For our Friday File today, before I head out the door to take a week of respite with the family for Thanksgiving (no Friday File next week, by the way, though we will have our annual “Turkey of the Year” piece next week), I thought I’d take a look at a teaser pitch going around for the kind of thing that has much broader appeal than the small-cap tech or biotech stocks or miners that spur thoughts of overnight riches: income.
Today’s pitch is from Mark Skousen’s Forecast and Strategies, which has been around for a long time (the ad letter is actually signed by his publisher, Roger Michalski), and he throws out hints about a couple dividend-paying stocks. Just the kind of respite we might need after a week of risky oil stocks, levered bets, and biotech gambles crossing the transom.
The first idea is a MLP, one of the major pipeline owners in the country, and he says it has “The Perfect Dividend Chart” (meaning, a dividend that grows consistently and rapidly over a long period of time).
The second idea, the one that gives us our “best company money can buy right now” headline today (that’s a quote from the ad, to be clear), is a Business Development Company (BDC), one of the less-discussed types of tax-advantaged income investments (REITs and MLPs are generally more popular).
Neither is likely to be a shocking “limited time opportunity” that sends you rushing to your broker’s order ticket, but both are large and well-run companies with stocks that have been good to investors for years. We’ll go through them one at a time.
Here’s the intro from the ad:
“The Secret Pipeline System Six Times Bigger Than the Controversial Keystone XL
“The Company Behind it is on Track to Transport $165 Billion Worth of Oil in a Single Year…
“Setting the Stage for one of the Most Dramatic Stock Moves We’ve Seen in Decades…
“And a Single Event in 2015 Will Kick Everything Off.”
No matter how you feel about the Keystone XL, it’s that feeling that is the driver of the decision and the argument — the pipeline itself is not likely, from my perspective, to dramatically alter the energy market or the environment, but it is something specific and clearly identifiable to fight about, a line in the sand that can be drawn and redrawn and tussled over by both sides until nothing matters except that line.
Here’s more from the ad:
“A new energy company (virtually unknown to most Americans) has secretly gone about creating an alternative pipeline system that’s set to generate billions in new revenue…
“The series of projects, already approved and in operation, is six times larger than Keystone.
“Keystone XL’s pipeline at maximum capacity can transport 830,000 barrels per day… Approximately $77 million worth at today’s prices.
“By comparison, this company’s pipeline system can transport more than 5 million barrels every day… About $465 million worth!
“It’s now transporting crude oil, natural gas, ethane, and more from America’s huge energy reserves. They’re connecting the Eagle Ford, Utica, Bakken Shale, the Gulf Coast, the Marcellus Shale, and virtually every other major natural gas and oil reservoir in the country.”
That gets your attention, that some company is “secretly” working around Keystone XL… because “secret” means “hey, no one knows so maybe I’ll get rich first!”… but that comparison, of course, is silly. That’s a little like saying that the Toronto 407 ETR toll road is not that big a deal because the New Jersey Turnpike is so fantastically successful. Transportation is all local — there are a lot of ways to get from point A to point B, whether you’re a truck driver or a barrel of oil, but there’s really only direct competition on comparable routes between two points. This company has not, of course, “secretly” built a big pipeline from Alberta, Canada to Cushing, Oklahoma, though they are one of the larger pipeline operators so they do have capacity to move product on many different routes around the country.
And this “secret” company is a big dividend-raiser, which is perhaps the best kind of stock around which to build a long-term portfolio:
“They recently set a new record in gross operating margin. They set a new record in cash distributions. They set new records in revenue, gross profit, and net income.
“And the cash distributions the company is handing to shareholders is unlike anything we’ve seen in years.
“They’ve never decreased dividends once in company history. And they’ve raised them — not every year — but every quarter since 2011.”
So that’s all well and good, and we can identify the company based on that — but why is now the time?
Because Skousen thinks (and he’s not alone on this, of course) that Congress will pass a bill lifting the U.S. crude oil export ban next year, allowing for exports from our booming domestic oil production (in addition to the push to export LNG, though that’s a much trickier business). Exports will essentially all go through the big ports in the Gulf of Mexico, most likely, so he thinks the companies — like this one — who control a lot of pipelines in the region will see more traffic in