Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Spectra Energy (SE) climbed 10% today after announcing that it will drop down all U.S. transmission and storage assets to its publicly traded MLP, Spectra Energy Partners (SEP).
So what: The move will allow Spectra Energy to accelerate the growth of its dividend and should put it in a stronger financial position to carry out pipeline projects. Of course, Spectra Energy Partners also gained on the news -- up about 5% -- as the dropdown is expected to help boost its own distribution rate as well.
Now what: Spectra Energy now sees annual dividend growth of $0.12 versus its previous commitment of $0.08, while Spectra Energy Partners will increase its quarterly distribution rate to a penny versus the current three quarters of a cent. "We fully expect this move to be a win for investors in both SE and SEP, and it will give us a more robust MLP to advance our growth opportunities," said Spectra Energy CEO Greg Ebel. Of course, with Spectra Energy shares hitting a new 52-week high today -- now up about 25% over the past six months -- and trading at a 20-plus forward P/E, much of that growth might already be baked into the valuation.
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