Investors frustrated with low interest rates on savings and
uncertainty about the stock market have found some comfort in
master limited partnerships.
MLPs raise money from investors to finance their activities,
most commonly oil and gas exploration, transportation and
storage. The MLPs pay no taxes on profits but are required to
make regular cash payments to their investors.
Plains All American Pipeline (
) is one such MLP. The stock offers the best of both worlds --
capital appreciation and a steady income stream. The shares are
up 26% this year, almost triple the S&P 500. The annual
dividend yield is 4%, about double the S&P 500 average.
On Monday, Deutsche Bank upgraded the stock to buy from
PAA enjoys a 96 Composite Rating, third highest in the Oil
& Gas-Transportation Pipeline industry group behindEQT
Midstream Partners (
) andOiltanking Partners (
But PAA enjoys an advantage in that it trades more than
900,000 shares a day. That makes it more liquid and therefore
less risky than its rivals. In fact, most of PAA's biggest
competitors are thinly traded.
The stock boasts an Accumulation/Distribution Rating of A-,
indicating strong demand.
The company said Jan. 7 that it would boost its quarterly
payout to 56.25 cents a share, or $2.25 on an annual basis, from
54.25 cents. The company has increased the payout for 14 straight
quarters and 33 out of the 35 quarters.
Profit rose 22% in the latest quarter on a 6% increase in
The company said it will report first-quarter earnings May 7
after the close. Wall Street expects a 23% gain to 97 cents a
share on a 22% rise in revenue. Though profit margins are thin,
cash flow per share has risen for six straight years.