| | | Hi E_K_S,
I'd love to have your review on a stock I've recently sold some puts on.
Symbol PAGP. Not to be confused with PALP. PAGP is the General Partner of the Plains Pipeline L.P.
PAGP is a C-Corp and has a qualified dividend, just recently increased to .4175 or $1.67 annualized.
They have recently entered into an agreement to sell the NGL business and have recently completed two transactions, which first bought 45% of the "EPIC" pipeline, and subsequently also bought out the remaining 55% owner/operator as well.
This now yields them as the operator, in which they historically have been a customer with the previous seller. They anticipate some very beneficial synergies as operator owner. Additionally they anticipate modest Capex needs in the future.
It is another light shale oil pipeline that sources oil from both the Eagle Ford shale in Southwest Texas and the Permian.
Unlike KMI, the pipeline's terminal is in Corpus Christi an up and coming deep water port that can fill VLCC (Very LargeCrudeContainer) ships.
They seem to be very conservative. As the LNG sale gets all approvals, they have taken on some debt by up the EPIC pipeline. Until that transaction is funded they have increased their debt to the mid-point of their comfort zone. Upon funding they will return to their lower level of debt ratios.
I sold some $20 puts for March and May 2026.
The stock has a recent low of $16.61 (in April of 2025) and I didn't buy any shares. Since then, it has gone into the 21's. On this big down day it has gone up to $21.20.
If those puts get assigned it will yield an 8.25% to 8.5% return.
It is really a tracking stock for me, but I'm quickly wishing I had just bought some shares as well.
Hopefully it will trade sidewaysjust above $20.00 and allow me to stagger out into the future some more $20.00 puts.
Hoping you might have the time to give it your eagle eye analysis.
Rogue Dolphin has posted several Dan Steffen's substacks on oil and gas and he has this C-Corp as one of the five best pipelines that pay dividends.
It has caught my attention as that is exactly my kind of value play. Sideways price action for years, as I compound a nice dividend with regular put premium.
He says pipelines are huge safe income as they stay in the ground for decades and are vastly undervalued.
That view rings very true to what you and I have said for years about KMI.
I'm hoping we may have found another undervalued HIGH DIVIDEND payer.
Perhaps they are undervalued because their symbol and name are often confused with the same named Limited Partner - which I stay away from, due to the lack of qualified dividends.
TIA.
Bobjigh |
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