Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

Natural Gas Midstream offers gas processing, gathering, and other related natural gas services. This segment owns and operates natural gas midstream assets located in Oklahoma, Pennsylvania, and Texas. It owned and operated approximately 4,200 miles of natural gas gathering pipelines and 7 natural gas processing facilities with approximately 420 million cubic feet per day of capacity. It also owns a natural gas marketing business, which aggregates third-party volumes and sells those volumes into intrastate pipeline systems and at market hubs accessed by various interstate pipelines. The company was founded in 1882 and is based in Radnor, Pennsylvania.

What makes this Limited Partnership a little different is that it has 2 sources of business: coal and natural gas. Most LP's focus on only one. Furthermore, it doesn't actually operate any coal mines so it doesn't have large capital expenditures. But it does receive royalties which give it a stable cash flow. That's why investors feel comfortable the dividend is relatively safe. It's also relatively high.

Paying out a penny more each quarter in 2011 (starting at 47 cents, then 48, 49 and finally 50), total dividends this year will be $1.94. If the 50 cent dividend holds, that makes for $2.00 in 2012. Most likely it will be raised again. It takes 134% of earnings to pay it, but since dividends are paid from cash flow, having dividends, at least temporarily, higher than earnings is not too much of a concern. It will be if it continues for too long but for now, the dividend appears safe. Also, since this is an LP, it has to pay out at least 70% of its earnings, by law. Judge LP's on their cash flow more than earnings at least in terms of getting paid a dividend.

Third quarter earnings were a little disappointing, missing analysts' expectations by 31% or 29 cents vs the expected 42 cents. The main reason was in the company's Panhandle facilities where there were capacity constraints. The consequence: lower margins in the midstream segment. The remedy: more processing capacity. The company is adding enough to process 120 million more cubic feet per day. Earnings for the full year are expected to be $1.41, up from 83 cents in 2010. For 2012, look for $1.67.

As mentioned, the company operates in 2 segments. The coal business reaps the royalties without the regulations, allowing for stable cash flows. The natural gas midstream business is where the growth should be. To exploit the opportunity requires heavy capital expenditures to build out and maintain infrastructure. For example, the company recently spent $120 million on the Marcellus Shale project, completed this year. The benefit is that this division has the potential to provide ever higher dividends for a long time to come. Another key development: the company doesn't have a General Partner. It merged with its GP last year, simplifying its corporate structure. In this new form, the company has a lower cost of capital and better efficiency.

Essential Numbers:
- Market Cap: $1.80 billion
- Trailing P/E: 16.32
- Forward P/E: 15.15
- Price to sales ratio: 1.6
- Price to book value: 4.37
- Operating margin: 12.77%
- Profit margin: 8.0%
- Return on equity: 22.72%
- Return on assets: 6.46%
- Revenues (last 12 months): $1.12 billion
- Total cash: $13.91 million
- Cash per share: 20 cents
- Total Debt: $938.42 million
- Total debt to equity: 228.96%
- Current rato: 1.03
- Book value per share: $5.77
- Beta: .9
- 52 week change: -8.66%
- Shares Outstanding: 71 million
- Float: 65.74 million
- Held by insiders: 1.07%
- Held by institutions: 16%

An interesting note is that the stock has historically traded about 12 times its dividend. So it's currently about fully priced. But the dividend will most likely increase this year by at least 4 cents, probably a penny a quarter, if not more. If oil and natural gas continue to see higher prices, expect the dividend to increase even faster. That should mean the stock price will as well.