Spectra Energy Corp. (SE), Spectra Energy Partners, LP (SEP): Can Natural Gas and Special Tax Status Keep These Dividend Stocks Soaring?

At the same time, the utility’s keeping some gas close to home with an $850 million expansion to its current Northeast regional connection. With 15-year contracts in the bag from Northeast Utilities System (NYSE:NU), National Grid plc (ADR) (NYSE:NGG), and UIL Holdings Corporation (NYSE:UIL), the renovation is well deserved.

Source: Spectra Q2 2013 Earnings

Can the Spectras keep soaring?
Spectra and Partners have made remarkable gains in the last year. Both stocks soared on the news of Spectra’s asset dropdown, although Spectra Energy Partners, LP (NYSE:SEP) ultimately pocketed more of the market-moving action.

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With the big news over, the real question is whether Spectra Energy Corp. (NYSE:SE)’s transmission deals and Spectra Energy Partners, LP (NYSE:SEP)’ operations and tax status will live up to expectations. Both stocks’ P/E ratios are about 70% higher than their peers, but stable earnings are a lucrative lure for income investors. The utility’s dividend yield stands at 3.45%, while the MLP’s clocks in at 4.75%.

At current prices, I think Partners offers investors a long-term dividend churner for those wanting consistent distributions without worrying as much about short-term share price rises and dips. Although Spectra Energy’s got big transmission plans of its own, its valuation puts it out of my price range for the time being.

The article Can Natural Gas and Special Tax Status Keep These Dividend Stocks Soaring? originally appeared on Fool.com and is written by Justin Loiseau.

Fool contributor Justin Loiseau has no position in any stocks mentioned. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends National Grid plc (NYSE:NGG) (ADR) and Spectra Energy. The Motley Fool has the following options: long January 2014 $30 calls on Chesapeake Energy (NYSE:CHK).

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