1.7%) for $6B.
  • Because all ACMP's revenue comes from fixed fees, ~80% of cash flow at WMB will be guaranteed after the takeover, Kirst says, with ACMP unitholders getting a higher payout in exchange for slower growth at the combined company.
  • Maxim Group believes WMB will continue to raise its dividend at a ~10% rate for several years beyond 2017, given strong coverage ratios and opportunities due to expected continued increase in shale activity and the need for energy infrastructure development in the U.S. (Briefing.com)
  • Also: WPZ +6.5%.
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