Dividends4Life: Earn a 9.0% Return from the Energy Sector

Earn a 9.0% Return from the Energy Sector

Posted by D4L | Wednesday, February 01, 2017 | | 0 comments »

As a dividend investor, the most important information after the yield is how the business operation is going to support the dividend. The dividend’s safety relies on every aspect of the business, from the financials to the competitive environment. Since it is difficult to start such a business, there is not much in terms of competition. Since there are so few companies in the sector, the existing ones own a larger percentage of the market share as a whole when compared to a low-barrier-to-entry market. This is called an oligopoly environment.

So few companies in the market also means that those companies’ profits are inflation-indexed. From a dividend investor point of view, this is all great because it means that the dividend is protected because the bottom line should grow. With growing profits there is also a possibility that dividend hikes could be seen. The company I’ve found has high profit margins and operates in the energy sector. This sector requires a large up-front capital investment to start a business in. But, after the initial investment, costs outside of maintenance are minimal. The company I’ve found that meets these criteria is Enbridge Energy Partners L.P. (NYSE:EEP).

Source: Dividend Investor

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