2 Energy Service Companies Boost Dividends and Offer 6%-Plus Yields
By: Ned Piplovic,
Two midstream energy service companies offer 6%-plus dividend yields to complement their decades-long records of rising dividends.
Both companies have been raising their annual dividend payouts for more than a decade and the most recent boosts versus the prior quarter were 1.2% and 1.4%, respectively.
Both equities have their ex-dividend date on April 26, 2017.
Genesis Energy, L.P. (NYSE:GEL)
Genesis Energy, L.P. operates in the midstream segment of the crude oil and natural gas industry. The company owns interests in approximately 1,500 miles of crude oil pipelines located offshore in the Gulf of Mexico, 10 refining operations, 200 trucks, 400 trailers and 523 railcars. It also has terminals totaling 4.6 million barrels of storage capacity in various locations along the Gulf Coast. GEL’s marine transportation segment owns and operates a fleet of 83 barges with a combined transportation capacity of 2.9 million barrels and 43 push/tow boats.
The company hiked its quarterly dividend 1.4% versus the previous period. The current quarterly dividend of $0.72 translates to a $2.88 annual payout and an 8.9% dividend yield. That yield is 51% higher than the average yield over the last five years. Since the last dividend drop in 2003, the company has boosted its annual dividend payout at an average annual rate of 23.5% for 14 consecutive years. Over that period, the annual payout has grown almost 20 times higher than the 2003 annual distribution amount.
The share price rose 36% between its 52-week low in mid-April and July 20, 2016, when the price reached its 52-week high. However, the share price dropped steadily after the July high and shed all those gains by the end of March 2017, when the price fell to just 2% above the April 2016 price low. The share price regained about 5% in April 2017 and is currently trading about 0.5% higher than the share price from one year ago.
Enterprise Products Partners L.P. (NYSE:EPD)
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and refined products. The company operates approximately 20,000 miles of NGL pipelines, 5,400 miles of crude oil pipelines, 15 NGL fractionators, liquefied petroleum gas and ethane export terminals, crude oil storage and marine terminals located in Oklahoma and Texas, as well as a fleet of 440 tractor-trailer tank trucks.
The company has boosted its annual dividend distribution every year since it started paying a dividend in 1998. The most recent dividend hike of 1.2% raises the current quarterly payout to $0.415 per share. This quarterly dividend converts to a $1.66 annual payout and a 6% dividend yield. The current yield is 24% above the five-year average yield of 4.8%. Over the past 19 years, the company boosted its annual dividend at an average growth rate of more than 9% every year. Consequently, the current annualized dividend is 420% higher than the 1998 annual distribution amount.
The share price has experienced some volatility over the past 52 weeks but has recovered to post a gain on the year. After rising 28% between its 52-week low in April and July 2016, the share price relinquished nearly all the gains by early November 2016. The share price reversed trend and rose 23% on its way to the 52-week high at the end of January 2017. Since the January peak, the share price pulled back about 8% and is currently trading around $28. The current price is 18% above the 52-week low from April 2016.
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