Spectra Energy Partners Offers 43 Consecutive Quarterly Dividend Hikes (SPE)

Since its formation in late 2007, Spectra Energy Partners LP has rewarded its shareholders with dividend hikes over the past 43 consecutive quarters.

Over that period of nearly 11 years, the company managed to maintain an average dividend growth rate of more than 2% every quarter and currently offers a dividend yield in excess of 8%. Additionally, the company supported its dividend income with a rising share price for most of that period. However, the share price lost a third of its value in the first quarter of 2018 but recovered nearly half of those losses by the beginning of August 2018.

The technical indicators have not given a clear signal yet that the share price might extend its uptrend. However, keen investors should consider putting Spectra Energy Partners under a close watch and be ready to take advantage of the discounted share prices should the 50-day moving average (MA) cross above the 200-day MA in a bullish manner in the next 30 to 60 days.

Investors looking to take advantage of the quarterly dividend hikes and an 8%-plus yield that are willing to tolerate some risk might consider taking a position in this stock before the company’s next ex-dividend date on August 15, 2018. That action will establish shareholder of record status and ensure eligibility for the next round of dividend distributions on the August 29, 2018, pay date.

Spectra Energy Partners LP (NYSE:SPE)

Headquartered in Houston, Texas, and formed in 2007, Spectra Energy Partners, LP operates as an investment arm of Enbridge, Inc (NYSE:ENB). Through its subsidiaries, Spectra Energy Partners engages in transportation of natural gas through interstate pipeline systems, and the storage of natural gas in underground facilities in the United States. As of June 2018, the company owned and operated approximately 1,400 miles of the East Tennessee interstate natural gas transportation. Additionally, the company owned and operated a liquefied natural gas storage facility in Kingsport, Tennessee, with working gas storage capacity of approximately 1.1 billion cubic feet (Bcf) and re-gasification capability of 150 million cubic feet per day. Furthermore, the company also owned a 24.5% interest in the Gulfstream interstate natural gas transportation system of approximately 700 miles of pipelines that extend from Mississippi and Alabama across the Gulf of Mexico into Florida, as well as a 50% interest in Market Hub, which owns and operates several salt cavern natural gas storage facilities. Overall, Spectra Energy Partners owns and operates more than 15,000 miles of transmission pipelines, approximately 170 billion cubic feet of natural gas storage and approximately 5.6 million barrels of crude oil storage.

The company’s share price — technically unit price since the company operates as a Master Limited Partnership (MLP) — ascended 1.6% at the beginning of the trailing 12 month before peaking at $45.49 on October 6, 2017. However, after peaking in early October 2017, the share price reversed trend and lost more than a third of its value before hitting its 52-week low of $30.04, on June 1, 2018. After its bottom at the beginning of June, the share price reversed direction again and regained almost half of these losses to close on August 7, 2018, at $37.47, which was still 16% lower than it was one year earlier, but almost 25% above its 52-week low from early June 2018.

The company’s current $0.764 quarterly distribution — MLP’s equivalent of a dividend payout — is 1.7% higher than the $0.751 distribution from the same period last year. This new dividend is equivalent to a $3.06 annualized payout for 2018 and currently yields 8.2%, which is more than 48% above the company’s own 5.5% average yield over the past five years.

Additionally, the current yield is more than 260% above the 2.26% average yield of the entire Basic Materials sector, as well as 73% higher than the 4.71% simple average yield of all the companies in the Oil & Gas Pipelines industry segment. Furthermore, SPE’s current 8.2% yield is also 9.3% above the 7.46% average yield of the segment’s only dividend-paying companies.

Since beginning its current streak of 43 consecutive quarterly dividend hikes, the company enhanced its total annual distribution 155%, which corresponds to an average growth rate of 2.2% every quarter or 8.4% per year.

Despite the quarterly dividend hikes, the company currently offers a total loss of 10% for the past 12 months. However, a share price gain of just $4.19 would bring the shareholder returns to the breakeven point. Based on the growth trend, the share price could achieve that gain over the next 30 days. The company achieved a total return of nearly 20% over the past five years.

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