2018 OIL CRASH gives us HUGE 2019 Dividend Opportunity - Best Investments | Summary and Q&A

TL;DR

Oil industry ETFs are highly correlated to the price of oil, but midstream MLPs offer a more stable dividend yield. Three companies, Holly Energy Partners, Energy Transfer, and EQM Midstream Partners, offer dividend yields of over 8% and have steady revenue and net income.

Key Insights

• 🛢️ Oil industry ETFs are highly correlated to the price of oil, making them risky for dividend investing.
• ✋ Midstream MLPs, such as Holly Energy Partners, Energy Transfer, and EQM Midstream Partners, offer higher dividend yields and are less impacted by oil price fluctuations.
• 🚕 MLPs enjoy tax advantages as they don't pay corporate income taxes.
• ✋ Steady revenue and net income of these companies indicate their ability to sustain high dividends.
• ❓ Energy Transfer is an attractive investment due to its size, diversification, and expected revenue growth.
• 🫢 EQM Midstream Partners focuses on natural gas transportation and aims to increase distributions by 15% annually.
• 💇 Monitoring any potential dividend cuts is crucial when investing in these companies.

Transcript

Hey YouTube. I'm Jimmy. So oil has been crashing over the past two months. Here's what the chart looks like. And as you could see oil has fallen from a peak of over seventy six dollars a share back in early October to now just over fifty dollars. Now the question I had to ask myself Was is there an opportunity here. And I found four of them that ha... Read More

Questions & Answers

Q: How are midstream MLPs different from upstream oil companies in terms of dividend stability?

Midstream MLPs are less impacted by oil price fluctuations as they are paid a contracted rate for transporting oil, regardless of the oil price. Upstream companies, on the other hand, experience squeezed profit margins due to falling oil prices.

Q: What are the tax advantages of investing in MLPs?

MLPs don't pay corporate income taxes as long as they distribute most of their net income to investors. This tax advantage allows MLPs to offer higher dividend yields compared to regular corporations.

Q: What makes Energy Transfer an attractive investment in the midstream space?

Energy Transfer is one of the largest midstream players with a market cap of $38 billion and owns a vast pipeline network. The recent merger has simplified their business, and analysts expect steady revenue growth and increasing dividends in the coming years.

Q: What sets EQM Midstream Partners apart from other midstream MLPs?

EQM focuses on shipping natural gas, mainly in Pennsylvania. They recently merged with rice midstream and are focused on building their Mountain Valley Pipeline. They have stated their ambition to increase distributions by 15% annually.

Summary & Key Takeaways

• Oil prices have fallen, hurting upstream oil companies due to squeezed profit margins.

• Oil industry ETFs, such as XLE, are highly correlated to the price of oil, making them risky for dividend investing.

• Midstream MLPs, like Holly Energy Partners, Energy Transfer, and EQM Midstream Partners, offer a dividend yield of over 8% and are less correlated to the price of oil.

• These companies have steady revenue and net income, making them attractive opportunities for investors seeking high dividends.