Author: Tyler Kocon, Split Rock Private Trading
Covestor models: Bakken Shale, Equity Rotation
Disclosure: Long TRP
OPEC’s positive outlook on the future demand of oil only bodes well for companies that operate domestically in the United States.
For the first time in recent memory, the U.S. has displayed a glimmer of hope for an oil independent future. Production rates from some of the most plentiful and productive oil basins in the country continue to grow as technology advances and infrastructure becomes more robust.
The future looks brighter every day.
The topic of infrastructure has gathered a lot of attention over recent quarters. Domestic oil producers are constantly searching for a way to move more crude.
Because of this immense demand, companies that develop and implement oil and natural gas pipelines across the country continue to look more and more attractive for dividend-oriented oil and natural gas investors.
The oil and gas players in Canada, our close most trusted energy neighbor, benefit, as well. One particular one that Split Rock Private Trading is fond of is TransCanada Corporation (TRP), which also has U.S. operations. It has a respectable dividend yield of 3.7% (as of 9/25/12), but more importantly has a diverse portfolio of products and services.
TRP has evolved from a company that builds and maintains oil and natural gas pipelines to a full-service energy company that owns and operates an impressive mixture of energy assets. From traditional coal fired power plants to cutting-edge wind, hydroelectric, and nuclear energy power stations, TransCanada plays a part in just about every aspect of North American energy.
In only a couple months, the United States will choose a president — something that may affect many oil-related companies. Both of the respective candidates may have differing policies regarding the immediate energy future of the United States.
TRP is fortunate: It product mix is diverse enough that it may benefit no matter who is elected in November. It stands to potentially profit from an increase in oil-heavy consumption due to existing pipelines. It can also benefit from the massive influx of natural gas infrastructure pipelines being laid across Canada and the United States.
It’s an energy-diverse company with a strong dividend that could benefit as the U.S. oil and gas outlook continues to brighten.
The investments discussed are held in client accounts as of September 25, 2012. These investments may or may not be currently held in client accounts.The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.
Certain of the information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Covestor believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
