A quick update on another purchase to wrap up January 2018. This time, its a purchase adding to my dividend growth portfolio after a long time. Its been hard to find value in this market, except in the basic materials sector. However, as I mentioned in the Outlook for 2018 post, I am looking to pull some money off the table as I have overextended in this sector of the economy — with my investment portfolio sitting close to 50% in that one sector. I am still bullish on the sector, but looking to deploy funds elsewhere in the economy, and I have been looking at related commodity plays.
For this purchase, I have looked at the energy sector and decided that I could use with some more exposure and increase my annual dividends from an existing company in my portfolio.
I decided to add to my position with 50 shares in Inter Pipeline Ltd (TSE:IPL) @ CAD$25.00. With a current yield of 6.7%, this purchase adds C$84 to my annual passive income stream. I will probably add another tranche in the coming weeks/months if theres a significant pullback as I think its a good strong play on the overall economy. But for this iteration, I have decided to limit to 50 shares.
Recent Buy Decision
- I have owned Inter Pipeline for years now and this company has been one of the most reliable monthly payers in my portfolio. It’s a company I am very familiar with and am confident to put more money to work.
- My last tranche was in summer of last year (2017) and the company had just announced successfully completing the acquisition of NGL midstream business from Williams Canada for $1.35B.
- Since then, the company has been busy. Recent developments include:
- Announced development of Canada’s first integrated Propane Dehydrogenation (PDH) & Polypropylene (PP) complex for $3.5 billion
- IPL announced buying the 15% stake in Cold Lake pipeline from Canadian Natural Resources (CNR) for $527M, thus taking 100% control of the pipeline.
- Secured a new long term cost of service contract for CNR’s Kirby North project
- Raised dividend by 3.7%, now paying C$1.68 per share annually.
- IPL over the last few years also started diversifying geographically with terminals in Northern Europe. As per last year, EU makes 9% of the overall market share for IPL. I will be keeping a close eye when the annual report is out to see if that has changed over the course of 2017.
- A great cash flow machine that not pays well today at 6.7%, but also grows its dividends consistently. The company has raised dividends for 9 consecutive years with 1-, 3-, 5-, and 10-yr dividend CAGR at 3.8%, 7.3%, 9.1%, and 6.9% respectively.
- For more details, see the Inter Pipeline’s Corp Presentation.
What do you think of this purchase? Share your thoughts below.
Full Disclosure: Long TSE:IPL. Our full list of holdings is available here.
Nice buy, I am looking at adding shares as well. Thanks for sharing.
Looks like I bought too soon…and its at a better price today 🙂 All the best
R2R
That’s a pretty juicy yield you picked up. I’m slightly familiar with this stock but never really looked into it seriously. It’s amazing how the energy sector is looking brighter after a couple years of some serious headwinds and many calling an end to energy/oil as we know it. As I always say… happy to see the buying continue!
Thanks DivHut. Yeah…the energy sector looked like it was going to collapse a couple of years ago…which I think went down as a sector-centric recession, even though most investors didnt notice it — esp when you were well diversified. IPL has been a good one for me and I will be looking to add more shares in the coming weeks/months.
R2R
R2R, Nice buy. Good yield plus consistent dividend growth usually equals solid total returns over the long haul. Tom
Thanks Tom. Looking forward to build that income stream after a long break from adding to my DGI portfolio.
R2R
Don’t know much about Canadian stocks but it looks good. I was a little underweight in energy but my mom gifted me 3 stocks 2 which went through yesterday one was Exxon so it helped pull that sector up. It’s not in my main account so I have to yet add it to my tracker which will put it inline with a few other sectors and bring my top sectors down
Good company to own there with Exxon. I think oil will do very well this year…all the best
R2R
Looks like a solid buy there R2R. I wouldn’t mind upping my exposure to non-US stocks and Canada seems like a decent place to park some of that investment capital. Pair that with the O&G space and InterPipeline looks like a good choice.
Thanks for stopping by and the comment, JC. I think the O&G sector will do pretty well this year, so not a bad time to load up on the shares. Having said that, looks like I pulled the trigger a bit too early and the stock has dropped since…might buy another lot soon.
R2R
Have held this since 2003 @ $6.90 when it was a trust fund. It has more than paid itself back to me since then and I continue to accumulate on the dips. Looking nice right now. Will use the HELOC to buy more in the investment account. Just acquired 1000
RICARDO
Nice. Ive been holding IPL for over 5-6 yrs I think … it still used to be called IPL.UN when I started. Great stock to own for income purposes. I just added another slug earlier this week. Thats a nice chunk to add 1000 shares. Congrats on adding more to your income stream.
Best
R2R