Income from Critical Infrastructure

05/05/2017 2:50 am EST

Focus: INCOME

Bryan Perry

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

I’m featuring a long-awaited income asset that many subscribers have been seeking for their IRAs and retirement plans. It involves energy infrastructure outside the master limited partnership (MLP) structure. In fact, it is a REIT that generates a year-end 1099 statement instead of a K-1 report, states Bryan Perry, editor of Cash Machine.

The REIT is CorEnergy Infrastructure Trust (CORR), formerly Tortoise Capital Resources Corp. The trust affords investors a differentiated mechanism to invest in critical infrastructure assets that are characterized by stable cash flows and inflation protection.

The trust invests in upstream (exploration and production), midstream (transport, storage, logistics, processing) and downstream (refining, transmission) assets.

As a structured REIT, CorEnergy delivered diluted Funds from Operations (FFO) of $3.54 per share in 2016 to easily cover the $3.00 per share dividend paid out for the year, with 2017 shaping up to be a stronger year on the top and bottom line.

Indeed, 2016 revenues of $89.3 million were up 25.2% from $71.3 million for 2015. Growth through acquisition is a primary driver.

The company is evaluating a broad set of infrastructure opportunities and anticipates transacting one or two acquisitions in 2017 and 2018 with a target range of $50-$250 million per project.

The current yield stands at a hearty 8.45% and makes for a solid addition to the Conservative High-Yield Portfolio.

The stock is appropriate for both cash and retirement accounts. But due to the fact that REIT dividends are taxed as ordinary income and not qualified income, I view owning the stock in retirement accounts as a better fit. Buy CORR under $36.

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