MLP Profits Has a New Name: Income Millionaire
Editor’s Note: The following article details an important subscription update. MLP Profits is changing its name to Income Millionaire. You’ll receive full access to this new site beginning Wednesday, May 24th. Your access to the MLP Profits website will continue for three more months. Here’s Igor with more details.
You’ve long suspected this, so I might as well admit it: there are profits out there beyond MLPs.
In all seriousness, beyond the little tax-advantaged patch of pipeline equities a whole world of income opportunities beckons. This service has already dipped a toe in it with financial MLPs like Blackstone (BX) and Oaktree (OAK) and conventional energy stocks like BP (BP).
So imagine my excitement when I learned I’d have the chance to design a go-anywhere, own-anything portfolio from scratch, with an opportunity to continue to follow and recommend the best of MLPs. Yeah, I’m very excited.
Effective this week, MLP Profits has a broad new mandate to pursue attractive income opportunities around the globe, including many of the top midstream MLPs that got us here.
To mark this milestone we’re changing our name to Income Millionaire, a title that reflects our expanded ambition. Some of us have already made our first and second million, and some are still getting there. But all of us can use some of the big yields still out there to build our wealth, provided we can navigate all the usual investing hazards.
In addition to the new portfolio, we’re getting a new site, and you’ll be receiving an invitation in your email with all the details tomorrow morning. The current site will remain operational for the next three months, and of course, I’ll remain available to answer questions about its legacy portfolios as well as the new Income Millionaire recommendations.
Plus, if your account is using our auto-renew feature, rest assured that we’ll maintain your current pricing. That means you won’t need to pay the higher subscription rate we’re planning to charge any new Income Millionaire subscribers.
As you will see, the Income Millionaire has inherited many of our current Best Buys and recent picks. But since I’ll be concentrating on the new portfolio from here on out, let’s review where we are leaving things.
The Conservative Portfolio has lived up to its promise, and no action is required on any of its current recommendations. Enterprise Products Partners (EPD), EQT Midstream Partners (EQM) and TransCanada (TRP) all made the cut for Income Millionaire.
It was painful to leave out big winners like Magellan Midstream Partners (MMP) and UGI (UGI), and I did so because of the wealth of new opportunities available to us rather than out of any concern about their fundamentals.
Of the three recently recommended gas distributors, Southwest Gas (SWX) is the only one in the red. But it retains the best growth prospects of the three based on its service footprint in Nevada (including Las Vegas) and Arizona. And the entire gas distribution space remains in takeover play as electric utilities scramble for new sources of regulated growth.
The Growth Portfolio will be contributing top two Best Buys Energy Transfer Equity (ETE) and Williams (WMB) to the Income Millionaire, along with #10 Best Buy Blackstone and #11 Best Buy CONE Midstream Partners (CNNX).
#6 Best Buy Antero Midstream Partners (AM) had a shot but has run up too close to what I see as its fair value to qualify. Cedar Fair (FUN) did make it as a beneficiary of strong consumer travel spending as well as a real estate play, with an attractive yield and free cash flow. I realize it has been rated a Hold. One of the advantages of assembling a new portfolio is the chance to shake inertia and reevaluate one’s prior stances.
Tesoro Logistics (TLLP) will also be making the move over to Income Millionaire; although it’s returned 22% in under six months since joining the portfolio I remain bullish on this diversified refinery logistics provider. We’re in for significantly higher oil prices over time, and TLLP’s gathering and processing operations in the Bakken will benefit immensely.
Of the remaining Growth recommendations, I’m highest on Energy Transfer Partners (NYSE: ETP) with its solid, diversified 9% yield. Refinery logistics plays Delek Logistics Partners (DKL) and PBF Logistics (PBFX) also yield 9%, and should benefit from additional sponsor dropdowns. Macquarie Infrastructure (MIC) and Rice Midstream Partners (RMP) are the two other names I’m particularly sad to leave behind but will continue to track for possible Income Millionaire inclusion.
Plains All American (PAA) along with its dividend paying proxy PAGP and Enbridge Energy Partners (EEP) along with its doppelganger EEQ are clearly the Growth basket’s weakest links right now. But these large crude shippers are still delivering healthy yields in the wake of distribution cuts and I expect them to rally once oil does.
Recent Aggressive Portfolio recommendations Black Stone Minerals (BSM) and Sanchez Production Partners (SPP) are also making the jump to the new Income Millionaire portfolio; both will benefit from production growth in the Eagle Ford, although Black Stone is much more widely diversified and retains its primary focus on the Haynesville.
I would have loved to bring Enviva Partners (EVA) and USA Compression Partners (USAC) over as well and may yet do so at a later date. Enviva, the leading wood pellets supplier to European power plants, remains attractive as a play on the conversion to renewable power sources that’s well along in Europe but has much further to go in the U.S., Japan and South Korea. Unlike rival compression contractors, USA Compression hasn’t cut its distribution and could well sustain its 12% yield in a sector just emerging from a protracted slump. Based on investor reaction to the cuts by rivals, a payout reduction to reduce leverage would not be treated as a calamity.
I’m less enthused at this point about CVR Energy (CVI), which has benefited from the recently strong refining margins but not as yet from the hoped-for regulatory overhaul of the ethanol quota tracking system that has cost it so dearly in the past. I fear the current gasoline glut could soon pressure all refining stocks, and CVI has additional headline risk because its majority-owner Carl Icahn is so closely associated with a Trump Administration that’s in all sorts of political and legal trouble. This thesis didn’t work out as hoped and I feel lucky to escape with only a modest loss. Sell CVI.
I also think there are better coal-mining opportunities out there than Foresight Energy (FELP), which remains burdened by costly debt as is now a Sell as well. Alliance Holdings (AHGP) and Alliance Resource Partners (ARLP) have obviously done much better, returning in excess of 50% each since I recommended them 11 months ago. But #13 Best Buy Contura (CNTE) remains by far my favorite coal name. It emerged from bankruptcy with little debt and has by far the lowest valuation in the industry. The pending move from over-the-counter trading to one of the major exchanges, expected this summer, should begin to unlock some of that value.
I can keep you updated on its progress while exploring the excellent income-generating opportunities available worldwide and easily accessed by U.S. investors via proxies traded in the U.S., ETFs and high-yielding closed-end funds. I hope you will join me on this journey.