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Perry's Picks for an Energy Portfolio

06/18/2019 5:00 am EST


Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

Clearly, the sharp drop in Treasury yields of late pulled the Fed into the spotlight as the bond market dictates to the Fed and not the other way around. Leave no doubt — short-term interest rates are coming down, observes Bryan Perry, editor of Cash Machine.

Lower bond yields are driving up interest in high-yield assets. With earnings season now in the record books, I’m very pleased to report that our portfolio holdings demonstrated solid business fundamentals at a time when caution was the operative word going into the first-quarter reporting period.

Even as energy prices have tanked in recent weeks, our exposure to the sector involves only one bluechip integrated oil company, BP plc (BP) — the highest yielding big name in the sector paying out 5.86%.

Strong international demand for Liquefied Natural Gas (LNG) is benefitting our holdings in Hoegh LNG Partners LP (HMLP), Cheniere Energy Partners LP (CQP) and Dominion Energy (D).

An attractive crack spread bodes well for refining companies like CVR Energy (CVI), which is officially in play as a takeover candidate after hiring BofAMerrill to explore the sale of the company.

Lower gas prices induce higher volume for travel on America’s highways and raise the prospects for gas station operator Sunoco L.P. (SUN).

 The robust domestic economy is a healthy boost to domestic energy infrastructure that continues to support the rising distribution coverage of the energy Master Limited Partnerships (MLPs) held in the InfraCap MLP ETF (AMZA). As far as energy goes, we are in excellent shape.

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