Looking for a high yielding niche to hang your hat? You might consider the shuttle tanker industry, which performs a vital service to the oil industry - they can't monetize their oil unless it gets to port, and it's a whole lot cheaper to hire shuttle tankers to transport it, than it is to build underwater pipelines. This stock yields over 11%, and has good distribution coverage of 1.18x. It's a leader in a vital niche industry, with long term contracts, and over 99% utilization of its services. It hit its 2016 guidance targets in Q1, and its profitability is not affected by the price of oil.
We've written previous articles about KNOT Offshore Partners LP, (NYSE:KNOP), and this article will update the information in those articles. KNOP is a leading player in the shuttle tanker industry, which is tiny in comparison to other shipping industries - only 72 vessels, which is less than 2% of the vessel count in the conventional tanker industry. KNOP operates on a dropdown model with its sponsor, Knutsen NYK, which has sold an additional 7 vessels to KNOP, since KNOP IPO'd in April 2013 with 3 vessels. The fleet is all on long term contracts, which have an average of 5.3 years left on their contracts, in addition to extension options.
Source: Seeking Alpha
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