Acquisitions should help raise payout

Article Excerpt

BUCKEYE PARTNERS L.P. $45 (New York symbol BPL; WSSF Rating: Average) has agreed to buy two oil storage terminals in the Midwest, and a 350-mile natural gas liquids pipeline between Colorado and Kansas. Buckeye did not disclose the price of these new assets, but will borrow about $120 million from its short-term credit lines to pay for them. To put that in perspective, Buckeye earned $1.97 a unit (total $72.3 million) in the first nine months of 2005. The partnership has used acquisitions to spur its growth in the past few years, which adds to its risk. These new purchases will likely raise its long-term debt, from 1.1 times unitholders’ equity at September 30, 2005 to around 1.3 times. However, the extra cash flow from these assets should let Buckeye increase its annual distribution rate of $2.90 a unit, which yields 6.4%. Buckeye Partners is a buy. buy…

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