25.6% , ETP , 6.2%
16.0% , APL , 7.9%
11.2% , PAA , 6.4%
9.2% , KMP , 6.4%
8.8% , EPD , 6.9%
6.8% , BPL , 6.5%
1.2% , TPP , 7.1%
0.0% , EEP , 8.0%
0.0% , NBP , 7.2%
0.0% , TCLP , 6.8%
16.0% , MMP , 6.9%
12.0% , SXL , 6.8%
10.2% , MMLP , 8.1%
7.2% , MWE , 7.0%
6.4% , VLI , 6.4%
6.0% , PPX , 7.1%
In the list, the first column is the rate of growth of distributions, trend line as I see it.
The right column is Yield based on yesterday's price.
The first group is over 5 years old, the second is over 3 years old.
Growth is key. You can offord to pay more (lower initial yield) for strong growers. Older MLP's have a longer period to read their long term growth, so it should be more accurate and better in predicting future growth.
As you can see from the list, strong growth is not necessarly price in fully.
Ticker , Yield
XTEX , 5.4%
HEP , 6.1%
CPNO , 5.4%
Here are the rest of the list, but these are not old enough to establish a good growth profile.
I used factoids blog for the list of MLP's in the pipeline sector. Hope I got them all. Not responsible for errors in data.
I will add my 2 cents worth since my opinion is a bit different.
MLPs are probably in for a bit of a downspell in the next 4-6 months. My reasons are that wages are up and unemployment is continuing down. These factors will push the Fed to continue increasing the fed funds rate at least two more times to 5% or possibly 5.25%. The possibility of more increases will raise interest rates and give competition for alternative opportunities to invest.
Historically MMP trades at a 219bps premium to the 10yr Fed rate. So its yield should be something upside of 7.3% if the Fed continues to raise.
Now the real question! Buy or not and when. In a 2 year perspecitve I would wait a bit. Talk of future rate increases makes investors in this type of investment nervous. Vis a vie look at today down action. If, like chartny and me, you are going to hold virtually forever it probably doesn't make any difference.
Happy investing. ARB
"TMG as a "hidden gem." It went from 6.90 to 8.50 or so in less than a week."
Not my kind of volatility.
Looks like since start of 2005, near $5 to near $13, to near $5 to now over $8.
No dividend. I would wonder why.
Not for me, but I do not suggest others follow what I would do. Each person needs to do their own thing.
Who else to ask about the "Fools" opinion of TMG as a "hidden gem." It went from 6.90 to 8.50 or so in less than a week. Would you envision this as a 5-yr holding now? Seems seductive but dangerous. Any thoughts sage?
" question for your advice on MMP."
If I had free $$ I would buy.
It is one month shy of 5 years old, growing at 16% per year, 6.9% yield.
MLP's are in a bit of a slump, so this seems like a good buying time for the group.
Just a quick question for your advice on MMP.
Does this look like a good value for the next 2 years in my income producing account?
Thanks so much for your reply.
All have a great day tomorrow in an uncertain market.
"Do you compare each Quarter with the one that had preceded it ?"
That is it. I do not care about the calendar or which is Q1 etc.
If I imput 1% per quarter, then my best fit line would be each quarter is 1% higher than the previous quarter. If it fits the actual performance line of growth, then the 1% x 4 qould be 4% annualized growth. It is thus compounded on a quarterly basis. I trial and error the input % until the best fit line agrees with the actual perfornance.
Of course for any MLP history, I have to input a starting value to match actual, and a break point to match acutal, then a value for the first best fit time frame, then the value for the second time frame. I have a master worksheet that I copy and then download the history with dates. It takes about 5 to 10 minutes to do a MLP.
I have a copy of a couple of charts posted on this monitored group. A picture is worth a thousand words.
All of these growth numbers are very interesting. But do you look at balance sheet? What about debt coverage? These numbers were all produced in a period of accommodative interest rates. What happens when the rates go neutral? Are any of these MLPs over leveraged?
chartny wrote: "In the list, the first column is the rate of growth of distributions, trend line as I see it."
I wish that you would state that the trend line is based on data OVER WHAT TIME PERIOD. I believe you used five quarters in the past, but it is an aid to new readers to know that, if that is still the case.
chartny wrote: "The first group is over 5 years old, the second is over 3 years old."
There is a distribution history of six years for MMP and VLI, and five years for SXL and MWE. And this could just be me being my nitpicking old self - finding confusion where no one else sees it. If the calculations are based on 5 quarters only - then . . . . it does not matter - except to footnote that the bottom [or second part] of the list are newer MLPs.
chartny wrote: "I used factoids blog for the list of MLP's in the pipeline sector. Hope I got them all."
You got them all. And thanks for posting my link.
I calculate distribution growth trends for 2 year a five year periods - and annual growth for each year over a time period of 2000 through 2005. Summing up distribution growth with ONE NUMBER can give a distorted picture.
yr-------00 01 02 03 04 05
raw data 29 31 32 33 41 50
growth by year in percent
05-04 04-03 03-02 02-01 01-00
21.21 26.92 01.88 02.08 08.70
growth over 2 and five years in percent
"There is a distribution history of six years for MMP and VLI, and five years for SXL and MWE."
MMP , 3/1/01
VLI , 4/1/01
SXL , 2/1/02
PPX , 7/1/02
MWE , 9/1/02
MMLP , 11/1/02
XTEX , 2/1/03
HEP , 7/8/04
I have the date of IPO for these, all are under 5 years.
If I am incorrect please let me know.
Yahoo and moneycentral agree.
"I wish that you would state that the trend line is based on data OVER WHAT TIME PERIOD. I believe you used five quarters in the past, but it is an aid to new readers to know that, if that is still the case."
And to all who wish to follow growth of distibutions.
I make a chart of distributions back to about 25 quarters if they are old enough for that number.
ticker , Quatr , rate , Quatr , rate
ETP , 17 , 4.4% , 8 , 25.6%
APL , 18 , 9.2% , 7 , 16.0%
PAA , 18 , 5.6% , 7 , 11.2%
KMP , 9 , 23.2% , 15 , 9.2%
EPD , 16 , 10.0% , 9 , 8.8%
BPL , 18 , 2.3% , 7 , 7.1%
TPP , 17 , 8.0% , 8 , 1.2%
This is the list of growers that are older than 5 years. In pipelines of course.
The first column after ticker, is number of quarters at this growth rate, (in the next column)
The 4th column is the number of quarters at this rate (in the next column)
I use the chart of distributions vs time. Then make a straight line that best fits the earlier time period, then a straight line that best fits the second time period. Every one has a breakpoint. Of course there could be no break, or 2 breaks, but it just did not happen.
So, my recent growth rate is based on 7 to 15 quarters as the data dictates. I am most interested in the most recent period, and how steady the gains are. The older gain period is just reference. Gain rates are annualized.
It is interesting that some broke to the upside, and some to the downside. Only TPP fell off the wagon. Also interesting that many did so 7 to 9 quarters back. Just like there was a rotation in who is up and who is down, all in a short calendar period.
Also note that prior to the break, many MLP's "stair step" their growth, but more recently the growth is much more uniform. This should make it easier to tell early when a MLP makes a sudden end of growth. I was not paying attention and was late getting out of TPP. Still got out 8.7% better than yesterday's close. Better late than never.
I use this data for my own interests, but share it here for any who find it interesting.
Thanks for the good info. I appreciate your analysis. I would like to point out though that EEP went from 20 in 1993 to 50 in 1998 ( I do not know the trend of distributions in those years but I bet it was a good uptrend), Since then EEP has been flat and one can buy today at 46 (I bought some at 42.50 a little while back) Future growth does not always follow trend lines. When price is right bird in hand may be a good buy.
"I would like to point out though that EEP went from 20 in 1993 to 50 in 1998"
Yea but: big BUT
from Oct 1998 to present
Think I see a trend here.
Past performanc is the best predictor of future performance.
I follow the principle of watching my investments closely with the thought. Perform or else. Like TPP about 8 quarters ago, just stopped growing.
And look what is out there in the new ones. Less than 5 years old.
MMP growing at 16% and yield 6.9%
SLX growing at 12% and yield 6.8%
MMLP growing at 10.2% and yield 8.1%
I do not own those yet. YET!!
Have a nice evening.