The Motley Fool folks are out with a new obfuscated, teaser ad; this time around it’s for their Motley Fool Income Investor newsletter signed by Scott Schedler. Here’s how he gets you fascinated.
The IRS is daring you to make this investment now an obscure tax loophole from Reagan years…
So the gossip about the tax loophole from Reagan years is cueing at their much cherished MLP’s (Master Limited Partnership) though this newsletter places emphases on REITS and great dividend stocks with strong Balance Sheets. The Income Investor does have a very good past record of picking up winners a couple of years since.
Whether or not this is an excellent newsletter, many of us are always interested in MLP’s, which is what they are at, in this unrelenting teaser ad. It seems they have got three of them up their sleeve this time; we will try to decipher them in order. But before that some hints from the ad.
This company specializes in processing freshly extracted natural gas methane to remove impurities.
Consider the fact that any MLP is a good investment especially in a low interest environment, owing to the distribution yields they offer. MLP’s enjoy a lower cost of capital, as they don’t have to pay taxes on their profit, that’s what makes newsletter copywriters, and investors drool for MLP’s.
The beauty of investing in a MLP is that you aren’t buying a stock in these companies; instead you are buying partnership units. While the investment method is the same until you get to fill your K-1 forms, you seldom notice any kind of difference in the process.
So who is it? Let me quickly break the ice, the first MLP stock they are betting on to fill their prophecy is Philips 66 an energy manufacturing, and Logistics Company, with diversified interests in chemical mining and marketing. Philips 66 is a spin-out off ConocoPhillips to form an MLP.
Quite obviously they are a Motley Fool darling stock for a couple of years. Philips 66 has announced plans to increase its quarterly dividend payout by 25%. And yes this is a buy for me as a clean play to profit from a burgeoning US shale production.
Now let’s quickly move on to decipher their second pick shall we? OK some more clues please!
This company, which operates 4 massive interstate natural gas pipelines, as well as a high-tech central facility that “re-gasifies” liquid natural gas…
This one I think should be Energy Transfer Partners a much focused midstream player thanks in part to their spree of acquisitions and a merger with Sunoco. They should be able to start dispersal’s again which would probably be a catalyst for a possible up move in their price.
The Sunoco merger was a very big move for ETP, the shareholders of Sunoco laughed their way to the bank after the merger that could have resulted in a quick selloff leading to a short depression in its price. ETP looks quite appealing to me if they could resume dispersal’s.
Moving on to the third Motley Fool Darling.
This company may be the best bargain of all… according to James, below its true value.
Well not many clues on this one but I will take a wild guess, considering their past favorites as Motley Fool has a trait of re-marketing its older picks with rehashed versions of their earlier teaser ads. This one I think is Summit Midstream Partners NYSE SMLP, unsurprisingly another midstream player that is more reliable than its peers with exposure to sub sector risks.
It went public only last year, so not much comparison data is available for SMLP. It’s a young company second best to date posting a total return of 80% to its stake holders. SMLP rewarded two fold to its shareholders. However the ability to maintain this growth matters for a dividend growth investor.
The recent surge in oil and natural gas supplies in the US has created huge bottlenecks for producers, which however can be eased up by the midstream players. This has created immeasurable profit openings for the midstream players.
So that’s the basic rundown, if you have got any of your own MLP’s or know of a reason why folks would be interested in them please feel free to post in the little comment box below.
Disclosure: I don’t have any positions in any stocks mentioned herein, and no plans to initiate any in the near future as well.