I own sevreal MLP's and have enjoyed watching the distributions increase year after year. I recently discovered UGI and relized it was the GP of APU. I have followed APU for a while now. I am curious as to why UGI management does not grow the distribution at APU like many of the other MLP's. NRGY, a propane MLP that is similar to APU has grown its distribution at an astronomical clip. The GP gets a greater and greater incentive as the distribution increases. Is Yahoo's distribution history incorrect or has APU really left the distribution stagnant for all of these years? I don't mean this to be a bashing post, I think APU looks solid, just curious as the the gameplan and if the info is correct.
Its decent. If you are interested in a propane play, then I suggest either NRGY or ETP. NRGY has by far the best management in the game, hands down, and ETP is a hybrid propane and pipeline company, so they don't have the erratic fluctuations from winter to summer that most propane companies do. Both NRGY and ETP have privately held GP's which means they eat their own cooking so to speak....
Well, I'm not buying APU so I'm probably not the person to ask on an entry price. The MLP's are indeed very interest rate sensitive(from the retail investor side). The MLP's got whacked very very very hard a few weeks back and there were some incredible bagains for a day or two. Alot of great MLP's that normally trade in mid 6% range got as high as 7%, some even crept into 8% but alas almost all of them have regained their losses and driven the yield back down. I look for MLP's that grow their distribution(not APU). Ifyyou look at MLP's like KMP, XTEX, MWE, NRGY they have grown the distribution at rates of 10%-15% a year. This is this kind of MLP to be in as it offers both a great yield and great capital appreciation potential.
APU's distribution history, well I can sum it up by saying .55 a quarter since 1996.
Acquisition history-bolt on acquisitions, they buy small propane companies and inegrate them into the APU family. They can leverage better returns by buying in bulk, back-office support is minimized etc. Classical example of synergy. However, APU never shares any of the new gains with unithlders, uses it strictly for debt retirement(not a bad thing) so it it not the MLP of choice on the street, that is why it trades with such a high yield, its not in favor. Same thing with NBP and EEP, management has screwed up two many times and consequently they are not in favor and thus the yield increases.
Please explain distribution history.
Explain acquistions APU makes.
Reading some of the posts the large divd makes
the downside not so great even with treasury
increases the way I read it.
One person told me they were just parking their money in APU til other interest bearing vehicles popped up that were more desirable long term and risk wise.
What is a good price to buy at?
Probably a good thing for APU. MLP's are different than most c-corps in the fact that issuing new equity is often a good thing rather than a bad. Often times it is to make accretive acquisitions that actually boost per share distributable cash flow after the merger. That is indeed a good thing, examples are Kinder Morgan (KMP), Inergy (NRGY), Markwest Energy Partners (MWE) etc etc. APU however, does not choose to reward its shareholders with higher payouts. It is heavily levered and consequently has been forced to use any and all surplus cash flow to pay down debt, or to acquire assets(with the earnings from those assets being used to pay down debt). All in all, the distribution is in my opinion, secure but there are better run propane MLP's (Inergy and Energy Transfer Partners come to mind).
div has been 2.20 since 1996. The div consists of inc plus return of capital. LP pay out most of their income. I guess instead of paying a larger div they continue to expand. right now the div is greater then income. If you like tax shelters which defer taxable until you sell or inc exceeds div APU is a good value witha 8.5 % yld tax sheltered
I understand the principles of MLP's, the tax sheltered or rather deferred distribution, the return of capital and etc, it just baffles me that an MLP would go that long and not increase the distribution. UGI is the General Partner and obviously owns the IDR's (incentive distribution rights). The higher the distribution paid to the LP holders means a disproportionately larger share goes to the GP. Makes no since whatsoever to grow the MLP and not grow the distribution especially if the GP is in the 2% splits!!!! Growing the distribution causes capital appreciation....absolutely boggles my mind. MLP's were set up to allow for investment in energy infrastructure and gives them a low cost capital source and almost all of them acquire assets on a consistant basis to grow the distribution and delever. UGI is sitting on a real growth engine and its doing squat with it. Look at Kinder Morgan (KMP), look at Inergy (NRGY), look at Energy Transfer Partners (formerly Heritage Propane) all of them make acquisitions(or rather accretive acquisitions) and consistantly raise the distribution quarter after quarter. ETP is about to increase theirs from $2.80 to $3.00 and they only just increased it to $2.80 earlier this year. Markwest Energy Partners has grown its distribution from $2.56 in December 03 to $2.76 currently and will most likely be at $2.90ish by December 04.