I have been going through the top 20 insider purchase list in Barron's that came out this weekend. It appears like there is a lot of insider buying activity in the high yield sectors that have been hit recently by the rise of interest rates. Energy limited partnerships (MLPs), Mortgage REITs and property REITs are overly represented on this week's top 20. Insiders seem to be betting that the 10 year treasury yield looks like it could top out at 3% and some of the recent declines are buying opportunities in these sectors.
Given this, I think it is time to take a quick look at a couple of intriguing high yielders that have had recent insider buying.
Lehigh Gas Partners (LGP) is a limited partnership that engages in the wholesale distribution of motor fuels to gas stations, truck stops, and toll road plazas in the United States. Several insiders have bought over $1mm in shares since mid-August. These are the first insider purchases in 2013.
The shares have a distribution yield of 6.6% and the company has already raised its payout incrementally since first coming public in the fourth quarter of 2012. Revenue growth is tracking to better than 10% this fiscal year and analysts expect sales gains in the high single digits for FY2014. The four analysts that cover the stock have price targets ranging from $31 to $33 on the shares.
El Paso Pipeline Partners (EPB) is another limited partnership that owns and operates interstate natural gas transportation and terminaling facilities in the United States. An insider just purchased more than $750K of new shares one week ago. EPB is down ~10% from its recent highs a few months ago.
The shares offer a distribution yield north of six percent (6.2%) and the entity has more than doubled its quarterly payouts since it came public in 2007. Revenue growth in fiscal 2014 should accelerate to ~10% from around a 3% gain this fiscal year. The stock has a low beta and was just named a top dividend stock at Forbes.