Dripping The Pipes – Oh Yeah!

Hey everyone

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.

The Buy

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..

Conclusion

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?

Cheers!

Rob

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.