Enbridge Energy Partners: High Yields with Good Growth Prospects

I have been positive on several Master Limited Partnership's for months and have held two in my Permanent Portfolio for a long time. One of the best of breed in my view is Enbridge Energy Partners, LP (EEP) which was formed in 1991 to own and operate the Lakehead system, which is the U.S. portion of a crude and liquid petroleum pipeline system extending from western Canada through the upper and lower Great Lakes region of the U.S. to eastern Canada as well as encompassing the Gulf Coast.

Much of EEP's product comes from western Canada, increasingly from the Alberta region. EEP provides services to its customers and returns for its unit holders primarily through interstate pipeline transportation and storage of crude oil and liquid petroleum, gathering, treating, processing and transportation of natural gas and NGLs through pipelines and related facilities and providing supply, transportation and sales service, including purchasing and selling of natural gas and NGLs. Headquartered in Houston,the Master Limited Partnership has approximately 78,000 unit holders not including a substantial stake held by Enbridge Management LLC.

Enbridge Energy Partners is trading just below its 200 day moving average at $50.24 per share, up substantially over the past month. The 52 week price range has varied from $43.52-$61.82 per share with average daily volume of approximately 250,000 shares. Sporting a PE of 20.7 the shares may not be seen as a value play. However, I believe that enhanced earnings and analysts' upgrades may well propel this stock significantly higher in price. The 7.56% tax advantaged yield is a beautiful thing.

Lately, many talking heads and other media minions have begun to hop on the energy MLP bandwagon to which I say: It's about time. High yields with good growth prospects (especially for the diversified petroleum and natural gas entities) in a wide swatch of locales allows the investor to profit via interesting inter-sector diversification coupled with high yields which are likely to rise with a tax advantaged factor to boot.

In today's investment climate, MLPs in general and EEP specifically may be a lucrative addition to your portfolio, indeed.

Full Disclosure: Author maintains EEP as a long position in his permanent portfolio.

Comments

[NI123]

Are MLP's good for a ROTH IRA?

[dfinn]

is the fact that the payout ratio is 179% significant?

[Whisper OnThe Wind]

Hmmm, another dividend beauty.