Tuesday, March 16, 2010
Natural Gas Stocks: Hot Air or Hot Air Rising?
Yes, we've had some bad weather in the East. But with the ending of Winter and the onslaught of Spring, natural gas futures fell to their lowest level in about four years. If you look at a chart of natural gas, you will notice that since July of 2008, gas has been in a constant downtrend. However, the natural gas stocks, utilities, and publicly traded limited partnerships have been bouncing all over the place during the last couple years.
Income investors like natural gas stocks for several reasons. First, they pay a decent dividend with over 15 paying more than 4%. Second, they provide diversification from electric utilities. The average price to earnings ratio for all these stocks is less than 15. And in terms of gas stocks, in addition to natural gas companies, investors can also choose propane distributors.
There are plenty of natural gas and propane gas utilities available to invest in. WallStreetNewsNetwork.com has turned up about 25 gas utilities with yields ranging from 2% to above 8%, such as ONEOK Inc. (OKE) yielding 3.8%, Piedmont Natural Gas Co. Inc. (PNY) yielding 4.1%, and TransCanada Corp. (TRP) yielding 4.3%.
You might also consider investing in electric utilities, which also pay fairly high yields, many in excess of 5%.
To see a list of 25 gas utilities in the form of a free downloadable Excel database of natural gas and propane stocks, go to WallStreetNewsNetwork.com.
Author does not own any of the above.