Dripping The Pipes – Oh Yeah!
Dripping The Pipes – Oh Yeah!
Another month half way through and the cash in my pocket was burning. I really don’t like to hold cash, I prefer to put it to work right away. While this can be a discussion all by itself and some people love to hoard cash while the market is where its at, I don’t… haha
After that December pullback it does make you question the current stock prices.. They have just skyrocketed back and a lot is resting on the potential for the US and China to improve their trade deals. This could either make the market run or pullback. I ask my magic 8-ball and it says Ask again Later….. No one know what will happen.
Stupid magic 8-ball…….
There was a couple stocks I really had my eyes on BCE, BIP and NTR but they ran and ran and now are close to 52 week highs. I was debating adding to Brookfield Property Partners before their ex dividend but the stock has jumped like 25% since I bought them last month. So I decided to just watch them a bit and look at some good value stocks.
While looking across my portfolio 2 stocks caught my eye. Both energy stocks. Altagas or Interpipeline. Id love to lower my average price of Altagas since it has got killed since their dividend cut and I feel they are a good deal at the moment. Meanwhile Interpipeline has went up a buck or 2 since my last buy. This cut off my chance to drip them…… You know I want those drips, and I like Interpipeline so that’s where I put my money.
Before this purchase I had 143 shares of Interpipeline and that brought in $20.37 a month, I didn’t want ITP to be a huge holding of mine but definitely wanted the power of compounding to come into play. Since my rule of thumb is to generally make my buys a thousand plus. I decided to add another 49 shares at $21.26 per share. Our entire position now bring in $27.36 per month enabling the drip… mmmmmmmmmm
Interpipeline currently has a 4 star morning star rating and a fair value of $24.98, so almost a 20% upside to get to fair value and also sports a hefty 8% dividend yield. With a p/e ratio of 14x I felt it was a good move to buy them at this time.
Canada currently is having a tonne of issues getting new pipelines built, so these existing pipes have a nice moat basically. The oil sands will be pumping more oil out again now that Alberta is going to ease those mandatory oil cuts and prices have recovered a bit from those lows a couple months ago. We even saw Warren Buffett take a position in Suncor recently, seems like a good sign for the oil sands.
My biggest concern with Interpipeline is their Heartland Petrochemical Complex, while its been on schedule its a big cost.
“The Heartland Petrochemical Complex represents the largest organic growth project in our history, and a key part of our growth strategy”
~ Christian Bayle, Inter Pipeline President and CEO
The Heartland Petrochemical Complex will be designed to convert locally sourced, low-cost propane into 525,000 tonnes per year of polypropylene, a high value, easy to transport plastic used in the manufacturing of a wide range of finished products.Consisting of a propane dehydrogenation (PDH) and a polypropylene (PP) facility, the Heartland Petrochemical Complex will cost approximately $3.5 billion and will be located in Strathcona county, Alberta near Inter Pipeline’s existing Redwater Olefinic Fractionator.
Construction of the Heartland Petrochemical Complex is in progress with completion scheduled for late 2021.
(Source Interpipeline’s website)
This could be either huge or a big blow considering Pembina Pipeline is now going make their own complex, that is anticipated to produce in excess of 1.2 billion pounds per year of polypropylene which would be transported to North American and global markets.
Either way Canada will be producing a lot of plastic in the coming years..
Well that’s my newest buy. I love adding to existing positions especially when it now enables a monthly drip. This purchase added $83.79 to our forward income and has been reflected in our Dividend Portfolio. Interpipeline has raised its dividend yearly for the last 10 years and has a 10 year growth rate of 7.2%
*As always, these thoughts are my own and are just shown for educational purposes. Always do your own research before making a investment purchase*
What are your thoughts? Are you buying anything this month?
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.
If you have some cash you like to put to use, why not consider TOO.PR.A cumulative preferred units @ 7.25 pc, redeemable at US dollar 25? Since it is now trading at below the redemption price, the yield is above 9 pc. If you bought some today, you pretty much lock in a capital gain and collect a handsome income in the meantime. What down side risks do you see that I missed?
hey George. I seriously have no clue how these things work. I read that they can be turned in after april 2018…. So couldnt you buy them now at 19 and change and sell for 25 instantly?
I dont know much about this kinda stuff so tend to stay away. People talk about ftn too and it offers a 18% yield….. Seems really high risk.
Actually I bought some last week at $19 and change. The redemption is at the option of the issuer any time after Apr 2018. If you sold it today it would be at the market price, not the redemption price. Of course, you should hold it if the market price is lower than $25. The preferred units would seem to work like bonds: fixed rate based on redemption price rather than face value; you know exactly how much you get back on redemption (as opposed to maturity); you get paid before the common shareholders; if the issuer missed one quarterly distribution, it is carried forward and added to the next pay date. I think the General Partner of this LP units is Brookfield. That should give investors some faith.
Thats interesting, I would have to read more about it. I saw something about brookfield being part of it.
Interesting pick though.
I love IPL – keep in mind, they are well into construction on the Heartland Project, whereas Pembina is only getting started. I like to think IPL will be the first producer, and will therefore have first shot at the Canadian customers. I have 813 shares of IPL currently…and am aiming for 1000. By far my largest holding – but I believe it will payoff longterm especially when/if oil recovers.
wow thats a nice position. Congrats. Do you drip all that?
You are right about them being first. Its nice to see the construction on schedule too. I think being first definately has its advantages but the added competition in the future kinda sucks… lol
You make some great points.
I don’t drip – I prefer to collect the cash and then use it to buy new positions or add to previous positions. I just don’t like the fact that I can’t control when you are buying in. I also enjoy the $~110/month to buy other things if they are cheap. I have my eyes on FUN, SIX and HOT.UN at the moment.
It is interesting to note that you are considering HOT.UN. Do you think their price will recover when they eventually have completed renovating all their properties?
Good Point, especially with large positions.
Nice list. I have heard others speak about FUN at the moment as well. Im definitely a fan of Canada’s Wonderland and next year they will be doing stuff for christmas, so that will help with the seasonal factor.
I’m not a big fan of holding much cash either. Although I try to maintain a certain percent in comparison to my portfolio, I am coming up short on that target. And nice buy! This buy adds a nice chunk of extra dividend income, and pipelines could get a nice rise depending on the election and favourable pipeline news. Thanks for sharing, Rob!
Thanks man, we will see what happens to the pipes. We definitely could use more when they are pumping out so much. I prefer them compared to shipping via rail carts less chances of severe damage.
Holding cash is hard, id rather be pumping up my income. But wish I had more on these dips haha.
I hate to hold cash as well. I rather put it to work asap! Great buy once again. That IPL dividend is very juicy! I’m yet to finish adding to my smaller positions before investing in IPL. The BPY really took off. I wanted to add about 300 shares to my wife’s TFSA when it was around $22. No rush! I’m pretty sure more dips are coming. Usually the markets are soft in the summer.
Well heres hoping the markets become a little softer in the coming months, id like another pullback.
bpy has done a great job and now want to buy back alot of their shares up to 5% at current prices. That will only improve the stock.
No rush with ipl its been sideways for awhile now.
BPY has been in the dumps for quite some time. Their buy back at between US$19 and $21 is what is keeping their current price at around US$20. The average cost of my position is around $22. Given its juicy payout and the fact that its unit price is about 30% below the fair value of its underlying assets, I am holding it for the long haul.
I dont know IPL at all but it does sound interesting with a nice div yield. I’m going to add it to my watch list and see where it falls when I run my personal screens. Cheers, D4J
sounds like a good idea. If you dont have a position in Enbridge id maybe go that route first. Its my biggest holding.
Nice buy, and it’s got to feel great to have turned on that drip! I’ve never considered s one, but you make a compelling case. Nd it’s hard not to like that increase to the forward income!
thanks man, yeah got to love getting that drip going. itp seems great at these levels just hope that 3 billion dollar project runs smoothly.
Nice portfolio. I’m looking to add IPL to my RRSP.
Thanks, ipl at these levels looks good. Curious why in your rrsp though and not your tfsa?
I try to keep our canadian investments in our tfsas or resps and anything outside canada in our rrsp. Its a great way to stay diversified.
Hey Rob, I’m looking for the dividends from IPL to ‘fund’ acquisition of other stocks in my RRSP. Between contributing to TFSA, RRSP, investment account, work’s defined contribution plan and ESPP…got to figure out a way with what’s left from the pay cheque! My TFSA is already maxed.
Winning! congrats. Sounds like a great plan. I cant wait until my accounts are maxed, gotta grind harder.
keep it up