info:cagr_2012
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| Suggestions for a newbie' | Suggestions for a newbie' | ||
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| In a world where distribution gains approach zero, the yields of the GPs will fall to that of the MLP. The GP only has an advantage in a world where there is distribution growth. The pricing of the GPs of the big capped MLPs with long and good histories and strong balance sheets, have always sold with their growth component at a discount. [Companies with twice the dividend growth of others typically sell at yield spreads that are larger than the current yield spreads between MLPs and their GPs.] The GPs of the big caps to some extent have been stress tested in 2009 and survived that test. So they deserve to sell at lower yields than their MLP partners - and one can put more faith in a distribution growth projection going forward due to 2009's stress test. The first three of my ten suggestions are GPs: BGH [liquids], EPE [NGLs and natural gas, crude and refined products] and NRGP [mostly propane with some natural gas storage and gathering assets]. Be cognizant that GPs carry some additional legislative risk since they hold no physical assets and could be impacted more directly by potential tax law changes. This is not probable, but possible. | In a world where distribution gains approach zero, the yields of the GPs will fall to that of the MLP. The GP only has an advantage in a world where there is distribution growth. The pricing of the GPs of the big capped MLPs with long and good histories and strong balance sheets, have always sold with their growth component at a discount. [Companies with twice the dividend growth of others typically sell at yield spreads that are larger than the current yield spreads between MLPs and their GPs.] The GPs of the big caps to some extent have been stress tested in 2009 and survived that test. So they deserve to sell at lower yields than their MLP partners - and one can put more faith in a distribution growth projection going forward due to 2009's stress test. The first three of my ten suggestions are GPs: BGH [liquids], EPE [NGLs and natural gas, crude and refined products] and NRGP [mostly propane with some natural gas storage and gathering assets]. Be cognizant that GPs carry some additional legislative risk since they hold no physical assets and could be impacted more directly by potential tax law changes. This is not probable, but possible. | ||
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| + | If one wants to lessen this legislative risk - drop EPE and buy EPD. The GP/MLP spread on distribution growth has been better with BGH than EPE. And your portfolio may want propane exposure - and propane GP NRGP has been the star of distribution growth. Inflation risk scares me much more than legislative risk - so I [with my unique mix of fear and greed] would not suggest dropping down to only one GP. I would not suggest dropping down to two. | ||
| Buy Four Midstream MLPs | Buy Four Midstream MLPs | ||
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| . . and the too short to be much help primer from S&P - http:// | . . and the too short to be much help primer from S&P - http:// | ||
| - | If this message has been of use to you, then please return the favor by joining in the efforts to solicit better credit metrics reporting and more DCF/unit reporting of MLPs in the week before their conference calls. | + | If this message has been of use to you, then please return the favor by joining in the efforts to solicit better credit metrics reporting and more DCF/unit reporting of MLPs in the week before their conference calls. |
| My thanks again to passandshoot, | My thanks again to passandshoot, | ||
| Bob a.k.a. Factoids | Bob a.k.a. Factoids | ||
info/cagr_2012.1329866735.txt.gz · Last modified: 2012/02/21 18:25 by tomgee