Laclede Group Inc (LG) Just Doubled Its Market Presence

Construction of the 30 inch, 121 mile long transmission pipeline is planned to commence in the second half of 2014. The project is scheduled to become operational by March 2015. The pipeline will transport at a minimum 650,000 dekatherms of natural gas each day, which is same as supplying natural gas to 3 million households on a daily basis.

The construction of this natural gas transmission pipeline will also open the doors for future economic growth in the respective covered area. Once the pipeline becomes operational, the economic impact is estimated to be $13.1 million coming from new annual sales, income and property tax revenue in the subject region.

WGL Holdings Inc (NYSE:WGL) will own a 10% share in the pipeline venture, via its subsidiary CEV.

Ameren Corp (NYSE:AEE) is also another player in the industry. The company is planning to invest $330 million for the development of the natural gas infrastructure in terms of integrity, safety, and reliability of the natural gas distribution system during a 10 year horizon. The residential customers will be charged an additional one cent each day for the improved service over the ten year term. This will generate higher revenues for the investing companies and at the same time, customers will be able to derive more benefit from the service provided.

Final snapshot

Laclede Group is likely to report higher earnings in the future as the company extracts the estimated synergies from its acquisition of Missouri Gas. This transaction also supports dividend growth, thus providing a source of regular income for its investors. Based on the above analysis, I would advise buying and holding the stock of Laclede Group Inc (NYSE:LG) for medium term.

The new investment made by WGL is expected to increase the company’s revenues and profits in 2015 and beyond. In my opinion, this company is recommended for investors who can lock their investment for the next few years. The company also provides regular dividend income.

The article Laclede Just Doubled Its Market Presence originally appeared on Fool.com and is written by Awais Iqbal.

Awais Iqbal has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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