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Posts Tagged ‘Vanguard Natural Resources’

This New Monthly Dividend Payer is an Undervalued Growth and Income Play

Vanguard Natural Resources, LLC (NYSE: VNR) is a publicly traded limited liability company focused on the acquisition, production and development of oil and natural gas properties. Vanguard has significant growth and income potential while also being undervalued at its current stock price.

Vanguard trades at a PE of 7.4 compared to an industry PE average of 14. The Company increased earnings 88% and revenues 35% last quarter compared to the same quarter one year earlier.  Vanguard is projected to grow EPS by 36% next year.  Vanguard has increased cash flow 33% in the last 5 years compared to 12% for the industry.

Vanguard reported consolidated earnings and operations results for the second quarter and six months ended June 30, 2012.  For the quarter, the company reported total revenues of $151,915,000 against $112,509,000 a year ago. Income from operations was $102,301,000 against $61,088,000 a year ago. Net income attributable to the company unit holders was $103,447,000 against $31,799,000 a year ago.

Vanguard announced a public offering of an additional $200 million aggregate principal amount of their 7.875% senior unsecured notes due 2020 at a public offering price of 7.875%. The Company intends to use the net proceeds from this offering to repay a portion of the outstanding borrowings under its senior secured reserve-based credit facility.

Vanguard converted its quarterly dividend to a monthly dividend in July 2012.  The Company is paying 40.20 per month for an annual dividend of $2.40.  This is a current dividend yield of 8.04%.  The Company increased its quarterly dividend 7 straight quarters before converting to a monthly payout.  Vanguard has a 57% dividend payout ratio.

Richard Robert, EVP & CFO, commented, “We have listened to investors and we believe that we are giving them what they want. A monthly distribution should allow investors to better manage their finances by matching their monthly cash outflows with monthly cash inflows. In addition, a monthly distribution will allow us to reward our investors in a timelier manner as we make accretive acquisitions in the future. We believe the decision to pay distributions monthly rather than quarterly will be welcomed by both our current Vanguard unit holders as well as other potential investors looking to invest in high yielding energy securities.”

First Call analysts have a BUY recommendation with a 1.8 stock rating.  The stock has an equity summary score of 7.2 out of 10 for a Bullish outlook.  Vanguard has a 12 month price target of 33.

2 High Yield Dividend Stocks with a Bullish Outlook

While high yield is difficult to come by these days, here are 2 quality stocks with high dividend yields, reasonable valuations and projected growth next year.  Both of these stocks produced significant EPS growth last quarter and have equity summary scores indicating a Bullish outlook.

PennyMac Mortgage Investment Trust (NYSE: PMT) invests primarily in residential mortgage loans and mortgage-related assets.  PennyMac trades at a PE of 8 with a beta of 0.83.

PennyMac increased EPS by 33% last quarter compared to the same quarter a year ago.   The Company is projecting an increase in EPS of 7% next year.

PennyMac has a current dividend yield of 9.43% which has been increased 10% in the last year.

PennyMac is up 40% year to date and 9.3% in the last 4 weeks.  Shares pulled back in August after pricing an upsized underwritten public offering of 15 million shares at $20.93 each. The deal originally intended to sell 12 million shares. Underwriters received a 30-day option to purchase up to 2.25 million additional shares from the company.

PennyMac plans to spend the net proceeds to purchase residential whole mortgage loan portfolios as well as funding continued growth of its correspondent lending business and acquiring additional mortgage loans or other investments, including existing forward purchase agreements.

PennyMac has an equity summary score of 9.1 out of 10 for a VERY Bullish outlook.  PennyMac has a 12-month price target of $25.30.

Vanguard Natural Resources (NYSE: VNR) engages in the acquisition and development of oil and natural gas properties in the United States.

Vanguard increased EPS by 88% last quarter compared to the same quarter a year ago.   The Company is projecting an increase in EPS of 39% next year.  Vanguard has a PEG ratio of 0.41.  Vanguard trades at a PE of 7.2 with a beta of 1.02.

Vanguard dividends are paid on a monthly basis.  Vanguard has a current dividend yield of 8.31% which has been increased 4.35% in the last year.

Vanguard just announced the closing of its previously announced public offering of 6,900,000 common units representing limited liability company interests in the Company at a price of$27.51 per unit.  The 6,900,000 common units include 900,000 common units purchased pursuant to the underwriters’ full exercise of their option to purchase additional common units.

Vanguard intends to use the net proceeds from the offering of approximately $182.3 million, after deducting underwriting discounts and estimated offering expenses, to repay a portion of its indebtedness outstanding under its senior secured revolving credit facility.

Vanguard has an equity summary score of 7.4 out of 10 for a Bullish outlook.  Vanguard has a 12-month price target of $31.50.

It’s Raining Dividends in the Energy Sector

As more companies are increasing their dividends to reward shareholders, the energy sector seems to be near the top.  As I always do, I have listed the energy companies with recent dividend increases with a Bullish or better outlook.  Many of the listed energy companies have additional news included that is relevant to why these stocks are portfolio candidates.

The board of directors of Magellan Midstream Partners, L.P. (MMP) has significantly increased the partnership’s quarterly cash distribution to 94.25 cents per unit for the period April 1 through June 30, 2012, representing the 41stdistribution increase since its initial public offering in 2001.  The second-quarter 2012 distribution is 20% higher than the second-quarter 2011 distribution of 78.5 cents per unit and represents a 12% increase over the first-quarter 2012 distribution of 84 cents.  Looking ahead, MMP is now targeting distributions for full-year 2012 that are 18% higher than 2011, with the goal of raising distributions an additional 10% for 2013 as our future results are expected to benefit from additional growth projects coming online.

Bottom line:  MMP has a dividend yield of 4.82% with a 5-year average dividend growth rate of 8.87%. MMP has an equity summary score of 7.1 out of 10 for a Bullish outlook.

Oil refinery operator Marathon Petroleum (MPC) raised the octane on its quarterly dividend payment by 40% to 35 cents per share. The new payout will be made on Sept. 10 to shareholders of record as of Aug. 16.  MPC is pursuing a spin out of its pipeline and logistics business, MPLX LP. The company, which was formed in March by Marathon Petroleum, filed plans in July for an offering of roughly $365 million of its common units to raise funds for expansion and other purposes.  According to the filing, Marathon Petroleum (MPC) intends for MPLX to be the primary growth vehicle for the petroleum refiner and marketer’s midstream business.  Marathon is growing its retail business. Speedway acquired 87 GasAmerica locations during the second quarter and earlier this month completed the acquisition of 10 Road Ranger locations.

Bottom line:  MPC has a dividend yield of 2.95%. MMP has an equity summary score of 9.8 out of 10 for a VERY Bullish outlook.

Vanguard Natural Resources, LLC (VNR) announced that its board of directors has declared a cash distribution attributable to the second quarter of 2012 of $0.60 per unit ($2.40 on an annual basis) payable on August 14, 2012 to unitholders of record on August 7, 2012. This represents an approximate 4.3% distribution increase from the second quarter of 2011 and a 1.3% distribution increase from the first quarter of 2012.  VNR reported that on June 29, 2012 it consummated the previously announced acquisition of natural gas and liquids assets from Antero Resources for an adjusted purchase price of $434.4 million, subject to customary final post-closing adjustments. The effective date of the acquisition is April 1, 2012 with the transaction being immediately accretive to distributable cash flow.

Bottom line:  VNC has a dividend yield of 8.39%. MMP has an equity summary score of 7.2 out of 10 for a Bullish outlook.

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