Investors need to take in consideration that 2 of the last 4 distributions of UAN
were mediocre. Also, Congress has a bill to eliminate the requirement to
add corn ethanol into gasoline mixing. Frankly, requiring corn to be added to
gasoline is an expensive joke on mass America. Should the bill pass, this will
probably reduce corn demand and therefore UAN demand.
Even if the Congress keeps the corn mandate for gas, UAN's performance
has been pretty inconsistent and I will not be surprised if the dividend gets
cut in 2014.
Was looking at BWP for a possible investment and I must say I am wondering why
anyone would invest when the price is at the same level as the low 4 years ago.
The market indexes are all around all time highs and this is down at the low
reached around 4 years ago. So what is wrong?
Appreciate your comments. Yes, I was concerned that the pipeline contract fees were being renewed at lower rates. The distribution from the current cash flow is fine but these MLPs get clobbered when they reduce the distribution. My take is that they could reduce the distribution in 2014 and the price would take a major hit.
Natural gas prices have had a major increase over the last 12 months going from $2 to $4+ and
this is not helping BWP. I noticed that the price had dropped 25% while natural gas prices and the markets have been on a tear. I was concerned a cut in the dividend could create another drop 25% which is about 3 years of distributions.
BWP seems to be the only pipeline company that has not been on a tear which means their pipelines do not have the demand of others.
This company more than doubled in size in terms of locations and apartment bed counts and this did nothing for distributions or shareholders. What make you think if they double in size again this will help investors? It did not work the last time. There is a reason this keeps falling and I believe it is because they are unable to do anything to increase the return for shareholders. Management is the only winner hear as they get stock options, bonuses, etc. What are shareholders getting? 5% after state and federal taxes. But that net dividend does not account for any decline that shareholders have experienced.
You say Longview is a great little Canadian oil company. Cutting the dividend by 20% and a share
price that has fallen by 50% during the last year when all stock market indexes have hit all time
records does not see to me a very good investment. Most investors have lost more money in this stock in the last year to wipe out dividends paid in 2012, 2013 and 2014. So much for a great little company.
More students will live at home as college costs keep escalating in future years. Also, interest rates will be rising from 2014 onward which will impact real estate with debt. Investors should ask why the company has been unable to raise the dividend for the last three years. Basically the dividend remains flat which means no real growth for investors. I see no change in 2014. Buying in a retirement account is fine but for taxable investors, getting a 7% dividend, 5% after state and federal taxes is not all that great. Better to invest in companies that are paying 2-3-4% dividends and growing share price which is not taxable.
For a moment forget about the Fed. Look at Campus Crest. They have been doubling and tripling in size but they have been unable to increase the dividend. Investors buying for their personal account net around 5% after state and federal tax. Real money is made in the market by share appreciation and these guys while growing the company are unable to grow the profits so that distributions go up and share price goes up along with increasing dividends. Basically you are looking at the same share distribution in 2012, 2013 and 2014 as they are not increasing revenue and cash flow per share. Look at the oil pipeline companies that have been growing dividends every year. The share price goes up with the dividend increases. Look at McDonalds, Intel, Apple or any company that is raising dividends, the shares keep attracting investors and the investors are willing to pay more and more.
I have been unwilling to commit to BWP as each six months that go by the shares seem to only be going side ways and all the others go up with increasing dividends. For those people that have held BWP over the last 4 years, they have no appreciation. I just do not see anything in BWP reporting or presentations that indicates that anything will change in 2014. So that would be 5 years going no where in the price. The real issue is what happens if contract revenue drops and they cut the dividend? The 25% decline in 2013 could see another 25% drop in the unit price in 2014. Living just off the dividend which is taxable without unit growth makes this a much weaker investment than the top 30% of the mlp performers in terms of yield and growth.
It looks like they are trying to do to much in too many places:
South Africa, Australia, Europe, the U.S. They do not make
money and all they do is spend money they borrowed and obtained
from shareholders. It seems to me they have too many competitors
that are better financed. The Bond family which runs this are the
only ones making money off the company from the salaries and
I do not need MLP 101 I worked in taxation for 35 years so I do know the difference between dividends, their tax rates, limited partnerships, their distributions and their recapture issues upon sale. Most people do not hold investments until death so master limited partnerships are only a deferral mechanism. The real purpose of this message thread is about the economics of this investment but you must have missed the nuance of the line of inquiry. To help you out I am always looking for investments, those that have appreciation usually outperform those that are going sideways for years. I think if you look at this sector you will find that 9 out of 10 pipeline companies seem to outperform BWP for total return over the last 4-5 years. That was really line of inquiry here, not getting hung up on terminology of distributions.
Most of the posters are not recognizing that the management company has a sweetheart contract which depresses the company shares. My broker in Vancouver, Canada states that is the reason their company, Cannacord Wealth Management does not like the shares and does not recommend the shares. Management takes 20% off the top on any gains. That is a big pay day for doing nothing considering that once you purchase the shares of Long Run, the largest holding, what do you have to do with it? Most ETFs and Mutual funds do the same thing and charge 1% per year. In fact Vanguard and Fidelity charge only .5% per year on most of their funds and ETFs.
The share price is not going anywhere as long as the Canadian brokerage firms and analysts do not recommend the shares. They should liquidate but they have no incentive to do that so the share price is going no where.
The large farm land holding is not doing very much. Frankly it is mediocre.
The only decent prospect is the Long Run and by the time management takes
their 20% management fee off the top on the sale, it becomes mediocre too.
The farming operations are not really profitable. The uranium investment is not profitable. The fertilizer business has not done anything.
The only investment they have which is profitable is Long Run and they will take 20% of the profits when sold, then they have to pay taxes on the gains and what is left can be invested elsewhere.
They sold the gold around $1250 per ounce when they could have unloaded it a year earlier at $1850 per ounce. They also borrowed money to pay the dividend. All I see is poor management decisions for the last couple of years.
All of the pay tv providers are a problem. The real issue is how does one compare to another.
Consumer Reports collects data from their subscribers. They have have compared all the pay
tv companies and DTV has always been the best in their annual ratings of satellite and cable providers.
That certainly does not help your situation. Each of these companies has tens of millions of customers
and they all do the same thing. Frankly, most bill collection agencies do not want to waste employees to collect on $25.00. Remember, by the time any company pays even the minimum wage and phone expense and mailing expenses, a $25 bill or even a $50 bill is not worth pursuing. These telephone call centers have to pay rent for their space, systems and calling is not inexpensive today and employers have to pay payroll taxes in addition to the minimum wage. It costs about $20 an hour to provide a minimum wage office job between the salary, payroll tax, office space and furniture and phone for the worker.
You just got caught up in a one in a million situation that no business wants to pursue.
U.S. growth is not important when international growth is growing by over 1 million per year. Also, sports programming and other programming is much cheaper in South America. Their program costs south of the border are a fraction of the same costs in the U.S.
The upper middle class and upper class is always willing to pay more for the things they like. The profits per share have been climbing by about $1.00 per year per share and are projected to reach $8.00 a share from the current $5 per share by 2016. This is from their accounting and financial reporting departments that run the numbers for management to share with analysts and shareholders.
Look, I remember when the top of the line Mercedes, Audi and BMW use to cost around $30-40,000. Today they cost over $100,000. People with money are willing to pay for things. Certain companies get what they want from the top 10% of consumers even if the price goes up every year. Remember when a burger use to cost 15 cents to $1 for cheapest and most expensive. Now they run $1-15.
Putting all of your retirement money in a speculative investment that is not profitable and pays no dividends sounds like gambling. Why would you want to gamble your retirement money on a flyer. 9 out of 10 companies that make no money, have significant debt owed to the banks go no where.
All you are doing is gambling. You worked hard for your retirement, why gamble it on a #$%$ shoot like this?
The oil in the ground rarely pays off big when you do not have the money to drill the ground. That usually results where someone with the money comes in and pays you a royalty of 10-25% and drills your land.
The technology on turning coal into gas has gone no where over the last 10 years. Bigger companies like Shell and Sashol have been pouring billions into that area over the last decade and it has not moved their shares all that much.
Speculators have moved this stock from $10 to $30 or so over and over. At some point what happens if they give up on the coal to gas or one of their big fields brings in only marginal wells and hoped for partner gives up. That happened to me twice, once in Australia and once in Canada where a big boy agreed to drill 6-12 wells and in both locations they turned out to be so-so and that was the end of the drilling. This company holds lots of prospects but that is all they are. All you are doing is flipping a coin with your retirement.
Presidents do not create jobs, businesses create jobs and they have been doing little of that over the last ten years as they have out-sourced manufacturing to China, call centers to India, etc.
I hope you are smart enough to reconsider that businesses create jobs and if you didn't notice that financial institutions have been cutting jobs by tens of thousands, not just in the mortgage lending business. Drug companies have been allowed to merge over the last decade taking our ten largest drug companies down to 4 and eliminating 100,000 high paying pharmaceutical research and marketing jobs.
The military has been reduced by 1 million over the last 15 years and those jobs come about when Congress passes spending bills to hire workers.
Technology over the last 10 years has reduced lots of former jobs. Try getting a human operator answering the phone at any large business instead of a computer voice mail system. That has removed another 1 million jobs over the last 10 years. Keep adding up all the job losses and if you keep blaming an individual such as one of the Presidents you will show your narrow minded thought process. At least I believe it is much more complicated than you imply.
I have been looking at Canadian Oil Sands as an investment and it makes little sense to me. The company shares have been declining for around 5 years. The after tax return for those living in the U.S. with state income taxes is around a 6% return. In addition the stock market over the last year has reached highs for the last 5 year period but these shares have been in a free-fall. In addition we should expect more oil to reach international markets over the next year or two from Iran, Iraq, LIbya and the U.S. This should result in a decline off the $100-110 benchmarks in pricing for most of 2013,
I do not expect the price to fall into the $70-80 range but even a $90-100 range is still a 10% drop in pricing.
Why invest for an after tax return of 6% per year. There are many other energy companies where the prospects are substantially better.
You must not understand the difference between Netflix and Hulu vs. DTV. It is called sports entertainment and DTV provides the best sports packages both in North America and South America.
Tell me what Netflix and Hulu are doing in South America and Central America where there are 500 million people. Compare that number with the U.S. Obviously you do not understand why people spend $100 per ticket to go to a sporting event. DTV offers every pro football game to your TV that is available. The people filling sports stadiums have serious money to spend, just the same people that are spending $50,000-100,000 on a BMV, Mercedes, Jaguar, etc. Ten percent of the country does not really care how expensive a live sporting even is, how expensive a car is or how expensive DTV is.
DTV is for people that want a superior product. Obviously you are not one of those. Remember the adage, you get what you pay for, that statement is true 9 out of 10 times. Twenty million people in the U.S. and almost another 20 million in South America and Mexico subscribe to DTV or DTV's partner (Mexico) and they are willing to pay for a superior product. If you think Netflix and Hulu are the same thing as DTV then you probably think a BMW or Mercedes is similar to a Chrysler and a Porsche is similar to a Corvette. Yes, they are cars with 4 wheels but to the consumer that is willing to pay there is a difference.
People around the world buy Mercedes, Porsche and BMW and they do not care about the price. Same for those that subscribe to DTV vs. Netflix or Hulu. You obviously like to buy your tv entertainment for $10 while others buy TV entertainment for $100. You might be one of those that will purchase a car for $20,000-30,000 while there are others that will purchase a car for $50,000-100,000.
2 of the 40 richest people in the world own the largest positions in DTV, named Buffet and Malone. The well to do shop differently, buying the best, and price does not matter.
You are incorrect. What sports can you get on the internet. DTV pays over a billion dollars to the NFL to show every single NFL game every single week. Who on the internet is going to pay that kind of money.
Two of the 20 wealthiest men in the U.S. hole major billion dollar positions in DTV. These two guys keep growing their net worth more than any other investor in the country. The see the same thing: that DTV has added a million new customers every 12 months in North and South America.
You missed the most important point of my post. You keep thinking from your perspective "Do you really think people will continue to pay DTV $150 a month when the can get the same content for $10 a month." It is not possible to get for $10 what you get for $150.
No business keeps growing cash flow as DTV does without offering more. Tell me where I can get an NFL, MLB, NBA, NHL channel on the internet. These are all 24 hour sports channels for each league.
You are caught up thinking that people will not pay more for DTV. Tell me how you can record five different channels on the internet at one time. You can do that will the DTV recorder. Also, the DTV will let you watch something else while recording the 5 other channels. Tell me how the internet allows you to do that.
You do not seem to understand why BMV, Mercedes, Porsche sell so many cars around the world for more money than GM, Ford or Chrysler. You need to think about why so many people buy cars for $60,000, $70,000, $80,000, $90,000 when they can buy a car for $15,000-20,000. Until you understand why DTV currently has almost 40 million viewers and why people pay triple the price for a car when they could pay one third, you will not understand why DTV is such a good investment.
I purchased my shares for $16 and those shares are now worth $72. There is a reason why Buffet and Malone have kept buying shares in DTV every years. Believe it or not they are smarter than the other millions of us out there.