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InfraCap MLP ETF: Bottom Scooping A Forgotten Very High Yielding ETF

Published Wed, 09 Sep 2020 03:37:27 -0400 on Seeking Alpha

Seeking AlphaETF Analysis | Basic MaterialsInfraCap MLP ETF: Bottom Scooping A Forgotten Very High Yielding ETFSep. 9, 2020 3:37 AM ET|| About: InfraCap MLP ETF (AMZA)by: Daniel ThurechtDaniel Thurecht Long-term horizon, Contrarian, Oil & Gas, industrialsSummaryIt seems these recent market conditions have seen some industries ignored, such as the midstream industry within the energy sector.
This has left the InfraCap MLP ETF offering an 18% dividend yield despite it being reduced significantly and with a recent small increase it appears the worst could be over.
A discounted cash flow valuation produced a result that indicates their intrinsic value is 79% higher than their current share price even without any further dividend growth.
When running a Monte Carlo Simulation to estimate the intrinsic value for the company's shares, a staggering 100% of the results were above the current price, indicating minimal downside risk.
They offer a combination of a very high dividend yield, minimal downside potential with diversification and thus I believe that a very bullish rating is appropriate.
Introduction Market conditions have been rather abnormal lately with certain industries soaring to new heights whilst others seemingly remain forgotten. A perfect example of the latter is the midstream industry and by extension, the InfraCap MLP ETF (AMZA), which still offers a very high dividend yield of around 18% despite already reducing its dividends repeatedly as this economic crisis weighed on its underlying assets.
Background The last decade has seen ETFs getting a notable increase in popularity as they became more mainstream by offering investors a simple and fast way to gain exposure whilst maintaining diversification. This saves their often time-poor investors having to dig through seemingly endless amounts of financial statements and investor presentations since they can simply buy the basket of MLPs, as the graph included below displays.

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