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High Yield from Tallgrass

06/28/2017 2:50 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Based in Leawood, Kansas, Tallgrass Energy Partners (TEP) owns and operates midstream energy assets in North America, including more than 4,600 miles of transportation pipelines in Wyoming, Colorado, Kansas, Missouri and Nebraska, notes Mark Skousen, editor of High-Income Alert.

It provides crude oil transportation to customers in Colorado, Wyoming and surrounding areas through the Tallgrass Pony Express Pipeline.

It also provides natural gas transportation and storage services to customers in the Rocky Mountain, Midwest and Appalachian regions.

The company further owns and operates natural gas processing facilities, NGL transportation services and water services that are strategically located in key hydrocarbon basins.

They include the Denver-Julesburg, Powder River, Permian and Hugoton-Anadarko Basins and the Niobrara, Mississippi Lime, Eagle Ford, Bakken, Marcellus and Utica shale formations.

The last few months have been pretty tough on oil and gas exploration and production companies, as energy prices have gone back into a sinking spell.

But transportation and storage companies like Tallgrass are doing just fine. In fact, better than fine, as pipelines and terminals remain the cheapest and most efficient way of moving fossil fuels.

In the most recent quarter, earnings at Tallgrass soared 70%. The partnership enjoys an operating margin of 43%. And the shares currently yield 7.16%.

Plus, Tallgrass is publicly committed to increasing its quarterly cash distributions. No wonder insiders own more than 44% of the outstanding shares here. And they are buying more.

Last week, CEO David Dehaemers, Jr. filed a Form 4 with the Securities and Exchange Commission (SEC) revealing the purchase of 36,000 shares at $46.47, an investment of more than $1.66 million.  Today you can buy the shares a little cheaper than he did. And you should.

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