Motley Fool contributor James Halley says he is holding Williams Companies for its dividend growth and pipeline expansion prospects, not just its roughly 3% yield. As of Q2, the company had a $15.5 billion project backlog due online from 2027 to 2033.
Williams raised its quarterly dividend 5% this year to $0.525, its 10th consecutive annual increase. The dividend was covered 2.26 times by available funds from operations in Q2. That quarter, revenue rose 9.7% year over year to $3.05 billion and AFFO increased 10% to $1.45 billion.
Williams handles roughly one-third of U.S. natural gas production. Its take-or-pay contracts require customers to pay for minimum gas or pipeline-capacity volumes, or pay a penalty if they do not take delivery. The company links its six-gigawatt backlog of potential power-generation and corridor projects to rising electricity demand from data centers, AI infrastructure and industrial electrification; 10 Transco expansions are under construction or have signed customer agreements. Halley notes shares were up more than 15% this year and valued above 28 times forward earnings. Williams raised its long-term adjusted EBITDA growth target to more than 11% annually through 2030.
