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 (NYSE: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 (NYSE: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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Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Spectra Energy.. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.