Linn Energy LLC (LINE): A Steady Energy Company Doling out Nearly 8%

2). Government Regulation: Controversial exploration methods for natural gas, such as fracking, have faced severe government regulation, and any further regulation passed down by Washington could cripple the company’s ability to increase its production level and find new reserves

3). Competition: The competition to acquire quality properties that offer substantial potential is extremely fierce, and the competition to acquire new property can lead to Linn Energy overpaying for property that does not produce what is expected

Competition:

Major publicly traded competitors of Linn Energy include Anadarko Petroleum Corporation (NYSE:APC), Chevron Corporation (NYSE:CVX), Devon Energy Corporation (NYSE:DVN), and ConocoPhillips (NYSE:COP) . All of these companies operate in the same industry as Linn and compete with the company to acquire new property. Anadarko is valued at $42.20 billion, pays out a dividend yielding 0.43%, and carries a price to earnings ratio of 17.80. Chevron is valued at $226.33 billion, pays out a dividend yielding 3.11%, and carries a price to earnings ratio of 8.68. Devon is valued at $24.47 billion, pays out a dividend yielding 1.32%, and carries a price to earnings ratio of 34.86. ConocoPhillips is valued at $70.25 billion, pays out a dividend yielding 4.56%, and carries a price to earnings ratio of 9.80.

The Foolish Bottom Line:

Financially, Linn Energy is relatively solid. The company possesses a business model producing a double digit net profit margin, accelerated revenue growth, and a relatively cheap valuation. However, the company carries fluctuating profit and a massive debt load. Above all, the company’s enormous dividend and ability to continually raise their dividend payouts provides immense opportunity to investors, and over the long-term, Linn appears to be a company primed to provide solid returns through all economic cycles.

The article A Steady Energy Company Doling out Nearly 8% originally appeared on Fool.com and is written by Ryan Guenette.

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