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Re: Midstream prospects


@Holiday wrote:

@ElLobo wrote:

<snip>

Let me pose a question to you.  XOM is projected to pay $3.48 divey next year.  Was it riskier back on March 23, whenever it had an 11% yield or back in December, whenever it had a 5% yield?  I would opine that, back in December, XOM had a higher probability of a negative return, going forward, at $70/share than it did in March, trading at $32, hence it is LESS risky at a HIGHER yield!


Hi El,

That is an interesting way of phrasing that. I cannot say that I have ever thought about it like that before. 

I am looking at it through the lens of market perception. During a period of crisis, investors run for their lives. Stock price plummets, and yield skyrockets. From the markets perspective, risk is higher.

From my perspective, XOM is a dividend aristocrat, and has increased it's dividend for 37 straight years. I don't think they are interested in walking away from that distinction. The 11% yield made it worth the risk under this circumstance.

Exxon was a causality of indiscriminate selling when the market panicked and sold entire index. Exxon was a falling angel while other high yielding stocks are stumbling devils. I looked for, and bought, Falling Angels.

But, your argument presumes that what is true in one specific case is equally true in ALL cases which share that one single characteristic. You are arguing a false equivalency. True in a few cases, but not true in all cases you cite.

Try high yielding Dividend Aristocrats for starters. You will find the pool that I fished many stocks out of on the 24th. 

Thank you,

Holiday


Holiday,

I was simply responding to your conclusion (High yield does not indicate safety.)  Specifically, safety/riskiness is always relative.  My point, nevertheless, was that, in general, higher yield debt implies more risky debt but higher yield stocks USUALLY imply lower risk, for the reasons stated.  Novice investors always make your assumption, but those on THIS forum usually don't!  8-))

There are several ways of showing this.  I choose the single stock example.  I could have also listed all of the big oil aristrocrats and/or the big oil non-aristrocrats and asked you to explain why the higher yielding ones were 'riskier'.  Or ask, if LOWER yield implies less risk, are the non-divey payers the safest stocks to own?

At any rate, my thread is about the Alerian MLP ETF, where 5 of the top 10 holdings are aristrocrats.  Not sure, however, how long that will last, going forward!

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects

I agree that I really can't see oil going any lower, so it appears to have buying opportunities. 

Two CEFs that I have been tracking, MIE and NRGX seem to have some potential. What do you think? 

NRGX is interesting as it has this hybred aspect to it. Whether PIMCO can actually pull this off is another matter, but certainly at these prices, something that maybe throw $10k into and see what happens. 

MIE has totally tanked, and C&S cut the dividend significantly as well. 

Assuming economies start to recover. Even if via fits and starts, oil would be a good buy down here. 

I even had a position in CORR for awhile last year. They tanked along with the rest of the market. 

Your feedback on these or other options is appreciated. 

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Re: Midstream prospects


@astrokng wrote:

I agree that I really can't see oil going any lower, so it appears to have buying opportunities. 

Two CEFs that I have been tracking, MIE and NRGX seem to have some potential. What do you think? 

NRGX is interesting as it has this hybred aspect to it. Whether PIMCO can actually pull this off is another matter, but certainly at these prices, something that maybe throw $10k into and see what happens. 

MIE has totally tanked, and C&S cut the dividend significantly as well. 

Assuming economies start to recover. Even if via fits and starts, oil would be a good buy down here. 

I even had a position in CORR for awhile last year. They tanked along with the rest of the market. 

Your feedback on these or other options is appreciated. 


AMLP went ex-div on Thursday, kinda unexpectedly.  It cut it's divey down to $0.15, from $0.19, or about 20%, for about a 12% yield.  I wasn't expecting the cut, so I trimmed back my holding, booking a short term capital gain.

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects


@ElLobo wrote:

Recent article Oil Demand May Have Bottomed: What Midstream Investors Need To Know

<snip>

Personally, I have a sizable position in the midstream MLP ETF, AMLP, with 82% of its assets in its top 10 holdings:

Top 10 Holdings (81.83% of Total Assets) 
   
NameSymbol% Assets
Magellan Midstream Partners LPMMP12.98%
Enterprise Products Partners LPEPD11.89%
MPLX LP Partnership UnitsMPLX11.11%
Phillips 66 Partners LPPSXP10.73%
Energy Transfer LPET8.05%
Plains All American Pipeline LPPAA7.49%
TC Pipelines LPTCP6.07%
Shell Midstream Partners LPSHLX5.03%
Cheniere Energy Partners LPCQP4.48%
EQM Midstream Partners LPEQM4.00%

 

Regardless of how much oil is produced, or consumed, most of it has to be transported from well to refinery via midstream infrastructure.  AMLP bottomed on March 18 and has risen since.  At today's NAV and ttm distributions, AMLP yields 15%.  There is, obviously, the risk of these guys cutting their distributions this quarter, and going forward.  There's also the chance that some will raise their distributions.  After all, 5 of these top 10 are divey aristrocrats.


Hi EL,

I was researching AMLP this morning, and I cannot find any of these tickers listed as dividend aristocrats.  Which 5 are they?

From what I have read this morning, AMLP has tax liability issues. This chart does not look good either.

AMLP.jpg

Natural gas usage has seasonal influences.  Midstream operators don't get paid according to the price of LP, but they do get paid by the volume being transported. Economies recovering globally will surely increase demand, but there is a glut that needs to be worked off.  My sense is that there is pain yet to come.

I am liking the refiners better. XOM, PSX, CVX.  Conoco (COP) is part of Phillips, so I am not sure if there is an advantage to owning it over PSX.

I would reconsider your large position. If you are lucky, it is possible that you have simply been handed your own money back. Add total dividend income to the value of all your shares. If it is less than your initial investment, then you would have been better off holding cash and subtracting the "dividend income" from it. You are probably DEEP under water on a total return basis which means you are stuck in a High-Yield Hotel-California.

"You can check in any time you like, but you can never leave" (without realizing a capital loss).

Please let me know what the LP aristocrats are. You will save me some time. I might be interested in holding them as individual stocks, but AMLP does not seem appealing.

Thank you,

Holiday

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Re: Midstream prospects

"I was researching AMLP this morning, and I cannot find any of these tickers listed as dividend aristocrats. Which 5 are they?"

As of the end of March, EPD (23 years of ever increasing diveys), MMP (20 years), MPLX (8 years), PSXP (8 years), and SHLX (6 years).  In fact, here are the aristrocrats, with at least 5 years of even increasing diveys, from the Energy sector, as of the end of March:

  SectorIndustryYears
CNX Midstream Partners LPCNXMEnergyOil, Gas & Consumable Fuels6
Chevron Corp.CVXEnergyOil, Gas & Consumable Fuels33
Delek Logistics Partners LPDKLEnergyOil, Gas & Consumable Fuels8
Enbridge Inc.ENBEnergyOil, Gas & Consumable Fuels24
Enterprise Products Partners LPEPDEnergyOil, Gas & Consumable Fuels23
Enviva Partners  LPEVAEnergyOil, Gas & Consumable Fuels6
Green Plains Partners LPGPPEnergyOil, Gas & Consumable Fuels5
Holly Energy Partners LPHEPEnergyOil, Gas & Consumable Fuels15
Hoegh LNG Partners LPHMLPEnergyOil, Gas & Consumable Fuels6
Magellan Midstream Partners LPMMPEnergyOil, Gas & Consumable Fuels20
Marathon Petroleum Corp.MPCEnergyOil, Gas & Consumable Fuels10
MPLX LPMPLXEnergyOil, Gas & Consumable Fuels8
NACCO IndustriesNCEnergyOil, Gas & Consumable Fuels34
ONEOK Inc.OKEEnergyOil, Gas & Consumable Fuels18
PBF Logistics LPPBFXEnergyOil, Gas & Consumable Fuels6
Phillips 66PSXEnergyOil, Gas & Consumable Fuels8
Phillips 66 Partners LPPSXPEnergyOil, Gas & Consumable Fuels8
Shell Midstream Partners LPSHLXEnergyOil, Gas & Consumable Fuels6
Sprague Resources LPSRLPEnergyOil, Gas & Consumable Fuels6
Tallgrass Energy LPTGEEnergyOil, Gas & Consumable Fuels5
Texas Pacific Land TrustTPLEnergyOil, Gas & Consumable Fuels15
USD Partners LPUSDPEnergyOil, Gas & Consumable Fuels6
Valero Energy Corp.VLOEnergyOil, Gas & Consumable Fuels10
Western Midstream Partners LPWESEnergyOil, Gas & Consumable Fuels8
ExxonMobil Corp.XOMEnergyOil, Gas & Consumable Fuels37

 

No need for you to consider, let alone reconsider, my position in AMLP.  I took it shortly after it hit its all time low several weeks ago.  I've collected one distribution last week, and sold off a good chunk of my position after the distribution itself was cut about 20%, booking a very good short term capital gain in the process.  Ifn it isn't for you, so be it!  8-)

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects

 

Interesting thread guys...keep up the good discussions.

R48

 

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Re: Midstream prospects


@ElLobo wrote:

"I was researching AMLP this morning, and I cannot find any of these tickers listed as dividend aristocrats. Which 5 are they?"

As of the end of March, EPD (23 years of ever increasing diveys), MMP (20 years), MPLX (8 years), PSXP (8 years), and SHLX (6 years).  In fact, here are the aristrocrats, with at least 5 years of even increasing diveys, from the Energy sector, as of the end of March:

 


The requirements to be a Dividend Aristocrat are:

  • Be in the S&P 500
  • Have 25+ consecutive years of dividend increases
  • Meet certain minimum size & liquidity requirements

There are currently 66 Dividend Aristocrats. You can download an Excel spreadsheet of all 66 (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:

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Re: Midstream prospects


@Bentley wrote:

@ElLobo wrote:

"I was researching AMLP this morning, and I cannot find any of these tickers listed as dividend aristocrats. Which 5 are they?"

As of the end of March, EPD (23 years of ever increasing diveys), MMP (20 years), MPLX (8 years), PSXP (8 years), and SHLX (6 years).  In fact, here are the aristrocrats, with at least 5 years of even increasing diveys, from the Energy sector, as of the end of March:

 


The requirements to be a Dividend Aristocrat are:

  • Be in the S&P 500
  • Have 25+ consecutive years of dividend increases
  • Meet certain minimum size & liquidity requirements

There are currently 66 Dividend Aristocrats. You can download an Excel spreadsheet of all 66 (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:


The Dividend Aristrocrats are divided into 3 groups, all of which have continuously increased their diveys at least 5 years.  The first group, the Challangers, have increased at least 5 years but less than 9 years.  The Contenders are from 10 to 24 years, while the Champions are 25 years or more.  A spreadsheet with all such stocks is published each month, for the last 10 years.  Click on the Dividend Champions Excel Spreadsheet link on this page;

As of May 3, there are 139 Champions, 288 Contenders, and 383 Challangers, for a grand total of 810 Aristrocrats.

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects


@ElLobo wrote:

As of the end of March, EPD (23 years of ever increasing diveys), MMP (20 years), MPLX (8 years), PSXP (8 years), and SHLX (6 years).  In fact, here are the aristrocrats, with at least 5 years of even increasing diveys, from the Energy sector, as of the end of March:

  SectorIndustryYears
CNX Midstream Partners LPCNXMEnergyOil, Gas & Consumable Fuels6
Chevron Corp.CVXEnergyOil, Gas & Consumable Fuels33
Delek Logistics Partners LPDKLEnergyOil, Gas & Consumable Fuels8
Enbridge Inc.ENBEnergyOil, Gas & Consumable Fuels24
Enterprise Products Partners LPEPDEnergyOil, Gas & Consumable Fuels23
Enviva Partners  LPEVAEnergyOil, Gas & Consumable Fuels6
Green Plains Partners LPGPPEnergyOil, Gas & Consumable Fuels5
Holly Energy Partners LPHEPEnergyOil, Gas & Consumable Fuels15
Hoegh LNG Partners LPHMLPEnergyOil, Gas & Consumable Fuels6
Magellan Midstream Partners LPMMPEnergyOil, Gas & Consumable Fuels20
Marathon Petroleum Corp.MPCEnergyOil, Gas & Consumable Fuels10
MPLX LPMPLXEnergyOil, Gas & Consumable Fuels8
NACCO IndustriesNCEnergyOil, Gas & Consumable Fuels34
ONEOK Inc.OKEEnergyOil, Gas & Consumable Fuels18
PBF Logistics LPPBFXEnergyOil, Gas & Consumable Fuels6
Phillips 66PSXEnergyOil, Gas & Consumable Fuels8
Phillips 66 Partners LPPSXPEnergyOil, Gas & Consumable Fuels8
Shell Midstream Partners LPSHLXEnergyOil, Gas & Consumable Fuels6
Sprague Resources LPSRLPEnergyOil, Gas & Consumable Fuels6
Tallgrass Energy LPTGEEnergyOil, Gas & Consumable Fuels5
Texas Pacific Land TrustTPLEnergyOil, Gas & Consumable Fuels15
USD Partners LPUSDPEnergyOil, Gas & Consumable Fuels6
Valero Energy Corp.VLOEnergyOil, Gas & Consumable Fuels10
Western Midstream Partners LPWESEnergyOil, Gas & Consumable Fuels8
ExxonMobil Corp.XOMEnergyOil, Gas & Consumable Fuels37

 

<snip>


EL,

I am confused on many points. Maybe you can clarify.

First of all, a dividend aristocrat is defined as having a minimum of 25 consecutive years of dividend increases. So, the corrrect answer is NONE of the companies in AMLP are dividend aristocrats.

To make matters worse, the list of the companies in your OP are different than the list you just posted above. Neither list represents the actual holdings of AMLP.

If there is nothing in the years column below, it means it is not in your list above.

All AMLP holdings from their website  Years

MPLX LP

MLPX11.82%8
Magellan Midstream Partners, L.P.MMP10.92%20
Enterprise Products Partners L.P.EPD10.68%23
Energy Transfer, L.P. 9.77% 
Phillips 66 Partners LPPSXP9.00%8
Plains All American Pipeline, L.P. 8.36% 
TC PipeLines, LP 5.27% 
EQM Midstream Partners LP 4.51% 
Shell Midstream Partners LP 4.50% 
Western Midstream Partners LPWES4.20%8
Cheniere Energy Partners, L.P. 3.94% 
NuStar Energy L.P. 3.71% 
DCP Midstream LP 2.09% 
NGL Energy Partners LP 1.98% 
Genesis Energy, L.P. 1.97% 
Holly Energy Partners, L.P. 1.95% 
Crestwood Equity Partners LP 1.66% 
EnLink Midstream LLC 1.35% 
Enable Midstream Partners LP 1.11% 
CNX Midstream Partners LPCNXM0.79%6
Noble Midstream Partners LP 0.60% 

 

So only 6 of the companies you are talking about are actually held by AMLP.  What is going on?

Holiday

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Re: Midstream prospects


@ElLobo wrote:

At any rate, my thread is about the Alerian MLP ETF, where 5 of the top 10 holdings are aristrocrats


 

There are NO Aristocrats in the ALERAI MLP. Never have been AND never will be.!

 

The requirements to be a Dividend Aristocrat are:

Be in the S&P 500

Have 25+ consecutive years of dividend increases
Meet certain minimum size & liquidity requirements
There are currently 66 Dividend Aristocrats. You can download an Excel spreadsheet of all 66 (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:


Dividend Champions are companies that have increased their dividend for 25 or more consecutive years. Unlike the Dividend Aristocrats , Dividend Champions are not necessarily members of the S&P 500 index.


The Dividend Contenders are stocks that have grown their dividend for 10 to 24 consecutive years.

veni vidi vici vti
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Re: Midstream prospects

"So only 6 of the companies you are talking about are actually held by AMLP. What the hell is going on?"

@Holiday 

I'm talking about an ETF, not an individual company held, or not, by it at any particular point in time.

I, obviously, was going by an 'older' list of the top 10, and the information I originally posted was correct, at the time I made the post.  As were the number of years each of the 5 had continuously raised their diveys.  THAT information was correct as of the end of March, as I indicated, specifically the number of years each individual company had continuously raised its divey.  I had not gotten the end of April dividend aristrocrat spreadsheet whenever I made my OP.

Take the OP at its face value, or not.  AMLP is the largest MLP infrastructure, by AUM, ETF that I know about.  Invest in individual MLPs, rather than AMLP, or not.  Do your own DD or not.  March/April was a good time to take a position in it.

Stay safe.

 

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects

@ElLobo- "You may not know or understand this but the dividend a company pays depends completely on earnings, not their credit worthiness"

Dividends are paid from Cash Flow which includes debt. To @Holiday 's point, the lower the credit rating the higher the interest rate.       From Investopedia below -

"Cash from financing activities include the sources of cash from investors or banks, as well as the uses of cash paid to shareholders. Payment of dividends, payments for stock repurchases and the repayment of debt principal (loans) are included in this category.

Changes in cash from financing are "cash in" when capital is raised, and they're "cash out" when dividends are paid"

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Re: Midstream prospects

"Dividends are paid from Cash Flow which includes debt."

I have no idea what you mean, Fish!

Cash flow is earnings minus expenses, aka profits, in simple terms.  Expenses include interest payments, which, obviously, are higher per unit of debt for higher yields, aka lower credit worthiness.  Are you quibbling that I used the term 'earnings' rather than 'profits'?

Maybehaps you can explain how a higher dividend yield implies a lower creditworthiness company!  Or respond to my question to Holiday wrt XOM.

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects

Hi 


@MNfish wrote:

@ElLobo- "You may not know or understand this but the dividend a company pays depends completely on earnings, not their credit worthiness"

Dividends are paid from Cash Flow which includes debt. To @Holiday 's point, the lower the credit rating the higher the interest rate.       From Investopedia below -

"Cash from financing activities include the sources of cash from investors or banks, as well as the uses of cash paid to shareholders. Payment of dividends, payments for stock repurchases and the repayment of debt principal (loans) are included in this category.

Changes in cash from financing are "cash in" when capital is raised, and they're "cash out" when dividends are paid"


Hi MN,

That is exactly my point. There is a HUGE difference between a dividend aristocrat with an abnormally high yield, and the typical "junk bond" that has a credit rating of B. 

Having access to capital during a crisis is crucial to avoid default in many cases. Having a high credit rating like XOM significantly reduces the cost of that capital; another strong positive.

For some reason, EL is arguing that there are no differences between companies which have high yields. Furthermore, he argues that the higher the yield, the safer the company which flies in the face of nearly all economic theory. I don't understand either argument or why he feels that way. But, evidently he does. 

Falsely citing AMLP ownership and being dishonest about the number of "dividend aristocrats" (zero is true) in its portfolio was a turning point for me. EL's credit rating went from AA to C- in my book.

Looking at this another way:

If I were a bank and someone with a credit rating of AA asked me for a loan, I would give it to him. If another person with a credit rating was C- asked me for the same loan, then I would foreclose on his house to get my money while I still could.

Maybe EL is being paid to pump this dog so others can dump it?

Thank you,

Holiday

 

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Re: Midstream prospects


@Holiday wrote:

I would not buy a junk index that targets the oil patch, but I might buy an individual company from it.

Holiday

 


Holiday, a few things.  First, if I'm understanding some posts of yours, you were opportunistic back in March and I assume still are to some degree.  Second, we're on a thread that is titled 'prospects' so I assume we're forward-looking here.  Third, you've provided some thoughts on credit worthiness, indicating a realistic look at enterprises that can weather a little storm.  Fourth, I think it's obvious that ElLobo was referring to dividend champions/challengers/contenders when he used (lower case) 'aristocrats.'  The trademarked S&P Dividend Aristocrats wouldn't include a master limited partnership if it had increased its distribution 55 years in a row.  Standard & Poors by rule does not include those entities in its 500 index.

Some facts, in the event you're serious about investigating individual enterprises in the midstream area:

> Enterprise Products (EPD) and Magellan Midstream (MMP) have BBB+ ratings.  Together they comprise about 25% of the ETF mentioned.

> MMP has increased its distribution every year since its IPO.  Every year.  It's current distribution is almost 700% greater than it was in early '01

> MMP will book an increase in its distribution for 2020 even if it maintains its current distribution for the balance of the year.

> In spite of now being in the midst of an epic energy mess, MMP's total return from IPO thru April was 15.72%.

> MMP is trading at a 9.7% yield today.

> EPD has increased its distribution every year since its IPO. Every year.

> EPD will book an increase in its distribution for 2020 even if it maintains its current distribution for the balance of the year.

> In spite of now being in the midst of an epic energy mess, EPD's total return from IPO thru April was 13.68%.

> EPD is trading at a 9.7% yield today.

 

Okay, that crap is history, I realize.  And I refuse to compare the total returns of these two enterprises to some broad market index.  Comparing an individual company's total returns to an index is an intellectually challenged exercise.  Silly.  Stupid.  A waste of time.  After all, approximately half of any index falls below the average performance of the index.  I realize there are some who do that.  Silly.  Stupid.  A waste of time.

Frankly, even the concept of total return itself isn't relevant to many investors.  Especially to many who post around here and who outright state that their investing objective is income, not total return.  What the hell do I care if Magellan sports a 15.72% total return if the only return I'm ever going to get is the cash the company sends me?

With respect to prospects, I suppose some history is relevant in that it can show some commitment or level of competence of company management, so there is that.  But I'd suggest that if someone really want to consider prospects of individual companies in the midstream patch, they need to get down in the weeds and investigate recent filings and financial results and and capex plans and management forecasts.    Things like that.  And I suppose they need to consider those things in the context of their guess on what the Saudi and Russia honchos are gonna do and when the freeways will fill with Escalades ripping along at 75 and how many people are going to plug in their cars instead of gassing them up.

By the way, are you investing in a taxable situation when you say that you might consider some of these outfits?

 

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Re: Midstream prospects

"There is a HUGE difference between a dividend aristocrat with an abnormally high yield, and the typical "junk bond" that has a credit rating of B."

No question about it.  A dividend aristrocrat is a stock (or mlp, in this case), paying an ever increasing dividend.  The stock/mlp may also issue bonds, which pay coupon interest.  The dividend yield isn't related to the bond yield.

"EL is arguing that there are no differences between companies which have high yields."

Nope, never said or implied that.  Two companies that have the same bond coupon yields on their debt are considered, by the credit rating agencies, as having approximately the same credit worthiness.  You can't compare the credit worthiness of two companies by comparing their dividend yield.

"EL's credit rating went from AA to C- in my book."

No problem.  This is my thread, newbie.

You're welcome.

ElLobo, de la casa de la toro caca grande
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Re: Midstream prospects


@Holiday wrote:

 




@ElLobo

 




 

Falsely citing AMLP ownership and being dishonest about the number of "dividend aristocrats" (zero is true) in its portfolio was a turning point for me. EL's credit rating went from AA to C- in my book.

 

...Maybe EL is being paid to pump this dog so others can dump it?

 

Holiday

 


What brought this on, Holiday?

Was it necessary to  somehow  post someone is "dishonest"...or being paid to take positions??

Seems you did same to me in a post a couple weeks back, going into a political rant regarding something I had posted.

TDS issue, I surmise.

R48

 

 

 

 

 

 

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Re: Midstream prospects


@retiredat48 wrote:

@Holiday wrote:

 




@ElLobo

 




 

Falsely citing AMLP ownership and being dishonest about the number of "dividend aristocrats" (zero is true) in its portfolio was a turning point for me. EL's credit rating went from AA to C- in my book.

 

...Maybe EL is being paid to pump this dog so others can dump it?

 

Holiday

 


What brought this on, Holiday?

Was it necessary to  somehow  post someone is "dishonest"...or being paid to take positions??

R48

 


 

Bob,

 Do you believe there are MLP aristocrats?

 Do you believe there are MLPs with less than 25 years of growing dividends that are aristocrats?

 Claiming a product is an aristocrat when it is not may be considered dishonest or misleading by many.

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Re: Midstream prospects


@ElLobo wrote:

"Dividends are paid from Cash Flow which includes debt."

I have no idea what you mean, Fish!

Cash flow is earnings minus expenses, aka profits, in simple terms.  Expenses include interest payments, which, obviously, are higher per unit of debt for higher yields, aka lower credit worthiness.  Are you quibbling that I used the term 'earnings' rather than 'profits'?

Maybehaps you can explain how a higher dividend yield implies a lower creditworthiness company!  Or respond to my question to Holiday wrt XOM.

 

Net Income is earnings minus expenses, aka profits, in simple terms. Cash flow is Net Income + Depreciation +/- Cash from Investing +/- Cash from Financing in simple terms. There's plenty of companies that don't have enough net income to cover their dividend in any given quarter, month, year.

As to XOM being more or less risky because their yield "percentage" is higher than it was doesn't matter to me much. I bought some at $55ish and some at $35ish in March, not because the yield % was high but because the price was low and they're a pretty well run company. 

 

 


 

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Re: Midstream prospects


@MNfish wrote:

@ElLobo wrote:

"Dividends are paid from Cash Flow which includes debt."

I have no idea what you mean, Fish!

Cash flow is earnings minus expenses, aka profits, in simple terms.  Expenses include interest payments, which, obviously, are higher per unit of debt for higher yields, aka lower credit worthiness.  Are you quibbling that I used the term 'earnings' rather than 'profits'?

Maybehaps you can explain how a higher dividend yield implies a lower creditworthiness company!  Or respond to my question to Holiday wrt XOM.

 

Net Income is earnings minus expenses, aka profits, in simple terms. Cash flow is Net Income + Depreciation +/- Cash from Investing +/- Cash from Financing in simple terms. There's plenty of companies that don't have enough net income to cover their dividend in any given quarter, month, year.

As to XOM being more or less risky because their yield "percentage" is higher than it was doesn't matter to me much. I bought some at $55ish and some at $35ish in March, not because the yield % was high but because the price was low and they're a pretty well run company. 

 

 


 


Fair enough.  Now, how does this relate to the creditworthiness of a company, as represented by the ratings assigned to its debt by the agencies?  THAT was Holiday's, and your, focus, in this thread.

"Dividends are paid from Cash Flow which includes debt."  As near as I can tell, using debt to pay dividends higher than cash flow isn't a characteristic of a 'well run' company, certainly not any that are divey aristrocrats.

To repeat: "Maybehaps you can explain how a higher dividend yield implies a lower creditworthiness company!"

ElLobo, de la casa de la toro caca grande
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