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Spectra Energy shares hit all-time high

NEW YORK (AP) -- Shares of Spectra Energy Corp. jumped to an all-time high Wednesday on the company's plans to move the rest of its U.S. transmission and storage assets to its limited partnership by the end of the year.

THE SPARK: Spectra said the move will allow it to increase its dividend and to boost Spectra Energy Partners LP's quarterly distribution rate.

THE BIG PICTURE: President and CEO Greg Ebel said the move will result in a stronger master limited partnership and boost the company's growth opportunities.

Spectra Energy expects to raise its annual dividend to about 12 cents per share, up from 8 cents. Meanwhile, Spectra Energy Partners plans to increase its quarterly distribution rate by 0.25 cent, to 1 cent.

The Houston-based company said it plans to provide more details about the deal when it releases second-quarter results in August.

THE ANALYSIS: Citi analyst Faisel Khan, who backed his "Neutral" rating and $30 price target for the stock, said he was surprised by the timing and size of the move, given the previously conservative stance of the company's management.

But Khan said he expects it to boost returns for Spectra Energy shareholders through dividend growth, higher cash flows at the general partner and Spectra Energy's ability to finance new projects using a cheaper cost of equity at the partnership.

THE SHARES: Spectra Energy shares rose $2.94, or 9.7 percent, to $33.26 in morning trading, after peaking at $33.96, their highest level since the company went public in 2006. Spectra shares have risen steadily since the start of this year, gaining about 11 percent.

Spectra Energy Partners rose $1.83, or 5.1 percent, to $39.08.