There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

December 15, 2009 - Northwestern Natural Gas Co. (NWN-NYSE) doing business as NW Natural, engages in the storage and distribution of natural gas in Oregon, Washington and California. The company operates in two segments, Local Gas Distribution and Gas Storage.

As of December 31, 2008, it had approximately 590,000 residential customers, 62,000 commercial customers, and 1,000 industrial sales and transportation customers in 124 cities and neighboring communities in 15 Oregon counties, as well as in 14 cities and neighboring communities in 3 Washington counties.

The Gas Storage segment provides underground natural gas storage services to interstate and intrastate customers in the Pacific Northwest. This segment serves primarily natural gas distribution, electric generation, and energy marketing companies. The company was founded in 1910 and is headquartered in Portland, Oregon.

Natural gas prices plunged in the last 15 months and that allowed NWN to lower its rates about 16% in Oregon and 22% in Washington. Lower rates will attract more customers and increase usage. To further help NWN's profitability, management recently negotiated a new 5 year union contract which keeps wage increases to 1% a year after the current year's 2.3% raise in 2009. In addition, between 50 to 100 positions are being eliminated and a new, more efficient meter-reading system is being implemented.

With gas prices low, look for more companies to convert from oil and electricity as their main power sources. New construction will also add new customers. In Portland, there's a new high-density zoning area which could add several thousand customers within a few years as condos and apartments are built.

NWN is expanding its storage capacity. A gas storage project in California should be completed by August of 2010. Furthermore a pipeline that's a joint venture with Trans Canada Gas is scheduled to open by 2013. Both projects will require about $500 million to complete but once finished should add considerable revenues and profits.

Part of the story for NWN is its commtiment to increasing the dividend. In 2005, the annual payout was $1.32 followed by $1.39, then $1.44. Last year, it was $1.52. This year will finish with $1.60. Next year it will be $1.66 unless the company does its usual increase in the fourth quarter. The yield is 3.7%. To pay the dividend takes 59% of earnings.

More numbers: Trailing P/E is 15.5. Price to sales is 1.13. Price to book is 1.86. Book value is $24.17. Operating margin for the last 12 months was 14.69% while Profit margin was 7.31%. Return on equity was 12.35%. Annual revenues in 2008 were $1.038 billion. Look for $1.07 billion this year, then $1.11 billion next year. Current ratio is 1.03. Beta is a very low .2. There are 26.52 million shares outstanding. Institutions own 59% of the stock. Value Line rates the company A for Financial Strength.

Conservative investors will find this stock of interest. Its price history is not exciting and rather flat over the last 3 years. Compared to the market's miserable performance that will come as high comfort. The dividend is decent. And with new projects over the next few years expected to increase profitability, this company should see slow but steady growth for some time to come.

- Company Web site: www.nwnatural.com

Ted Allrich