Dividends4Life: Super-High-Yielding Energy Stocks

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Super-High-Yielding Energy Stocks

Posted by D4L | Saturday, August 03, 2013 | | 0 comments »

Searching for high yields is a great way to discover new stock ideas. Sometimes, however, a high yield is only a temporary pop over the lifetime of an investment. Evaluating the sustainability of a yield is very important, but if you've discovered a young stock with little financial history, it can be a bit tougher. Today we'll examine the business models of three relatively young master limited partnerships with high yields to try and determine whether the businesses lend themselves to a lifetime of high payouts.

CVR Refining (NYSE: CVRR) 22.5% yield controls two refineries, one in Kansas and one in Oklahoma, as well as a pipeline and storage network. Northern Tier Energy (NYSE: NTI) 20.4% yield like CVR Refining, is also a downstream MLP. QR Energy (NYSE: QRE) 11.7% yield is a small operation, with reserves of 99.1 million barrels of oil equivalent to its name. A yield might be your first introduction to a company, but it shouldn't be your last. High yields are only as good as the businesses they're built on, and though there's nothing about these three business models that guarantees they can't sustain their yields, the nature of their operations suggests it may be difficult.

Source: Motley Fool

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