The Beauty of A Flexible Income Investing Strategy

Pipelines have been a glorious way to build long-term wealth, particularly if you are willing to accept hiccups in income and think broadly about total income generated over the course of a full business cycle. Because natural gas storage is at a low point in its own business cycle, Boardwalk investors have had a rough year, suffering a distribution cut of 81%. Truly patient investors, though, should have a promising decade ahead from this price point.

Pipelines have been a glorious way to build long-term wealth, particularly if you are willing to accept hiccups in income and think broadly about total income generated over the course of a full business cycle. 

In February, I wrote an article titled “Why Boardwalk Pipelines Is An Absolute Steal At $13.” That article was uncharacteristic compared to the high-quality dividend stocks I usually discuss because it involved a highly unique set of circumstances coming together. To summarize the obvious: you had a pipeline that had never lowered its distribution since becoming publicly traded in 2005 suddenly slash its distribution by 81%, from $0.535 to $0.10 quarterly. Because most energy MLPs are held for their ability to return large amounts of cash to unitholders, most long-term investors in this MLP had a “WTF Am I Doing With This Albatross In My Portfolio?” moment, cutting the price of the partnership in half within a single day of trading.

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