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Inter Pipeline Is A Great Dividend Play

Published Fri, 26 Apr 2019 16:30:22 -0400 on Seeking Alpha

Investment Thesis
Inter Pipeline Ltd. (OTCPK: IPPLF) is opportunistically investing in projects that will significantly grow EBITDA. The firm is growing its core oil sands pipeline business while diversifying further into bulk storage and petrochemicals. Demand projections for the firm's petrochemical outputs as well as production growth projections in the oil sands are both strong tail winds for the company. Inter Pipeline's ambitious capital commitments have been an overhang on the share price. The current dividend yield of almost 8% is well covered and has enjoyed a CAGR of 7.3% of the last decade. While dividend growth is expected to slow as capital is redirected to growth projects, Inter Pipeline's current yield and valuation offer investors a total return opportunity of ~20%. Inter Pipeline's long term cost-of-service contracts ensure stable earnings that have limited exposure to commodity or volume fluctuations.
Company Description
Inter Pipeline Ltd is a midstream, transportation and storage company with assets in Canada and Europe. With a market capitalization of ~CAD $9B, Inter Pipeline trades on the TSX as IPL. The firm currently operates four business segments: Oil Sands Transportation, Natural Gas Liquids Processing, Conventional Oil Transportation and Bulk Liquids Storage. Oil Sands Transportation makes up the bulk of the firm’s revenue, contributing 48% of EBITDA in 2018. Inter Pipeline is currently undertaking its largest ever capital project; a CAD... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NUSTAR ENERGY 26.89   0.0 -6.61 2.40 8.95
CNOOC 150.64   0.0 0.00 7.53 5.95
ROYAL DUTCH SHELL A 68.62   27.1 2.59 3.76 5.35
PEMBINA PIPELINE 36.91   16.1 2.29 1.80 4.86
EXXON MOBIL 71.98   17.3 4.15 3.48 4.83
CANADIAN NATURAL RESOURCES 25.35   8.4 3.00 1.13 4.32
CHEVRON 121.42   15.7 7.72 4.76 3.91
IMPERIAL OIL 26.59   0.0 0.00 0.66 2.49
CENOVUS ENERGY 9.50   59.4 0.16 0.15 1.58


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