While the perception is that EPD is grossly undervalued..... Its current 6% yield is its historical average
One needs to divorce their thinking that the 4% yield of 2014 is the norm.... Cause its not
I think its going to be extremely difficult for any MLP to be able to sustain a yield lower than 6%...... And those that have lower yields will find themselves up around 6% sooner or later
Broader mkt could still face a significant downside.... S&P 500 currently has a P/E of about 26.... About 100% above historical norms.... US GDP growth is non existant .... Not only is recession probable.... One is over due in historical cycles.... Its not different this time.... The more things change the more they stay the same
Market selloff will take this to its February lows with a possibliity of going below $19
$90 is not rational thought.... That would imply a yield of less than 2%.... And the carnage in the sector would never allow the valuation to go to that level....
I know... 6 thumbs down
There have already been babies born in the US to mothers who had Zika and their babies were normal...
That may be the result of quality medical care or they may have been affected later in the pregnancy
MLPs are not traded as stocks.... They are units in a partnership
MLPs do not pay dividends.... They pay a complicated tax differed distribution
How do you pay a high yield on a $90 unit???? The distribution would have to be close to $6....
Thats more than 3Xs what EPD currently pays.... EPD currently has 2+ Billion shares and pays $1.58... Thats $3+ Billion in distributions.... For that $90 unit to yield 6% it would equate to $10+ Billion a year in distributions.... Where would that kind of money come from...
MLPs historicaly are bought for their high yield dependable income streams... The units are not really an in demand investment when the yield drops so yield supports price
KMP paid every last available cent available to unitholders.... It was unsustainable.... The parent GP c-Corp KMI took them over causing a massive tax hit to the MLP unitholders.... KMI continued to think that as a C-Corp they could continue to pay every last available cent as a distribution... While funding all capex via share offerings and debt.... That model failed famously
Why I have been outspoken in the past about more of EPDs available cash to be paid to unitholders.... EPD is in fact better off having used so much organicly produced cash for growth (still believe there is room for an acelerated distribution but this Qs #s were scary)
Partnerships have advantages.... But they also have some big disadvantages as has been evident over the past 18 months... I probably confused you even more after this but ask the same question of arbtrader.... He can give a far better explanation than I could because my rediculous mind moves far faster than I type and never go back and correct myself
Yeah its a win win for EPD and the industry.....
EPD is insured for the assets and lost income....
Oil and nat gas supplies are disrupted and we should see a pop in their prices
A) EPD did not drop as much as many smaller MLPs with much lower share/units outstanding
B) EPD has about 2.3 Billion units outstanding.... And is $10 above its low.... That equates to a $23 BILLION increase in Market capitalization...
In your list of 16 "stocks" ( always good to remember that EPD is not a stock) how many have had market caps increase by more than $23 BILLION?.... Its a very relevent question
For example KMI (a stock) has about a similar share/unit count as EPD and is about 63% above its lows whih is about a $16.1 Billion increase in mkt cap
EPD has recoverd about 53% above its lows and has a market cap increas of $23 BILLION
So while KMI Has had a better % rally off its lows.... EPD has had a far greater rally in $ terms relative to its lows
All things are not equal and you must weigh many factors besides % gain from low
Using KMI again it lost 75% off its high.... EPD lost 56% off its high
KMI is currently 59% off its high after the rebound while EPD is 36% off its high
Taking all of the above into consideration EPD had outperformed KMI across the board whit raising its distribution and KMI cut theirs by 75%
MLPs fund their backlog of new infrastructure projects with an approx balance about 50/50 of new debt and new equity
Its what MLPs do.... Works fantastic when times are good... Gets problematic when unit prices are low and the cost in dilution and distributions are higher
Its a shelf offering statement that allows ETP to sell shares ATM to fund backlog....
Its good and its bad.... High volume up day the company can raise some cash..... But IF things were wonderful they would just subscribe a secondary at a small discount to market
Another interesting example of a big MLP that was hammered is ETE.... It lost about 90% of its value.... And has rallied 225% above its low yet it remains about 75% off its high