Wednesday, June 28, 2017

Recent Buy – Inter Pipeline Ltd

As the market continues its relentless climb, I have been weary and finding it harder to find some good investment opportunities. The purchases have all but dried up in my portfolio. However, I was finally able to pull the trigger last week when I saw a pretty good opportunity in the energy sector. Midstream/pipelines were one of the best performers in 2016 and the stock picking competition resulted in Top 3 to be pipelines. However, they seemed to have pulled back a bit this year, and I decided to add to my existing position.
I added 100 shares in Inter Pipeline Ltd (IPL.TO) @ C$26.00. The company pays C$1.62 in dividends annually and currently yields 6.15%.

Recent Buy Decision

  • I have owned Inter Pipeline for years now and this company has been one of the most reliable monthly payers in my portfolio. It’s a company, I am very familiar with and am confident to put more money to work.
  • The stock, after a fantastic  2016 (40% in capital gains + dividends in 2016), has pulled back about 10% so far YTD in 2017. I think its a pretty good valuation currently to buy more shares.
  • The company has been expanding its business and has a very well diversified business model. Diversification comes from Oil Sands Transportation, NGL Processing, Conventional Oil Pipelines and Bulk Liquid Storage (see image below for details).

  • IPL also has been expanding geographically with bulk storage terminals in Europe.
  • IPL recently successfully completed the acquisition of NGL midstream business from Williams Canada for $1.35B, expanding its footprint in the space.
  • I bought this in my trading account, so I may or may not decide to write some covered call options on this position in the future, depending on how the opportunity presents itself. I am hoping to get ever juicier than 6.1% that the stock currently offers
  • Instead of rehashing all the points of why I believe in this company, here is a link to the corporate presentation.
What do you think of this purchase. Be sure to leave your thoughts below.

Full Disclosure: Long IPL.TO. Our full list of holdings are available here.

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