Energy Transfer Equity Offers 11 Consecutive Annual Dividend Hikes (ETE)
By: Ned Piplovic,
Energy Transfer Equity, L.P. (NYSE:ETE) has rewarded its shareholders with dividend hikes every year since it started paying dividend in 2006.
In addition to more than a decade of consecutive annual dividend hikes, the company also offers its shareholders an above-average dividend yield of almost 7% and a double-digit-percentage average growth rate.
The company’s share price took a significant hit in late 2015 and shareholders suffered a total loss of nearly 30% over the past three years. However, the share price reversed trend and has nearly tripled its value since February 2016 to bring shareholders’ total return into the positive plane. After experiencing another significant decline during February and March 2018, the share price has been rising since April and recent technical indicators hint at a possible continuation of the current uptrend. Additionally, except for three trading sessions in mid-July, the share price has been above both moving averages since May 17, 2018.
The company’s most recent quarterly dividend distribution occurred on May 21, 2018, just 17 days after the March 4, 2018, ex-dividend date, which was just one week after the April 26, 2018, declaration date. Therefore, interested investors should be ready for a dividend declaration later this week with an ex-dividend date in the first few days of August and a mid-August pay date.
Based on the company’s dividend distribution pattern over the past few years, investors should not expect any dividend hikes for the upcoming quarterly distribution. Instead, the company will most likely distribute the same $0.305 quarterly payout as it did in May.
Energy Transfer Equity, L.P. (NYSE:EPE)
Based in Dallas, Texas, and founded in 2002, Energy Transfer Equity, L.P. provides diversified energy-related services in the United States. The company sells and transports natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users and other marketing companies. The company’s midstream operations comprise of natural gas processing plants, treating and conditioning facilities, as well as natural gas and natural gas liquid (NGL) gathering pipelines in Texas, New Mexico, West Virginia, Pennsylvania and Louisiana. Additionally, this segment operates oil pipelines and oil stabilization facilities in South Texas and a natural gas gathering system in Ohio, as well as transportation and supply of water to natural gas producers in Pennsylvania. Furthermore, the NGL transportation and services operations include additional 4,300 miles of NGL pipelines, 5 NGL and propane fractionation facilities and NGL storage facilities with aggregate working storage capacity of approximately 53 million barrels.
The company’s share price ascended 7.2% between the onset of the trailing 12-month period and its 52-week high of $19.80 on January 23, 2018. After peaking in late January, the share price followed the overall market trend and declined more than 26% before reaching its 52-week low of $14.17 on April 2, 2018. The share price closed on July 25, 2018 at $17.98. This closing price was still approximately 6% below the January peak and virtually even with its $17.89 price from 12 months ago but almost 27% above the 52-week low from the beginning of April 2018.
After dropping below the 200-day moving average (MA) at the beginning of March 2018, the 50-day MA breached back above the 200-day MA on June 26, 2018, and has continued to rise. If these indicators instill investor confidence that the share price will continue to rise, interested investors should conduct their due diligence and be on the lookout for a declaration of the upcoming dividend distributions.
The company’s previous dividend, as well as the expected next quarterly payout of $0.305 is equivalent to a $1.22 annualized dividend and currently yields 6.8%. This current yield is almost 36% higher than the company’s own 5% average yield over the past five years and 200% above the 2.26% average yield of the entire Basic Materials sector. Additionally, ETE’s current yield is also 41% higher than the simple average yield of all the company’s peers in the Oil & Gas Pipelines industry segment. After 11 consecutive annual dividend hikes, the company advanced its total annual dividend 635%, which corresponds to an average annual growth rate of more than 18%.
As already indicated, the share price drop in the second half of 2015 resulted in a total loss of 28.2% over the past three years. More recent shareholders fared a little better, as the company’s rising dividend delivered a 7.2% total return over the last year. However, despite the 2015 price drop, long-term investors enjoyed a total return of almost 43% over the past five years.
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