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.
New Options Trade: Chesapeake Bankruptcy Ripples High Income Opportunities
After surviving a near-bankruptcy experience in 2015-16, many investors didn’t expect Chesapeake Energy to file Chapter 11 as it just recently announced. And it’s not Chesapeake shares that we are interested in, but rather the shares of a midstream provider that derives 6% of its revenues from Chesapeake. Volatility has spiked, and fear has already caused the shares to sell off a little farther than they should have, in our view. As a result, this attractive high-income options trade opportunity has emerged. We believe this is an attractive trade to place today and potentially over the next few days, as long as the underlying stock price doesn’t move too dramatically before then.
Double-Digit Yields: Natural Gas and The Companies that Move It
The volume of natural gas demanded did not go down appreciably during the Great Recession nor the 2015 oil price crash, and it won't here either. Thus firms whose main business is moving natural gas from here to there for a fixed fee are not going to be that heavily affected. This guest article (from Darren McCammon) reviews two such companies that currently offer attractive, well covered, double digit dividend yields (we currently own one of the two). According to Mr. McCammon “these are exactly the type of firms one should be buying greedily as everyone else runs in fear.”
Attractive 6.1% Yield Energy Company (We Own It)
After a difficult period involving financial and operational reorganization, this energy company has emerged financially stronger and set to grow its already attractive dividend. This article provides a background on the company, analyzes its recent past, dividend potential and finally concludes with our opinion on who might want to consider investing.
More Good News on Current Holdings: China Deal, A Consolidation, And Small Caps
We’ve had more very positive moves in three of our current holdings, and there are reasons to believe these upward trends will continue. In particular, the evolving trade deal with China could be very beneficial to one of our industrial stock holdings, one of our energy sector stocks just received a nice upward bump following consolidation news subsequent to new FERC regulations, and a certain small cap play is poised for a continued strong rally.