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Inergy, L.P. Message Board

  • wareham2620 wareham2620 Nov 13, 2009 11:15 AM Flag

    NRGY vs SPH

    I have owned NRGY since 2004 . I'm very happy with both their growth and dividend increases.
    While helping a friend search for new dividend paying stocks I came across SPH.

    Comparing the two on :
    http://www.smartmoney.com/dynamiccompare/?story=compare&grpNum=1&table=shareinfo,keystats2,growthestimate&refstory=ratings&origTicker=NRGY

    Also the Price Check Calculator:

    http://www.smartmoney.com/pricecheck/?story=worksheet&symbol=NRGY

    I'm now thinking of selling some of my NRGY and buying some SPH.As they both look good to me.However,NRGY has grown so much over the years I think it is undervalued.
    SPH pays less of a dividend but looks better from what I see.
    Any thoughts on the two would be appreciated and thanks in advance.

    PS, other stocks that I'm looking at are.

    PGN 6.49%
    T 6.20%
    MO 7.17%
    SXL 7.28%
    ARLP 7.92%
    LLY 5.57%
    SPH 7.45%

    All EPS are more than they are paying out in dividends.
    Best of luck to all.

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    • Wareham, let me offer my two cents. Can't say whether NRGY is better than the Surburban, but I would offer these factors to investigate. With these MLPs, GAAP earnings per share is really not the best metric to measure them as the depreciation charges and hedging mark-to market can throw the GAAP eps off. Better to focus on Distributable Cash flow or DCF per share and the coverage ratio of DCF to the distribution.

      I, too, have been pleased with NRGY but have recently realized that their publicly traded general partner, NRGP, may offer a better alternative in terms of distribution growth. Notice that NRGP was recently able to raise their distribution at a much higher rate than NRGY. One of NRGY's presentations shows that recent growth projects of NRGY should result in distribution growth of over $1 for NRGP versus much less for NRGY (forgive me for not quoting the exact figures). The point is that although NRGP has a slightly lower yield, it is poised to grow it at a much higher rate.

      As for your other holdings, you have a good stable of dividend payers although the growth may be average. I wonder if T will suffer once VZ is able to carry the iphone. I think LLY could be taken over and worry how healthcare reform will affect it -- it really hasn't done anything for years in terms of price appreciation. I believe ARLP is a coal partnership and worry about the affects of cap and trade on it. You could consider getting some extra income from writing covered calls on many of these stocks as they aren't likely to increase in price dramatically - perfect for covered call writing.

      I would consider many of the other pipeline MLPs and their publicly traded gp's. Many have yields in the 7-8% range and don't have commodity price exposure. Some of the better run ones are KMP, ETP, ETE, EPD and EPE. I own ETP/ETE. Many of these have had great runs since March so try to find the ones that are raising distributions and have an upward sloping chart (from left to right). There are exploration and production MLPs, like EVEP and ENP, that have double digit yields and hedge their production. Both could pull back if oil and nat gas fall, but hedges will protect their distributions (at least for a few years until the hedges roll off). There are almost too many choices in this sector.

      • 2 Replies to marklibera
      • marklibera,
        First of all I would like to thank you for your response and advice.However,I've already sold part of my NRGY and bought the SPH.
        As for T,I also sold some of my T and bought VZ .
        I made a very poor trader ,so I'll pass on the call and puts.

        I've just been buying and holding dividend / distributions paying stocks.I own many stocks and have held them from the top.I placed them into the reinvestment plan and hoped for the best.Some have stopped their dividends / distributions and or cut them.I guess I should have sold them at that time.But I didn't ,I still hold them.

        My MLP's
        ARLP {LP)7.51% Industrial Metals & Minerals
        CPNO (LLC)11.32% Natural Gas .No longer raising distributions .
        MMP crude oil.6.94% Also no longer raising distributions .
        EPD Diversified.7.24%
        NRGY Propane.7.93%
        SPH Propane.7.45%
        CLMT Oil & Gas Refining & Marketing.10.17% Cut back their distributions.
        FUN Amusement park etc.likely suspension of its dividend beginning next year.
        All have upward sloping chart except FUN.But in the long run I think fun will make it.
        All of the above had raising distributions when I bought them.

        My portfolio,the good,bad and gone.

        ABB, AEE, ARLP, BAC, BMY, C, CHKE, CLMT ,CPNO, DFR, DSX, EDE, EPD ,FUN ,JRT, LUMC.OB, MCGC, MMP, NAT ,NRGY ,PCU ,PGN, SFI ,SPH, T, TEG, VGR, ACAS, GE, MIC, PFE, VZ, PCU, LCC .

        Well thanks again and I will try to focus on Distributable Cash flow or DCF per share and the coverage ratio of DCF to the distribution.

        Best of luck to all.

      • Mark...I am new to this board and have read your postings with much interest. You obviously have an extensive background in this investment niche and perhaps others. I have just begun to explore moving a percentage of my portfolio to stocks like SPH and NRGP because of their track record of value, as well as consistent and handsome dividends.

        One question from one of your posts - where can I find a company's "Distributable Cash Flow". Is it a line item in their financial statements? Any help would be very much appreciated.

        GLTA

    • i really hope you guys dont mind we saying this. this is my first time on this board. thanks to each of you. i have printed out your messages. i have been looking for quite awhile at the mlps and trying to decide which ones to buy. i own line and epd. thanks for the help. i really appreciate it. blessings upon each one of you.

    • A few more comments. I owe a great deal to many of the knowledgeable posters on many of these boards. One of the problems with trying to create your own diversified income portfolio is that it requires that you learn a lot about many different businesses, not to mention something about accounting, taxes and the laws that govern the operation of these companies. It's almost impossible to do it yourself and follow all of these stocks for potential buying opportunities (e.g. like when MLPs issue equity). High yielding stocks come with many risks that other dividend payers don't have - like restrictions in their debt agreements that can force them to reduce distributions, like laws like the Investment Company Act which forced some business development companies and closed-end funds to reduce leverage. So keep looking and keep sharing what you learn with others.

      BTW, the propane sector got a pump from Cramer today so that's why NRGY and NRGP are up. His pumping usually results in the stocks getting sold off later. Might be time to take advantage of the pump and take a profit if you have one and look to re-enter sometime later.

    • Look at BQI today!

    • Take a quick look at NGLS as well. Picked some up today under $22 Great dividend and growth potential. GL

 

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