Western Gas Ptrs (WES) 2013 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 Co.  While profits have been somewhat erratic, the partnership has grown dividends at a 15%+ rate over the last four years while earning a 10-11% 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 39% debt to equity ratio and its stock yields 3.8%.

  Statistical Summary

                  Stock      Dividend        Payout      # Increases  

                  Yield      Growth Rate     Ratio       Since 2008

WES          3.8%            9%             73%              3

Ind Ave      7.6               4                79               NA 

                Debt/                        EPS Down       Net        Value Line

                Equity         ROE      Since 2008      Margin       Rating

WES         39%            10%           1                  22%           A

Ind Ave     58               14             NA                14              NA

     Chart

            Note: WES stock made great progress off its March 2009 low, quickly surpassing the downtrend off its June 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  The wiggly red line is the 50 day moving average.  The High Yield Portfolio owns a full position in WES.  It is being Removed from the High Yield Buy List today.  The lower boundary of its Sell Half Range is $83.

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

5/13