December 10, 2018

Inter Pipeline Fund (IPL-U)

There are various different ways to get portfolio exposure to oil, and the broader energy transportation sector.  You can invest in some of the major companies in the field, or you can invest in the Inter Pipeline Fund (IPL-U).  When you buy into Inter Pipeline your not actually purchasing shares of an incorporated business like you would buy shares of an oil company for example.  Instead, you are actually buying “units” of a publically traded limited partnership.  The fund was started in 1997 and it now has massive holdings in petroleum transportation, and the extraction, transportation, and storage of natural gas.  It is based out of Calgary, Alberta, Canada.  While the fund does have most of its assets in Western Canada, it also has international holdings in the UK, Ireland and Germany.  It represents an excellent way to invest in a revenue-producing investment vehicle that is made up of mature, cash-flow positive, stable, energy producers.  Unlike most dividend-payers, who pay their shareholders quarterly, bi-annually, or annually, the Inter Pipeline Fund (IPL-U) distributes profits monthly.

 

In Western Canada along Inter Pipeline has over six thousand kilometres of petroleum pipelines, and owns 4.8 million barrels of storage capacity.  The system can move almost one million barrels of oil per day (this accounts for about a third of all oil sands production).  The Inter Pipeline Fund (IPL-U) is far from a pure oil play however, it is also one of the biggest natural gas owners in the world.  The fund’s three extraction facilities in Alberta produce about 40% of the total natural gas exported from the provincial leader.  If you have seen the name Simon Storage Limited in the field of oil and chemical storage around the world (capacity of eight million barrels), then you have been exposed to yet another aspect of the fund’s holdings.  Simon is a fully owned international subsidiary of the Inter Pipeline Fund (IPL-U).

 

The most recent news about the fund is that its monthly disbursements will be receiving more beneficial tax treatment in months to come relative to 2010.  This is due to the government recognizing the structural return of capital in the monthly disbursements.  With the world requiring more and more energy-related production and services, the Inter Pipeline Fund is an excellent way to invest in this reality.  It is currently trading at around $16 per-unit (you don’t buy shares of a fund remember).  This gives it a price-to-earnings ratio of about 18, and a dividend yield of 6%.  With such a large market capitalization (well over $4 billion), it is no wonder that most analysts are giving this dividend-producing giant a “buy” rating at the moment.  The fund also has a great Dividend Re-Investment Plan (DRIP) that includes a great 5% discount when you automatically re-invest your dividends.  When you combine this feature with the monthly distributions, it can allow investors to build up a solid position in the fund quite quickly.

 

Inter Pipeline Fund (IPL-U) Dividend Stock Graph:

TSE IPL-U

Inter Pipeline Fund (IPL-U) Dividend Stock Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
IPL-UInter Pipeline Fund16.395.8699.080.733.946.94

 

Speak Your Mind

*