EUROPE’S ENERGY CRISIS IS KEEPING ENERGY PRICES HIGH
America leads the world in oil and gas production. We believe midstream energy infrastructure offers predictable cash flows to investors.
Pipeline Real Yields Are High
When investors ask what return they should expect from an investment in midstream, we typically suggest dividends plus growth plus buybacks. Dividend yields are around 5%. Wells Fargo is forecasting 4% dividend growth next year, and buybacks of around 2% of market cap. 5% + 4% + 2% suggests an 11% total return, assuming no […]
The Pro-Energy Election
As the market absorbed last week’s election results, energy was the clear winner. On the week, midstream infrastructure returned +8.4% while the S&P500 was +4.7%. The main driver of outperformance is the expectation of a regulatory regime not beholden to climate extremists. The pause on LNG export permits will be lifted. Although many expected this […]
Trump Energizes The Pipeline Sector
Donald Trump’s political comeback looks a lot like the recovery in the energy sector. In March 2020 during the pandemic pipeline stocks slumped as crude oil prices briefly turned negative. Within a year Trump was out of office, faced numerous civil and criminal charges and was widely believed to be a one-term president. By then […]
There’s No AI in AMLP
Performance in the pipeline sector remains strong – closing in on its fourth straight year beating the S&P500 and ahead overall for the past five. But for the past six months the Alerian MLP Infrastructure ETF (AMLP) has increasingly lagged the sector, as defined by the American Energy Independence Index. AMLP is more or less […]
Which Pipeline Companies Are Best At Capital Allocation?
An axiom of capitalism is that a business must earn a Return On Invested Capital (ROIC) in excess of its Weighted Average Cost of Capital (WACC). It’s just as true for a lemonade stand as for a conglomerate. I should note here that fifteen years ago our younger daughter (then about nine years old) set […]