June 8, 2010

[dan_s]

If you're looking for high yield with tax benefits you should check out some of the energy sector MLP’s. These five are rock solid and offer big dividends.
 Enterprise Products Partners (EPD) – current yield of 6.8%
 Kinder Morgan Energy Partners (KMP) – current yield of 6.8%
 Linn Energy, LLC (LINE) – current yield is 10%
 Energy Transfer Partners. LP (ETP) – current yield is 8.2%
 Enbridge Energy, LP (EEP) – current yield is 8.1%

What I really like about this group is that they are all large-caps with options. You can sell Covered Calls against your position to significantly reduce risk (of course you give away some upside as a result) and increase the yield. The dividend is paid on the share price not on your net investment. This is perfect for investors that want to protect principle as much as possible but still get solid cash flows.

For example:
Line Energy (LINE) is a $3.7Billion company Your Cash Dividend rate
Investor:
> Buy 1,000 shares at $25 (25,000) 10%
> Sell 10 Jan 2011 $20 Calls at $5.50 + 5,500
> Investor’s net out of pocket investment (19,500) 12.8% < Which BTW is mostly tax free return of capital
Note: In Jan 2011 investor will be called out at $20,000 for a STCG of $500 or he can roll the Call Options forward.
LINE would have to fall below $19.5/share to loose money on this trade. < it dipped that low in the late 2008 crash but quickly bounced back.

I hope you guys read the update on ATPG. When the MC 941 #3 well is completed to Telemark they will be fine.


I'm working on a Company Profile for American Oil & Gas (AEZ)that Kim will send out Wednesday moring. This Bakken focused small-cap as a lot of potential.

Dan

[bearcatbob]

"I hope you guys read the update on ATPG. When the MC 941 #3 well is completed to Telemark they will be fine."

Yes - reading it is rassuring. Your analytical insight into something like this is the reason I am here. It is impossible to follow many stocks at that level of detail - so someone who really knows how doing it for me is a wonderful thing.

Bob

[dan_s]

Bob;

That's why you pay us the big bucks!

IMO ATPG is going to be fine but that doesn't mean the share price will rebound anytime soon. Investors are driven by GREED and FEAR and there is a lot of fear surrounding this one and any company with offshore operations.

IMO the deepwater drillers are grossly oversold. All they will do is move rigs out of the GOM to other markets. The rest of the world is not going to shut down their offshore exploration and neither will the U.S.

Take a hard look at AEZ. As I was working on my report that was sent out this morning I became more and more impressed by it. I met with a group of landmen today that are working the Bakken area. They confirmed that AEZ's Goliath Project is a very nice acreage block, the eastern half (and maybe all of it) are in the Bakken's "Sweet Spot". They also think their acreage in northern Dunn County is very good. AEZ's current acreage in North Dakota may hold more than 200 Million bbls of recoverable oil. As they report more and more successful wells (they have two rigs running in ND now) the share price will move up or it will become a very tasty takeover target.

You should all go to the EOG website and listen to their presentation from June 4. If oil moves over $80/bbl then EOG's share price could top $200 within twelve months. EOG is the "Big Dog" in both the Bakken and Eagleford, a shale you are soon going to hear a lot more about.

Dan