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Williams Companies, Williams Partners Present '16 Cash Flow Guide - Analyst Blog


Williams Partners L.P. (NYSE: WPZ) and Williams Companies, Inc. (NYSE: WMB) declared the dividend and distribution growth guidance for 2016.

According to the presentation made by the partnership and the company for their Analyst Day, the partnership's distributable cash flow (DCF) is expected to rise by about 75% in 2016 from 2013, which marks a cumulative annual growth rate (CAGR) of 20%.

The DCF per unit is likely to be up 41% in 2016 versus 2013 that is at a CAGR of 12%. The annual growth rate in 2014, 2015 and 2016 is expected to be 16%, 13% and 7%, respectively. The cash distribution per LP unit is projected to grow 6% per year in 2014 and 2015, with a target of 4.5% in 2016. The partnership is aiming to rebuild excess coverage with the cash coverage ratio of 1.03x and 1.05x expected in 2015 and 2016, respectively.

The plan requires modest Williams Partners equity through 2016. The current plan assumes equity issuance of $300 million in 2013 with no further issuance in 2015 or 2016.

The rapid increase in distribution at Williams Partners and Access Midstream Partners, L.P (NYSE: ACMP) are expected to drive dividend growth of 20% through 2016 at Williams Companies. The cash flow at Williams Companies is projected to increase by over 65% from 2013 to 2016 due to strong increase in cash flow from Williams Partners and Access Midstream Partners. This excess cash will be utilized to finance projects, with plans to transition project development to Williams Partners. The company is planning to move toward the full payout of master limited partnership cash distributions. It does not have any debt and no equity issuances are expected through 2016.

Both Williams Partners and Williams Companies carry a Zacks Rank #3 (Hold). Another oil and gas stock worth considering is Encana Corp. (NYSE: ECA), which sports a Zacks Rank #1 (Strong Buy).

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