Round Table: Our Take on Q3 Earnings So Far
Are you concerned by the large number of energy company dividend cuts we seem to be seeing this earnings season? – Roger Conrad: Let’s get one thing straight right up front. There’s no such thing as a “good” dividend cut. When a company reduces its payout, investors lose income and share prices typically fall to reflect the lower amount. That’s why we want to avoid stocks at risk of dividend cuts and it’s the reason we have an Endangered Dividends List.
Endangered Dividends List
Buckeye Partners (NYSE: BPL) is cutting its quarterly distribution for the first time in its 30-year plus history, from $1.2625 to 75 cents per unit. That’s a -40.6 percent reduction starting with this month’s payment, an amount right in line with our expectation.
Roundtable: Energy and the Stock Market
Roger Conrad: A month ago, we talked about the super majors as really a breed apart in the energy business, particularly for anything to do with long-term business resiliency. A lot of that has to do with balance sheets.
I mean there are plenty of sovereign governments that can’t match the Aaa credit rating ExxonMobil (NYSE: XOM) draws from Moody’s.
Endangered Dividends List
Endangered Dividends List companies are vulnerable for different reasons like cash flow, elevated debt levels, revenue pressure etc. This edition of the EDL table is expanded by five names since the previous issue of EIA.
The Outlook for Gas
Since the end of 2011, the average weekly closing price for front-month US natural gas futures is roughly $3.15/MMBtu, in-line with the current price of $3.12/MMBtu. In the short term, US gas storage levels are at the lowest levels in 15 years, supply growth is constrained and demand remains robust. That could lead to a spike in NYMEX gas futures to $4/MMBtu or higher this winter.
Endangered Dividends List
Endangered Dividends List companies are vulnerable for different reasons like cash flow, elevated debt levels, revenue pressure etc.
Endangered Dividends List
Ferrellgas Partners (NYSE: FGP) has exhausted a $50 million reserve for paying distributions. Under its debt covenants, the propane distributor MLP will have to suspend its distribution entirely, until the consolidated fixed charge coverage ratio recovers.
Roundtable: Our Views On Super Majors
Talking Point #1: What’s your general view of the super major oils at this time?
• Roger Conrad (RC): I became a shareholder of Chevron Corp (NYSE: CVX) when it acquired the former Texaco, which I believe was actually the first stock I ever bought. I was fresh out of business school and made an investment in Texaco’s dividend reinvestment plan, and I’m happy to report that I literally make more in dividends every year than my original investment.
Model Portfolios: Simplifying our Strategy
Starting in September, we’re taking a giant step to simplify our Energy and Income Advisor Portfolio strategy.
Our 3 Model Portfolios are divided into “Conservative” and “Aggressive” Holdings. The Conservative stocks are intended to be bedrock positions, where our objective is long-term capital appreciation and in most cases a rising stream of income. The Aggressive stocks carry more risk but also more upside potential and often very high yields to reward your wait.
Roundtable: Our Views on Q2 Earnings, Picking Permian Basin Targets, MLP Corporate Conversion, 2018 Political Risks and More
Talking Point #1: The Permian Basin of West Texas and New Mexico
– Roger Conrad (RC): Elliott, a lot has happened in the energy sector since the Roundtable discussion you and I had following MLP & Energy Infrastructure Conference. But the most striking development to me is how, despite what seems to be an endless legion of skeptics, the action in the Permian Basin just keeps heating up.
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Live Chat with
Elliott and Roger on Oct. 29, 2018
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Coverage Universe
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLP Ratings
Our assessment of every energy-related master limited partnership.
International Coverage Universe
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor