If you an income-focused investor, you have likely come across energy midstream companies (including master limited partnerships (“MLPs”)). These specialized companies transport oil and gas through pipelines, and they can offer some very large and steady income payments to investors (thanks to the steady long-term contracts they have in place with clients). However, before you invest in any of these companies, you need to understand the unique nuances and tax risks of the MLP structure, particularly with regards to account types (i.e. should you hold in your IRA, your taxable account, or neither). In this report, we share data on the top 10 midstream companies (including the top 5 MLPs), review Energy Transfer (an MLP) in particular (including its business, big yield, valuation and risks), and then finally conclude with our strong opinion on if (and where) your should even consider investing.
12 Big-Yield Oil & Gas Midstream Companies, Compared
If you like big-yield income, you’ve likely come across the oil & gas midstream industry. The group can offer impressive high income, plus total returns that are less correlated with the overall stock market (because of the steady fee-based income these companies generate). But there are a few things you need to consider before investing. In this brief report, we share comparative data on the 12 biggest companies in the group, plus a few important caveats on investing in them.
Energy Transfer: Tempting Big Yield, Dynamic Big Risks
If you are an income-focused investor, Energy Transfer offers a tempting 9.7% yield. Especially considering the stable fee-based income, the healthy distribution coverage ratio and the ongoing volume growth trajectory. However, there are variety of big risk factors that investors should consider, including debt levels, MLP tax considerations, management team, the lack of a strong competitive moat, rising interest rates, regulations, environmental concerns and the overall volatility profile of the industry. In this report, we provide an overview of the business, consider the attractive qualities that make the distribution so tempting, review the risks, evaluate the current valuation and then conclude with our opinion on investing.
New Options Trade: High Upfront Income, Diversified Midstream
In this report, we share a high-income-generating options trade on a diversified pipeline company that continues to make progress on paying down debt, it continues to pay an attractive distribution, and the share price is increasingly attractive. We believe the trade is attractive to place today, and potentially over the next few trading sessions as long as the underlying share price doesn’t move too far before then.
Undervalued 5.4% Yield Midstream: Decreasing Leverage, Increasing Distributions Expected
One of the largest and most diversified midstream pipeline operators in the US, the company we review in this report is focused on deleveraging its balance sheet and positioning for future distribution increases. And despite the recent strong price gains, the company continues to trade at discount to peers and has more upside ahead considering the healthy fundamentals. In this report, we review the health of the business, valuation, risks, dividend safety, and conclude with our opinion on investing.
4 Big Dividends That Have Gotten Less Expensive: Energy Transfer (ET), New Residential (NRZ), Ventas (VTR), Oxford Square (OXSQ)
The market continues to reach new all-time highs, and our investment portfolios do too. However, a handful of popular big dividend paying equities have gotten particularly less expensive in recent weeks. This week’s Weekly provides a brief update on all four of them, and whether we believe they are worth investing or avoiding altogether.
Options Trade: Energy Transfer, Attractive Premium Income
Energy Transfer is an attractive, big-distribution midstream energy company, and the price is significantly too low (in our view) because it has been incorrectly lumped in with other energy stocks whose near and intermediate term prices are more dependent on energy prices (ET has stable long-term contracts based on volume, not energy prices). Further, the recent volatility has created an attractive high-income-generating opportunity in the options market. This write-up shares the specific details on this attractive income-generating trade.
Energy Transfer's 8.8% Yield: Solid Income Potential? Improving Fundamentals?
Some investors view Energy Transfer, LP (ET) as a stable, cash flow generator. But are is it? And are the fundamentals actually improving? If you don’t know, it’s a Master Limited Partnership (MLP) that operates energy oriented transportation, storage and midstream assets in major production basins in the United States. This article provides a background on the company, analyses its cash flow generation, balance sheet, dividend potential and finally concludes with our opinion on whether investors should take advantage of the company’s high dividend yield.
Energy Transfer: Attractive 8.7% Yield, But Know The Big Risks
Energy Transfer (ET) offers a big 8.7% yield, and it trades at a very attractive EV-to-EBITDA relative to peers. However, if you’re going to invest, you may want to consider the big risks ET is currently facing (i.e. the price is low and the yield is high for a reason). This article provides an overview of Energy Transfer, reviews the big risks the organization faces, and concludes with our views on whether Energy Transfer is worth considering as an investment.