Topic: How To Invest

Q: Can I get your recommendation on Inter Pipeline? It pays a high dividend. Thanks.

Article Excerpt

A: Inter Pipeline Ltd., $22.12, symbol IPL on Toronto (Shares outstanding: 359.5 million; Market cap: $9.1 billion; www.interpipeline.com), transports, stores, markets and processes oil and natural gas. On September 1, 2013, the company changed from a limited partnership to a conventional corporation. It is based in Calgary and has four business segments: The oil sands operation (31% of its revenue) has three pipelines in Alberta that serve the Cold Lake and Athabasca oil sands projects. These operate on long-term cost-of-service contracts, which insulates this business segment’s revenue stream from oil price fluctuations. Conventional oil pipelines (29%) transport crude oil across Alberta and Saskatchewan. These pipelines operate on a mix of cost-of-service, fee-based, and commodity-based contracts. Its revenues are therefore less insulated from oil price fluctuations. NGL Extraction (33%) converts Alberta natural gas to natural gas liquids (NGLs) such as ethane, propane and butane. The bulk liquid storage business (7%) operates terminals in the U.K., Ireland, Germany, Denmark and Sweden. Inter Pipeline’s revenue increased 64.3%, from $1.4 billion…

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