Monday, April 4, 2011

Williams Partners, symbol WPZ

Income idea and dividend machine WPZ is my pick for the week of April 4, 2011.

Dear income investors:  If you have not yet researched master limited partnerships in the energy arena, it is time to do so.  In May many partnerships pay their dividend and they are healthy dividends.

I own many of these partnerships as we income investors chase yield.  I also tend to set stops when they reach a gain of 20 percent and I tend to lose the position.  However, so many companies are in this space that even if you take profit, you can find another company to buy.

WPZ is number 20 in our quest to find 52 dividend machines.  To remind you, a dividend machine pays at least 3%, makes more money than it pays out in a dividend, increases the dividend every year for at least five years, and is a solid company as measured by D/E (debt to equity ratio.)

WPZ is expected to earn $3.25 per share by the end of this fiscal year.   WPZ has raised the dividend every year and the dividend payout has nearly doubled in the last 5 years.  Currently the dividend amount is $.7025 per quarter.  At the closing price on Friday of $51.88 the dividend yield is 5.24%.  All energy companies need a lot of debt to fund their very expensive operations.  WPZ sports a very respectable D/E of 1.34.

The reason I include WPZ in my portfolio is its stellar growth rate.  Williams Partners knows how to execute.  It has grown at the rate of 273.7 percent in the last year.  That is phenomenal growth.  Income investors need companies that meet our dividend machine criteria but we also like growth.  Growing companies will increase your income.  Consider WPZ for the portion of your portfolio that is dedicated to income.

Very Truly Yours,