Finding decent yield continues to be challenging in this market and probably will remain so at least in the near term due to the Federal Reserve's policies. One area I continue to like to find yield is the energy sector, primarily MLPs that pay out 90% of their earnings in distributions. One recent MLP that has caught my eye is below.
LRR Energy, L.P. (NYSE:LRE) operates oil and natural gas properties in North America. The company holds interests in various assets located in the Permian Basin region in west Texas and southeast New Mexico; the Mid-Continent region in Oklahoma and east Texas; and the Gulf Coast region in Texas.
7 reasons LRE is still a solid income pick at just over $19 a share:
- LRE yields close to 10% (9.9%).
- Oppenheimer just upgraded the shares to Market Outperform and put a $24 price target on the shares.
- The company recently raised production guidance for the second half of 2012 from 5,900-6,300 boe/d to 6,100-6,400 boe/d.
- Insiders have bought over $500K worth of shares over the past six months.
- The median price target held by the five analysts that cover the stock is $22 a share:
- Almost 60% of the company's production is natural gas. NG prices are more than 50% from their lows earlier in the year improving sentiment on the sector and stock.
- The company has a stable of assets with proven reserves, an experience management team, a solid balance sheet and its production is well hedged. In short, it is well-run stable outfit that pays an outsized dividend and good pick to put in an income portfolio.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LRE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.