Targa Resources Provides A Safe Dividend, Poised To Grow In 2018

Targa Versus Peers

Heejung Ryoo, the firm's analyst, noted that estimated dividend yield of 7.8 percent for 2017 is 250–550 basis points higher than its c-corp mid-stream peers such as Kinder Morgan Inc KMI, Plains GP Holdings LP PAGP and ONEOK, Inc. OKE.

25% Returns From Targa

The analyst also noted that Targa has reduced its leverage since early this year. Accordingly, the analyst sees support for the current dividend yield even under a more bearish price scenario due to the healthy balance sheet.

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Barclays sees total returns of about 25 percent from owning Targa shares, with the high dividend yield and price upside potential lending support. The firm expects the company's valuation to improve in a better crude/NGL price environment it foresees in 2017 and beyond.

Barclays has an Overweight rating for the shares of Targa as opposed to its Neutral industry view, while its price target for the shares is $55.

At time of writing, Targa shares were down 0.79 percent at $46.41.

Full ratings data available on Benzinga Pro.