Barron's Recap (8/18/12): Pipeline to 6 Percent Payouts
This weekend in Barron's online: investing in master limited partnerships, the Paul Ryan effect, and the prospects for Waste Management, Swatch, Prosafe and Investors Bancorp.
"High Energy Income" by Dimitra DeFotis.
One single investment -- the master limited partnership (MLP) -- can provide investors with a 6 percent yield and a stake in America's energy boom. Though MLP performance has lagged so far in 2012, overall they have flourished since 1987, when Congress changed the tax code to encourage investing in energy infrastructure. The benchmark Alerian MLP Index tracks the 50 largest MLPs by market capitalization, and it has a total return of 90% over the past five years, trouncing the 10-year Treasury and the Standard & Poor's 500. Will that boom continue? A roundtable of three private wealth advisors with dedicated MLP investing strategies says yes. But there is a lot to learn about MLPs, from their unique vocabulary of terms to the thorny tax implications. Barron's trio of experts attempts to simplify the ins and outs of this alluring but complicated investment, as well as sharing some of their picks, such as Copano Energy (NASDAQ: CPNO), Kinder Morgan (NYSE: KMI) and Plains All American Pipeline (NYSE: PAA).
In "Starting to Smell a Little Ripe," Michael Santoli points out that Waste Management (NYSE: WM) shares have attracted buyers interested in the company's high-dividend payouts, but also wonders how much longer the trash hauler can afford the cost.
Jonathan Buck's "The Time Is Right for Swatch" suggests that Swatch Group, parent of Omega, the official timekeeper for the London Olympic games, still has room to grow even though it dominates the Swiss watch industry.
Prosafe operates in a lucrative niche of the offshore oil-services market, and "Deep-Value Deepwater Play" by Jonathan R. Laing says the small Norwegian outfit offers a big dividend yield and a healthy shot at capital appreciation.
"Budget Faceoff: Ryan vs. Obama" by Gene Epstein claims that in choosing Paul Ryan as his running mate, Mitt Romney has refocused the presidential race on issues. The presumptive presidential nominee has placed in much bolder relief his campaign's position on the federal budget.
David Englander's "A Stock You Can Bank On" sizes up Investors Bancorp (NASDAQ: ISBC), a well-run New Jersey bank that trades at a discount. After its misunderstood ownership structure gets cleared up in the next several months, the shares could rise 25% or more in the next year.
"In It for the Duration" by Sarah Max is a profile of Baird Core Plus Bond (NASDAQ: BCOSX) manager Mary Ellen Stanek. She and her team are winning the "game of inches" the old-fashioned way, with credit work and common sense.
Richard C. Morais's "Poacher Turned Gamekeeper" is an interview of Doug Black, the former chief operating officer at the private wealth division of UBS (NYSE: UBS), who is now teaching the wealthy how to ask their bankers the tough questions.
Ron Vinder of UBS, who shuns individual stocks in favor of exchange-traded funds, offers his best advice in Alexander Eule's "The Winning Ways of an ETF Wizard." He diversifies broadly and achieved solid returns in a flat stock-market decade.
"Fighting False Promises" is an editorial commentary by Thomas G. Donlan about U.S. Representative Paul Ryan's fiscal plan.
Columns in this weekend's Barron's discuss:
- The coming bust in junk bonds
- Second-quarter disclosures of hedge funds
- When the federal gasoline tax may be raised
- Cisco Systems' (NASDAQ: CSCO) dividend boost
- How to pick a junk fund
- Japanese fondness for leveraged ETFs
- QE3's likely effects on commodities
- Congressional Budget Office warning on government spending
See also: Cisco Jumps on Q4 Results, Dividend Hike
This weekend's Barron's online exclusives include:
"Bankrate CFO Slashes Stake by 35%" by Grace L. Williams. Chief Financial Officer Edward J. DiMaria sold 107,177 shares of Bankrate (NYSE: RATE) for $2,065,028.The sale represented 35% of his stake, and his direct holdings now represent less than 1% of the outstanding shares of the financial-information aggregator. He is one of three insiders at Bankrate who cashed out 207,177 of their shares between Aug. 9 and 16, to the tune of $3.9 million. This is DiMaria's second sales transaction this year.
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