4/4/13: A New Conservative Holding

By Roger Conrad • April 4, 2013

This month’s Best Buys include a new Conservative Portfolio Holding, Boardwalk Pipeline Partners LP (NYSE: BWP). Boardwalk owns and operates transportation, storage, gathering and processing infrastructure with a focus on natural gas and related liquids.

Like most fee-driven energy midstream operators, Boardwalk Pipeline has tacked on some gains since touching bottom in mid-November 2012. Unlike our Conservative Holdings, however, it still yields upward of 7 percent, the result of no distribution increases since April 2012.

Before that Boardwalk Pipeline had increased its payout for 24 consecutive quarters since its inception in late 2005.

And the longer the lack of dividend growth, the greater skepticism has appeared to grow about the MLP’s prospects. Of the 15 analysts covering the stock, only two rate it a “buy” against nine “holds” and four “sells.”

Insiders, on the other hand, have remained steady buyers, boosting their holdings by 5 percent over the past six months. Meanwhile, the company has continued to grow its business, recently inking a joint venture with Williams Companies Inc (NYSE: WMB) to develop a pipeline system for natural gas liquids (NGLs).

Boardwalk Pipeline currently boasts a yield that’s currently twice that of some of our Conservative Holdings, backed by a company with good contacts that’s in basically the same fee-for-service type of business. Boardwalk Pipeline Partners is a buy up to USD30 for those who don’t already own it.

For more on Boardwalk Pipeline, see this month’s Best Buys feature in MLP Profits.

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Douglas Roberts

04/05/13 ‐ 10:47pm ET April 5, 2013 at 10:47pm ET

Question:
I own shares or units of ETP (Energy Transfer Partners). They issued more shares to reduce some debt, and yes the stock dropped by 3.5% after the announcement. I understand the dilution, but from a financial perspective, is ETP appear to having any financial problems?

Let me know.

Doug

Investing Daily Service

04/09/13 ‐ 10:15am ET April 9, 2013 at 10:15am ET

Hi Mr. Roberts:

In Roger’s April 4 “Waiting for More Numbers” article he addresses ETP. A copy of the article is enclosed below. He will have a better grasp of ETP’s financials in May when their newest numbers will become available.

Energy Transfer Partners LP (NYSE: ETP) should be turning in its first-quarter numbers on or about May 8. The key dilemma with MLP is if it will begin raising distributions again this year or if there’s another major merger on the horizon.

The company and its general partner, Energy Transfer Equity LP (NYSE: ETE), completed a major simplification move this month, as the latter effectively dropped down the rest of its operating assets in return for a greater stake in Energy Transfer Partners. Moody’s affirmed the ratings of both following the USD3.75 billion deal, despite the near-term cash needs of Energy Transfer Partners to complete it. The next deal could be a hookup with Regency Energy Partners LP (NYSE: RGP).

But I wouldn’t pay more than my longstanding target of USD50 for Energy Transfer Partners until we see a higher payout.

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