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My 4 Favorite High-Yield Oil and Gas Pipeline Stocks
Posted by: Dividend (IP Logged)
Date: March 14, 2013 09:39AM

Stocks from the basic material sector could complement your portfolio and hedge it against strong commodity price increases. One industry from the basic material sector with the highest yielding stocks is the oil and gas pipeline industry.

Thirty-nine companies are linked to the industry of which 37 pay dividends. Combined they have a total market capitalization of USD800 billion. Nearly 60 percent of the industry players have a yield over 5 percent and some have a really great dividend history. Thanks to the share gas boom it’s now possible that more pipeline infrastructure is needed. The average industry yield amounts to 4.72% and the P/E ratio is 33.40.

You should have seen some interesting pipeline companies on my blog in the past. Normally I am no fan of real estate companies because of the huge amounts of money they need for growing. But pipeline operators look different. They pay huge dividends and have the ability to grow dividends year over year. Their business model works but I don’t know how long. Pipeline operators are better than real estate stocks but it could be possible that the time brings some changes, especially when the energy demand and supply is changing.

Oil and gas pipeline stocks are real asset companies and they have a huge leverage on their balance sheet. The average industry long-term debt to equity ratio is over 123 percent but as long as revenue and cash flow streams are stable, this figure is still healthy.

Linked is a list of all higher capitalized oil and gas pipeline operators (over USD2 billion market cap) with a yield over 5 percent. Seventeen stocks fulfilled these criteria of which eight have a current buy or better recommendation.

Here are my favorite stocks:

Boardwalk Pipeline Partners (BWP) has a market capitalization of $6.38 billion. The company employs 1,200 people, generates revenue of $1.185 billion and has a net income of $306.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $726.10 million. The EBITDA margin is 61.27 percent (the operating margin is 39.98 percent and the net profit margin 25.82 percent).

Financial Analysis: The total debt represents 45.01 percent of the company’s assets and the total debt in relation to the equity amounts to 91.28 percent. Due to the financial situation, a return on equity of 7.43 percent was realized. Twelve trailing months earnings per share reached a value of $1.28. Last fiscal year, the company paid $2.13 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 21.67, the P/S ratio is 5.38 and the P/B ratio is finally 1.68. The dividend yield amounts to 7.70 percent and the beta ratio has a value of 0.24.

Atlas Pipeline Partners (APL) has a market capitalization of $2.12 billion. The company employs 350 people, generates revenue of $1.246 billion and has a net income of $68.06 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $193.70 million. The EBITDA margin is 15.55 percent (the operating margin is 4.97 percent and the net profit margin 5.46 percent).

Financial Analysis: The total debt represents 38.49 percent of the company’s assets and the total debt in relation to the equity amounts to 76.66 percent. Due to the financial situation, a return on equity of 3.76 percent was realized. Twelve trailing months earnings per share reached a value of $0.94. Last fiscal year, the company paid $2.26 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 35.03, the P/S ratio is 1.70 and the P/B ratio is finally 1.41. The dividend yield amounts to 7.06 percent and the beta ratio has a value of 1.56.

DCP Midstream Partners (DPM) has a market capitalization of $3.24 billion. The company employs 334 people, generates revenue of $2.358 billion and has a net income of $139.60 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $260.30 million. The EBITDA margin is 11.04 percent (the operating margin is 6.42 percent and the net profit margin 5.92 percent).

Financial Analysis: The total debt represents 39.23 percent of the company’s assets and the total debt in relation to the equity amounts to 118.82 percent. Due to the financial situation, a return on equity of 11.84 percent was realized. Twelve trailing months earnings per share reached a value of $1.24. Last fiscal year, the company paid $2.52 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 36.02, the P/S ratio is 1.37 and the P/B ratio is finally 3.17. The dividend yield amounts to 6.16 percent and the beta ratio has a value of 1.14.

Kinder Morgan Energy Partners (KMP) has a market capitalization of $32.07 billion. The company employs 10,685 people, generates revenue of $8.642 billion and has a net income of $2.025 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.428 billion. The EBITDA margin is 39.67 percent (the operating margin is 27.08 percent and the net profit margin 23.43 percent).

Financial Analysis: The total debt represents 54.13 percent of the company’s assets and the total debt in relation to the equity amounts to 153.43 percent. Due to the financial situation, a return on equity of 7.34 percent was realized. Twelve trailing months earnings per share reached a value of $1.65. Last fiscal year, the company paid $4.98 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 52.21, the P/S ratio is 3.77 and the P/B ratio is finally 3.79. The dividend yield amounts to 6.00 percent and the beta ratio has a value of 0.40.

Take a closer look at the full list of the best yielding oil and gas pipeline stocks. The average P/E ratio amounts to 32.24 and forward P/E ratio is 22.35. The dividend yield has a value of 6.75 percent. Price to book ratio is 2.46 and price to sales ratio 4.39. The operating margin amounts to 18.45 percent and the beta ratio is 0.70. Stocks from the list have an average debt to equity ratio of 1.17.

Related stock ticker symbols:
NS, RGP, BWP, EEP, ETP, APL, BPL, CQP, NRGM, TCP, NGLS, DPM, CPNO, KMP, EPB, PBA, OKS

Selected Articles:
· 17 Cheap Growth Stocks From The Basic Material Sector
· 20 Highly Recommended Basic Material Stocks
· Best Basic Material Dividend Stocks For 2013
· The Best Large Cap Basic Material Dividend Stocks With Highest Growth Potential

Oil & gas pipeline operators with highest dividend yields originally published at long-term-investments.blogspot.com.


Stocks Discussed: NS, RGP, BWP, EEP, ETP, APL, BPL, CQP, NRGM, TCP, NGLS, DPM, C,
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