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
