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Invest Without the Risk

Energy and Capital's Weekend Edition

Written by Keith Kohl
Posted May 6, 2012

I don't take unnecessary risks in the market.

Those who do might take a lesson from my weekly poker night.

With a revolving door of friends and colleagues every Tuesday evening, there's never a dull game.

Some weeks I feel lucky; other nights, I'm not as fortunate.

Every so often, one of my colleagues will pull up a seat and join the table...

But when the cards are dealt, I know he isn't gambling.

When I finally asked him how he does it, he told me, “You don't go all-in with a pair of twos.”

You see, my buddy doesn't walk away with my money each week because he's luckier than I am; he simply hedges his risk with each hand he plays, whether it's by working out the odds or watching me scratch my ear whenever I'm holding a flush (I should probably stop doing that).

And that's exactly how we avoid risk today in a volatile market.

Investments should never be based on hunches, second-guesses, or emotions...

They should be cold, calculated moves that limit risk while providing a strong return for the investor's portfolio at the same time.

Dividends with a Kick

Like my poker buddy, my veteran readers know how to successfully weather a turbulent market.

Their strategy isn't some trading secret shared among board room executives behind closed doors...

In fact, last year I showed you four MLPs in the energy sector with high-yielding annual dividends.

Today they're still among the most secure, stable income plays for the last few years:

Company

Symbol

Market Value

Annual Yield

Enbridge Energy Partners

NYSE: EEP

$8.4 billion

7.12%

Pioneer Southwest Energy Partners

NYSE: PSE

$972.8 million

7.74%

Pembina Pipeline Corp.

NYSE: PBA

$8.7 billion

5.42%

Kinder Morgan Energy Partners

NYSE: KMP

$27.7 billion

5.85%

Just how stable are we talking here?

Anyone with a dime in energy market four years ago should know how painful things can get. When oil prices collapsed to $33 per barrel in 2008, there wasn't a single oil or gas stock that didn't cause investors to wince...

Or was there?

Throughout it all, not one of these MLPs lowered their dividends.

In fact, all of them managed to increase payouts to investors year after year.

One of those companies above, Enbridge Energy Partners, has raised its annual dividend sixteen times in the last twenty years — and not once has it been lowered.

Still think it's gambling?

Try finding a better bet than that in Las Vegas...

Enjoy your weekend,

Keith Kohl
Editor, Energy and Capital

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