Thursday, March 29, 2012

Any kind of energy!


Dividend Machine for week of March 26, 2012 - WPZ
           
I am crazy about this stock.  I like it so much that I recently added to my personal position. Energy in every form is needed today and will be in the future.  After all, the sun is just a ball of energy.

            Williams Partners is a master limited partnership and these were very hot in 2011.  In the past, master limited partnerships had income advantages for those who own the shares in a taxable account.   You can own them in a retirement account as well although if you own a lot, you should consult your tax adviser about some tax details.

            Partnerships of this type pay out most of their earnings and Williams Partners, WPZ, is no different.  In addition to liking it because I like the energy space, WPZ meets all our dividend machine criteria as you can see from the table provided below.

DIVIDEND MACHINE WPZ



Price when profiled
$55.88
Last 4 Qtrs Earnings
$3.69
Last 4 Qtrs Dividends
$2.96
Current Qtr Dividend
$0.76
Annualized Div Yield
5.46%
No. Years Div Increase
6
Debt/Equity ratio
1.06%

            WPZ has some calls available that would make you money, but they are not paying quite as much as I would like.  I am adding WPZ for the 5.46% yield and I would need to make at least ten percent on a call to risk losing the yield. The table below illustrates that today’s calls were just too cheap.  This is based on a June, 2012 call.

CALL OPTION
WPZ
Strike Price
$60.00
Cost Basis
$55.88
Call Premium
$0.35
Dividend
$0.00


Gain in $ if assigned
$4.47
Call Yield
0.58%
Gain Yield
7.45%
Total Gain Yield
7.45%

            Even without the call income, WPZ may be a very good fit for the income producing portion of your portfolio.
Very Truly Yours,

TheMoneyMadam