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Thursday December 03, 2009
Energized income: Kinder Morgan (KMP) & Con Ed (ED)
In Global Changes & Opportunities Report, he suggests, "I think the most attractive way to invest for current income is with selected high-yielding utilities -- like Con Ed (NYSE: ED) -- and limited partnerships -- such as Kinder Morgan Energy Partners (NYSE: KMP)." "Most money market funds pay less than it costs to mail the monthly statements. CDs offer more, but their yields are still pathetic. Even long term Treasuries are only in the 3.4% range. For many retired people, those are poverty level returns. "However, utilities and limited partnerships can only offer attractive dividends, but are also more secure forms of wealth than paper dollars. Although market prices will always fluctuate, I think both my income choices below will appreciate in long term accounts. 
"Kinder Morgan Energy Partners LP is the largest independent owner/operator of energy pipelines in the country. "The company pumps oil, natural gas, and fuel through a 26,000 mile network that connects producers to distributors. In addition, the company has 150 terminals that store and transport petroleum, petrochemicals, coal and other bulk items by rail and truck. "If you are looking for a conservative income investment that is likely to stay abreast of inflation, I think it would be difficult to beat Kinder Morgan. "As an energy pipeline company, it is less susceptible to changing fuel prices than the producers.Whatever energy happens to cost, it still needs to be moved from where it is processed to where it is used. "Although Kinder Morgan trades like a stock on the NYSE, it is actually a limited partnership that distributes its available cash to investors each quarter. "Over the past five years, the partnership had an attractive 6.5% average yield. Currently, the yield is an outstanding 7.7%. Best of all, only part of the payout is taxable. "Consolidated Edison is also attractive. Con Ed supplies electric power, natural gas, and steam to a total of over 4 million customers in New York, Pennsylvania, and New Jersey. "The company also sells power to other utilities in the Mid-Atlantic region. Additionally, Con Ed designs and installs modern energy efficient heating, ventilating, air conditioning, and lighting equipment throughout its service area. "There aren't many American companies with a longer history of success than Con Ed. It was founded in 1884 when Thomas Edison proved that electric networks were feasible. "More importantly to investors who seek income, the company raised its dividends 35 years in a row. That's an outstanding track record. The yield is currently an attractive 5.7%." |
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"One of the most common questions I receive from investors is, where should money be invested to generate income," notes