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Enterprise Products Partners L.P. Message Board

  • garywpezzuti garywpezzuti Nov 19, 2009 4:51 PM Flag

    Diversification

    As an extremely happy 'member of the family' for 1+ years, what other MLP's would you suggest to maintain diversity?

    Any suggestions will be helpful...

    Continued Success,
    Gary

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    • "Someone needs to explain to me why everyone is so hot on AT&T and Verizon."

      Well to start with I like them for their dividends.Also ,everybody and their children have a cell phone now a day.

      My guess ,they will probably sell or do away with landlines in the future.That is unless they can find another use for them.

      To tell you the truth ,I'm not real bright.I'm a very poor trader so I became a dividend investor.I'm invested in many diversified dividend paying stocks and placed them all into the reinvestment plan.I've held from the top all the way down. My hope is that most of my stocks make it. Also,that they would make up for my stocks that don't.

      I tried to stay diversified in my holdings.The stocks listed above are from my picks ,trying to help a friend who is looking for dividend paying stocks.

      I have been collecting T's dividends for many years now,since they were SBC.Well, you have explained to me why you were so hot on ACAS .However,it was over my head.So I thought I would reply.Oh ,and yes I still have ACAS.

      My portfolio,

      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 .

      My only new holdings are GE,VZ and SPH.I sold some ABB to get GE,some T to get VZ and some NRGY to get SPH.

      So it is for the dividends and to be diversified.

      Well best of luck to you.

    • Someone needs to explain to me why everyone is so hot on AT&T and Verizon.

      The decline in land line users is more than made up for by the increase in wireless users... I grant that...

      But these two are stuck with a landline system that costs a lot to maintain and over time there will be but a small minority of landline users.

      Why shouldn't I look at AT&T and Verizon the way I look at the post office versus FedX or UPS.

      What I mean is both AT&T and Verizon must spend huge amounts of money to maintain a landline system for the small minority of users in the future. This parallels USPS forced delivery to areas where FedX and UPS can ignore plus the fact that USPS also suffers from wireless in the form of internet traffic.

      I see a future where AT&T and Verizon may become uncompetitive because they will need to use wireless fee income to maintain the wireless system while pure wireless players with no wired infrastructure can lower their fees and put AT&T and Verizon on the defensive.

      I wonder if this scenerio is being priced in the stocks and more importantly in the very high dividend yield.

    • Sorrym once again.

      VZ, T, SXL, SO, PGN ,DUK, D, ARLP, AINV, BP, CLMT, ED, EPR, KFT, LRY, MO, NHP, NZT, RAI, SCG, SNH, SPH, SSS, VVC ,XEL, LLY.

    • EPD unit holder Gary asked "what other MLP's would you suggest to maintain diversity?"
      Hachi05man suggested MMP and PAA.
      Sinfuel suggested NS, OKS, PAA and DEP.

      Given that EPD already owns a big block of DEP - one could find fault with DEP as a 'diversifying' investment. All the other 'suggested' MLPs are fellow large-cap, non-E&P, non-propane, non-coal, non-marine transport, non-G&P and non-GP partnerships. If one's goal is diversification, then one needs to invest in companies that are NOT like EPD. And post TPP-merger, adding a crude or refined product MLP to the mix fails to gain one much diversity.

      So [1] you are not going to get much sector diversity adding one or two new investments to EPD. And [2] even adding diversity within MLPs is not going to add a lot of diversity to you overall portfolio when it comes to total returns. But changing your asset allocation so that MLPs are a higher percentage of you portfolio - THAT will probably change those returns - and probably [at least over the near term] improve those returns via their high yields and fairly visible distribution growth.

      So . . IMHO, if you want to diversify, then you need to add exposure to propane, coal, the GPs and the G&Ps.
      [1] Add MMP - and MLP with no IDRs that already had a superior history of distribution growth before that adjustment
      [2] Add two small cap midstream MLPs. I would suggest BWP and newbie EPB, but GEL and SEP are also very good suggestions.
      [3] Add two gathering and processing [G&P] MLPs. I would suggest MWE [Marcellus] and RGNC [Haynesville]. But KGS and NGLS are also good suggestions.
      [4] Add two general partners [GPs]. To get diversity, I would suggest coal GP NRGP. Given that you already own EPD, EPE would not add diversity. So that leaves BGH, ETE and NSH as good suggestions.
      [5] Add one exploration and production [E&P] companies. Going by past distribution history, I would suggest EVEP, LGCY, or LINE

      This recipe calls for a total of nine MLPs. Cutting the recipe down to get to five [one from each sub-sector] would mean buying only one G&P - and I would want to spread the risk [and the opportunity] between two. Cutting the recipe to five would imply still buying one E&P - and [being conservative - or maybe just not feeling that comfortable with the E&Ps] I would not want that high a weighting in E&Ps. And cutting the recipe to five would nudge me to buy coal GP NRGP for diversity - and while NRGP has had great distribution growth, I still would not want a 20% weighting in coal - a commodity that I can not see as having the brightest of futures.

      I believe that the tax complications caused by the K-1's keeps lots of investors away from MLPs. And the UBTIs keeps MLPs being held by several different types of institutional investors. Only the somewhat daring venture into MLPs due to tax reasons. And that keeps the yields unnaturally high. And the need for new energy infrastructure will keep the demand for these assets on the high side. The result of that combination of situations is both high yields with better than average growth for these companies.

      So having a 20% [or slightly lower] asset allocation to MLPs works for me. And with a portfolio weighting THAT high, owning at least nine MLPs is not a problem. I do not like having over a 3% total portfolio weighting in any stock - and usually I invest only 1% per stock. And I typically have several stocks in any given sector.

      Summation: you need a lot of MLPs to really have diversification. That requires a high sector weighting in MLPs. I am comfortable with that high weighting due to the higher yields on those distributions and the prospects for inflation beating distribution growth.

      NOTE - unless one chooses ETE as a GP, the suggestions fail to include any propane component. I also lack the knowledge to suggest a marine transport MLP.

    • NS, OKS, PAA, DEP...

      but they are a bit pricy right now...

    • conservative: PAA MMP

      potential growth: MWE


      Speculation: APL

 
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