Western Gas Ptrs (WES) 2014 Review

Western Gas Ptrs LP acquires, owns and operates midstream energy assets in east and west Texas, the Rocky Mountains and the mid-continent.  It gathers, treats and transports natural gas from its parent, Anadarko Petroleum Corp.  While profits have been somewhat erratic, the partnership has grown dividends at a 15%+ rate over the last four years while earning a 6-10% return on equity.  While the rate of increase in dividends will slow in the future, the partnership should continue to grow its payout at a sound rate because:

(1)    a very secure customer base [i.e. its parent],

(2)    acquisitions.

Negatives:

(1)    fluctuations in commodity prices,

(2)    demand is subject to seasonal and weather factors,

(3)    potential impact of new energy regulations.

            WES is rated A by Value Line, has a 42% debt to equity ratio and its stock yields 3.9%.

  Statistical Summary

                  Stock      Dividend        Payout      # Increases  

                  Yield      Growth Rate     Ratio       Since 2008

WES          3.9%            12%             94%              4

Ind Ave      6.2                7                 75               NA 

                Debt/                        EPS Down       Net        Value Line

                Equity         ROE      Since 2008      Margin       Rating

WES         42%             6%            233                22%           A

Ind Ave     52               16              NA                15              NA

     Chart

           

            Note: WES stock made great progress off its October 2008 low, quickly surpassing the downtrend off its June 2008 high (straight red line).  Long term, it is in an uptrend (blue lines).  The wiggly red line is the 50 day moving average.  The High Yield Portfolio owns an 85% position in WES.  The upper boundary of its Buy Value Range is $70; the lower boundary of its Sell Half Range is $85.   

http://finance.yahoo.com/q?s=WES

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