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Investors no longer have to wait three months between dividend checks thanks to Vanguard Natural Resources, BreitBurn Energy Partners and Enerplus.
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3 Monthly Dividend Stocks to Buy Today
One of the challenges of using the stock market for
income is balancing the quarterly dividend payments.
In order to avoid a lean month each quarter,
investors might buy a stock that is not a perfect fit for
their portfolio or risk tolerance.
Photo credit: Flickr/Monochrome
To counteract that we’re beginning to see more
companies pay monthly dividends. These high
yielding companies have listened to investors who
have said they want to smooth out their cash
flow.
Photo credit: Flickr/Ervins Strauhmanis
Many of the top monthly dividend payers reside in the energy sector. These companies are using the strong cash flow from oil
and gas wells to fuel excellent monthly
dividend payments to their investors.
Photo credit: Flickr/Kool Cats Photography
Three of the best monthly divided payers from the energy sector are BreitBurn Energy Partners,
Vanguard Natural Resources and Enerplus. Let’s take a closer look at what makes these great
monthly dividend stocks to own.
BreitBurn Energy Partners
• Proved reserves of 214.3 million BOE.
• Reserves are liquids weighted at 60% of total.
NASDAQ: BBEP
Photo credit: Flickr/Kool Cats Photography
BreitBurn Energy Partners
• Owns long-lived oil and gas properties with a more than 15 year reserve life.
• Liquids weighted reserves at 60% of total reserves.
NASDAQ: BBEP
Photo credit: Flickr/Kool Cats Photography
Source: Breitburn Energy Partners Investor Presentation
BreitBurn Energy Partners
BreitBurn Energy Partners has undertaken a strategic shift toward liquids in recent years.
Source: Breitburn Energy Partners Investor Presentation
BreitBurn Energy Partners
Why I like its current dividend:
Strong MLP asset base filled with low-decline oil and gas properties.
Effective hedging strategy to mitigate commodity price volatility and stabilize its cash flows.
After four years of consistent distribution growth BreitBurn now yields 9.15%.
BreitBurn Energy Partners
Keys to keep the income growing:
Solid organic drilling program is focused on high-margin oil properties.
History of acquiring solid producing properties. Last year BreitBurn targeted $500 million in
acquisitions, but it completed $1.2 billion worth of deals.
This year it’s targeting $600 million in acquisitions.
Vanguard Natural Resources
• Proved reserves of 300 million BOE.
• Reserves are gas weighted at 66%.
NASDAQ: VNR
Photo credit: Flickr/Wyoming: Upper Green River Valley
Vanguard Natural Resources
• Proved reserves of 300 million BOE.
• Reserves are gas weighted at 66%.
NASDAQ: VNR
Source: Vanguard Natural Resources Investor Presentation
Vanguard Natural Resources
Vanguard Natural Resources’ reserve shift has taken it in the opposite direction of BreitBurn Energy Partners.
Source: Vanguard Natural Resources Investor Presentation
Vanguard Natural Resources
Why I like its current dividend:
Like Breitburn it has a strong MLP asset base and it also hedges its commodity price exposure.
However, Vanguard Natural Resources does not outspend its cash flow to drill new wells and its committed to a 3.0x Debt/EBITDA ratio.
Vanguard has grown its distribution 48% since its IPO and currently yields 8%.
Vanguard Natural Resources
Keys to keep the income growing:
Recent acquisition in the Pinedale/Jonah Field signals a strategy shift toward low-risk growth drilling.
However, the bulk of its growth will come from acquiring solid producing properties.
Vanguard has acquired $3.4 billion of assets since its IPO and has been taking advantage of cheap natural gas prices to load up on gas assets.
Enerplus
• Proved reserves of 406 million BOE.
• Reserves are balanced at 51% liquids and 49% natural gas.
NYSE: ERF
Photo credit: Enerplus
Enerplus
• Proved reserves of 406 million BOE.
• Reserves are balanced at 51% liquids and 49% natural gas.
NYSE: ERF
Source: Enerplus Investor Presentation
Enerplus
Enerplus’ strategy shift has see its focus on growing production from shale.
Source: Enerplus Investor Presentation
Enerplus
Why I like its current dividend:
Base production from low-decline Canadian waterfloods and Canadian natural gas supports the dividend.
Growth from shale adds upside. Enerplus’ adjusted payout ratio has fallen from 212% in 2011 to
113% this year, while its simple payout ratio has gone from 59% to 24% over that same timeframe. This is making its dividend much more secure.
Enerplus currently yields 4.27%, but its shale fueled growth could send that payout higher in the years ahead.
Enerplus
Keys to keep the income growing:
Shale fueled growth is the key to Enerplus’ future. Recently announced that it has 250% more oil in
the Bakken than it previously estimated. Canada’s Duvernay Shale is a potentially massive
resource base that could fuel more upside to investors.
Investor takeawayEnergy fueled monthly dividends can come in all shapes and sizes. BreitBurn’s
payout is fueled by oil, Vanguard’s is fueled by natural gas and Enerplus’ is fueled by shale. That gives investors more choice in which cash cow they want to use to smooth out monthly cash flows rather than adding a less than ideal
candidate to their income portfolio.
Source: Enerplus
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