Recent Purchase: Inter Pipeline Ltd (IPL)

Purchase Inter Pipeline Stock

On February 19th, I added 43 shares of Inter Pipeline Ltd (TSE: IPL) to The Dividend Beginner’s portfolio. I purchased the shares at $23.20, with a trading cost of $6.95 for a total cost basis of $1, 004.55.

Inter Pipeline Ltd pays a monthly dividend of $0.13, or an annual dividend of $1.56. My initial yield on cost works out to 6.72%. I really like monthly dividend paying companies, and am grateful to have the opportunity to add another to my fleet. Considering I’ve purchased 43 shares, IPL adds $67.08 to my annual dividend income, or $5.59 per month. IPL has increased their dividends consecutively for 13 years. In fact, IPL meets all of the Dividend Beginner stock picking criteria. My stake in IPL has increased my 12-month forward annual dividend income from $1, 307.62 to $1, 374.70, an increase of 5.13%. My monthly average dividend income now stands at $114.56.

 

Inter Pipeline Logo

 

Before IPL Net Increase After IPL
Annual Dividend Income $1, 307.62 $67.08 $1, 374.70
Monthly Dividend Income $108.97 $5.59 $114.56
Percentage Increase 5.13%

You may notice this is less than I usually invest per transaction, but I’ve decided I’d like to nibble at the market more than consume it these days, as I can spread my money farther and diversify more; in addition, I set myself up to add more to core positions if the share price falls. As a result, if IPL were to fall further I would definitely average down. I’m certain some may think, “Well, it’s not so worth it relative to the transaction cost eating up a decent portion of your return“, to which I’d respond, “It makes more sense to pay a bit more percentage-wise for transaction costs, than to invest more and lose more of your capital“.

IPL had released record financial results for 2015 the day prior to my investment, amid a very tough energy market – which is impressive, while others falter. IPL has a smaller market cap than many of the other Canadian pipelines (Enbridge, TransCanada, Pembina, etc…), which usually translates to it having more room to grow.

Following are some highlights I particularly enjoyed from their 2015 earnings:

  • Generated record funds from operations of $774 million, a 37 percent increase over 2014 results
  • Net income increased 33 percent to a record $463 million for the year
  • Declared cash dividends of $497 million, or $1.49 per share
  • Attractive annual payout ratio of 68 percent
  • Announced a six percent increase to monthly cash dividends, the 13th consecutive increase for Inter Pipeline shareholders

8 Replies to “Recent Purchase: Inter Pipeline Ltd (IPL)”

  1. Nice purchase at a nice price. I am long IPL as well. Well run company and I liek the fact that they are diversifying into terminals…also paying attention to geographical diversification into northern EU.

    cheers
    R2R

    1. Hey R2R,

      I agree it’s a nice entry point. It’s been pretty up since I bought it after such great results. Interested in watching it fall to buy more though. The EU diversification is a nice plus.

      DB

  2. I like the purchase DB. I have a 20k position and will hold alongside Enbridge and Transcanada. Money maker and I like that it pays monthly. Keep it up bud. You’re doing fantastic. Thanks for sharing.

    1. Hey Tyler,

      Thanks for visiting. Wow, that is a gigantic position. It’s almost the size of my entire portfolio! Do you have a preference among those pipelines? Glad to meet another fellow shareholder! This stock looks like it’s going to do well for itself.

      DB

    1. Hey tisiot!

      I got a notification on my phone and thought that name sounded super familiar. I did indeed invest in IPL and am now considering doubling my position, considering it was so small, and I came into some proceeds from selling Goldcorp.

      Go pipelines indeed.

      ENB has really nice dividend growth rate.

      DB

Leave a Reply

Your email address will not be published.