Re: BIP ... >>> Any thoughts on BIP? <<< ............
I'm not sure what to think of it. It lists as an electric utility, yet it is a limited partnership.
Since you are asking about my thoughts, I'll share them. Keep in mind this is based on my objectives as I construct my dividend growth portfolio.
So my first task is to determine if I want it in my portfolio as a utility holding or under my MLP holdings.
As an MLP, it's common to have a payout ratio above 100% due to the way they are structured.
If I want to own an MLP, I'd prefer to stick with the pipeline companies. They are considered the safest of the MLP's with regard to dividends. They are basically considered toll roads for anything liquid that has to be shipped from the source. A couple of my MLP's are also involved in the gathering and process of liquids, but they are still basically a pipeline company.
My MLP holdings are:
EPB - yld 5.0%
EPD - yld 5.5%
KMP/KMR - yld 6.4%
MMP - yld 5.4%
BIP wouldn't fall into this category. BIP is more of an infrastructure MLP.
I own TPZ which is an energy infrastructure play.
TPZ - yld 6.4%
I prefer TPZ over BIP because TPZ is a pure energy infrastructure play and the energy MLP's seem to be the safest for dividend protection. TPZ holds MLP's and bonds of energy related companies.
I will be adding MLPI to my portfolio in the coming days.
MLPI - yld 5.2%
MLPI seeks to replicate the Alerian MLP Infrastructure Index.
BIP is too far off track to fit into my MLP portion of the portfolio. In addition to energy, it is also into shipping ports, timber, hospitals and prisons. If I want that kind of diversity, I'd prefer to purchase an ETF that diversifies among various companies that cover those sectors as opposed to one company spreading out like that.
If I'm looking to add BIP as a utility play, then I have to be concerned about the payout ratio because earnings don't cover the dividend. Utility stocks are generally very reliable dividend plays. I want the yield and I want the safety. I will own more utility companies than any other type of companies.
I currently own:
D - yld 4.3%
NST - yld 3.9%
PGN - yld 5.6%
SO - yld 4.8%
In the coming days I'm adding:
EXC - yld 5.3%
NGG - yld 7.6%
POR - yld 5.0%
My wild card in the group is NGG. It has the shortest dividend history of the group. BIP also has a short dividend history.
I also get foreign exposure with NGG, just the other side of the world than BIP. But again, if I want a utility, I want a company whose focus is on energy.
So, BIP doesn't fit there either.
I think where BIP fits is if someone just wants the yield without that yield being part of a dividend jigsaw puzzle like I'm constructing. <lol>
If someone has more of a focus on capital gains than income stream, I think BIP fits there even better.
So it depends on what your objective is at the time you are considering it. (Phew, you forced me to think. I need a beer.) |
