Inergy L.P.: An Income Investor's Must-Have

Inergy, L.P. | Investor Relations | Press Release.

I think Inergy LP (NRGY) should definitely be on every income investor’s radar. This company has increased the distribution every quarter for something like 7 years straight. Its management has cost under control and a well managed growth plan.

The retail propane market seems pretty recession proof (almost too late now!). Growth is possible by making acquisitions in this still fragmented business.

Inergy has also been creative in the growth of its midstream natural gas business. With operations focused on California and New York, the company has large markets to grow into.

Although the share price dropped to close to $12 over the last year, the share price is now 2% above where it was in the middle of 2008. Throw in a 10%+ dividend and long term investors should be pretty happy.

Disclosure: NRGY is a component of my site’s hypothetical Income Portfolio.

Comments

[elliot_mllr:]

The main attraction of Inergy in my opinion is not its propane business, but rather its New York State storage business and its potential. The storage operations, actual and prospective, are in the Marcellus shale, the most talked-about gas discovery since the Barnett shale. The Marcellus shale will be a center of drilling for years to come. I just bought Inergy.

May 07 01:36 PM

[You're Kidding:]

NRGY's dividend has been rising at almost an 11% CAGR (compound annual growth rate) for the last 7 yrs, which is excellent, but I wouldn't touch NRGY as an investment with a ten foot pole!

Why, you ask, since it is such a good investment?

Because BETTER than NRGY, is its General Partner, NRGP which has been raising its dividend at about a 34% CAGR !!!

Of course, this ridiculous rate will come down some in this environment, but in general, the General Partners of similar MLPs raise distributions much faster than their underlying LPs (Limited Partners.)

Quickly rising divs is the key to the best dividend growth strategy. Well...its actually the best stock investment strategy there is, period.

If you don't know that or don't believe me, then go to the URL below for a color, graphical, real time (with Sliders - no need to enter numbers!) compound interest calculator, which will allow you to play with various scenarios like distrbution rates, inflation, taxes etc., which shines as bright a light on why its far better to think long term, than not, as anything I have yet seen. Play with it for 15 min. and your investment outlook may turn 180 deg. Mine did and I'm 63.

personal.fidelity.com/...

How much longer do you think you will be alive? How much of that time will you be an investor? Is this figure not in the decades? Did the tortoise beat the hare to the finish line?

One serious problem we have on this planet is that most everyone thinks short term: individuals, institutions, businesses, governments. Think how things would be different today, if everyone had been thinking long term instead....

Good food for thought, IMHO.



Good luck!

May 08 12:05 AM