Targa Resources Increases Its Dividend For 10th Straight Quarter

Includes: NGL
by: Greg Group

Targa Resources Partners LP (NYSE:NGLS) is the premier company engaged in the business of gathering, compressing, treating, processing and selling natural gas and natural gas liquids (NGLs), and NGL products. Targa Resources is positioned well for growing earnings and dividends in the next 2-3 years.

Targa Resources Partners just announced that the board of directors of its general partner has declared a quarterly cash distribution of $0.6625 per common unit, or $2.65 per common unit on an annualized basis, for third-quarter 2012. The approved distribution represents an increase of approximately 3% over the previous quarter's distribution and 14% over the distribution for third-quarter 2011.

While Targa Resources has a current yield of 6.0%, it continues to be a high dividend grower. Targa Resources has increased its quarterly dividend for 10 straight quarters since Q3 2010. The company has increased its dividends by 13.7% in the past year and boasts a 5-year average dividend growth rate of 14%.

Targa Resources Partners is a publicly traded limited partnership that is a leading provider of midstream natural gas and natural gas liquid services in the United States. Targa Resources Partners is managed by its general partner, Targa Resources GP LLC, which is indirectly wholly owned by Targa Resources Corp. (NYSE:TRGP).

Targa Resources will continue to benefit from a favorable outlook for the NGL environment for the rest of 2012 and 2013, as we believe that the NGL infrastructure needs to continue to build out to meet the strong demand from the petrochemical industry and to relieve bottlenecks. We think the partnership's integrated natural gas liquids assets and expansion plans will benefit from strong NGL fundamentals.

Targa Resources has grown earnings by 40% in the past 12 months compared with the same period one year earlier. The company is projected to increase earnings per share 11.7% in 2013 and 25% in 2014 when the new NGL facility is fully operational. Based on earnings growth, Targa Resources has a 12-month price target of $52.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.