September 29th, 2010 | 
Category: 
Image via WikipediaBy now, anyone following the gas and oil industry certainly knows that Alberta is very rich in oil and gas resources. Inter Pipeline Fund is yet another company operating in the oil and gas industry. It operates in three different segments: pipelines (42%), NGL extraction (40%) and storage (18%). Their diversification is appreciated with regards to transportation and storage as it is a fee-for-service business.
Inter Pipeline Fund is another income trust converting to a corporation come January with the intention to retain its current distribution but the news release only suggests and doesn’t confirm a conversion. Their current yield is 6.78% at the writing of this post.
Fact Sheet
- Monthly distribution of 0.075$ per month. Most income trust that converts, tend to retain the monthly distribution. We shall see, as I could not find a confirmation on the timing of the distribution.
- P/E of 16.52
- Market Capitalization of 3.41B$
- Payout Ratio of 65.4%
- Debt to equity is 0.70
- P/B Ratio of 2.5
- Currently trading at 52-week high
- 9 dividend increases since 1998 with 1 reduction
- DRIP offer a 5% discount
Competitors
Here are some competitors: PIF.UN, FCE.UN, KEY.UN and ALA. They all seem to eb and flow together… Not a very conclusive difference though. However, AltaGas (TSE:ALA) converted to a corporation and looks interesting. Looks like I have another one to research in the future. It also pays monthly dividends with a yield of 6.31%.
Thoughts
I am not as confident in the company when I look at the numbers. I may be missing something with the core business expansion and future earnings… It currently has a large debt to equity ratio and it has had negative cashflows in some quarters. There are mixed signals as some analysts give it a sector outperform rating but that was with a 13$ target and it has reached it. From a quick read on stockchase.com, 13$ appears to be on the high side and receiving hold signals. The dividend yield is nice, but I would rather not risk a price drop.Readers: Do you own IPL.UN?
Disclosure: No position in IPL.UN at the time of writing
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