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Here's yet another MLP IPO, which historically have significantly outperformed the S&P 500.I realize that its yield is variable, but at its current planned distribution rate Northern Tier Energy (the name of the company is wrong here in CAPS) has a current yield of nearly 19%.I have no love for refining, but the business will continue to exist for quite some time plus NTI owns more than just a refiner, it has storage tanks, a dock, pipeline interests, etc.When the yield-hogs realize how huge this company's distribution is, variable or not, they will likely chase the stock and drive up it's price.Regarding the variable nature of the dividend payment, let's face it, all dividends are ultimately variable. Either a company is going to earn enough to sustain its payout or it won't. If a company isn't making enough money to maintain its payment it will eventually have to be cut. Paying out a dividend in excess of available cash maintains the illusion of consistency, but ultimately is not sustainable.Deej
A big part of their story is product distribution through 200+ retail outlets. This one is quite unique as far as MLPs go with its variable distribution, 100% distribution coverage ratio, absence of incentive distribution rights at the GP, single, agile refinery with access to Canada and North Dakota sources, and regional retail footprint. All this will likely make the market very uncomfortable and I suspect the yield will stay high. Note the refinery turnaround scheduled for 2013 that could hit the quarterly distribution hard.
Excellent comment above. I'm waiting for the stock to get clobbered in August when people realize that the distribution has gone way down, and then I'll climb in for even more!
It's early march 2013 now. Today price went up 2.35 or (8%) to 31.85. Yield is now at 15-17% depending on your source. I calculate yield as most recent distribution or 1.27 *4/31.85 or 15.9%.