In 2012, CHK sold more than $11 billion of its leases and pipelines in an effort to cut its losses. CHK has already sold another $3.6 billion of assets this year. Chesapeake could now be a turnaround story in the marking. But its 1.7% dividend yield won’t tempt many income investors.
Thankfully, there are better yield opportunities involved in the Utica Shale.
A number of pipeline companies are building transportation systems to service the Utica Shale. But Enterprise Products Partners L.P. (NYSE:EPD), which I already own in my Daily Paycheck portfolio, is likely to have the most cost-efficient solution.
Enterprise Products Partners L.P. (NYSE:EPD) is building a 369-mile ethane pipeline from Ohio to Indiana. From there, EPD will use an existing underutilized 861-mile pipeline that runs from Indiana to the Texas Gulf Coast. It will need just another 55-mile pipeline extension in the Gulf Coast to give shippers access to Enterprise Products Partners L.P. (NYSE:EPD)’s natural gas liquids storage facility in Mont Belvieu, Texas.
Commercial operation of the pipeline is scheduled to begin in the first quarter in 2014. Enterprise Products Partners L.P. (NYSE:EPD) has already received commitments from ethane producers to use the pipeline for at least the next 15 years.
On July 10, EPD raised its quarterly distribution to $0.68, up from $0.67 per unit. This was EPD’s 36th consecutive quarterly distribution increase. At current prices, Enterprise Products Partners L.P. (NYSE:EPD) has a yield of 4.3%.
Until Chesapeake’s turnaround is further along, I’d be reluctant to recommend it to income investors. Enterprise Products Partners, however, has the kind of consistent track record I look for when selecting a security for my advisory, The Daily Paycheck. EPD has been a solid performer in my portfolio since May 2011, returning 66%. While there will be a number of pipeline companies servicing the Utica Shale over time, I doubt any will do it as cost-effectively as Enterprise Products Partners L.P. (NYSE:EPD).
[Note: EPD is not the only stock I am considering as the Utica Shale comes online. I am also looking at two other picks that are poised to capitalize as more oil starts getting pumped out of the ground. One is a top oil producer that pays a 5.2% yield, while another is a 5%-yielding MLP that could make good additions to The Daily Paycheck soon. To learn how to get access to all my latest research, click here.]
P.S. — Great yielding stocks that have plenty of cash for dividend growth are the foundation for my “Daily Paycheck” investing strategy. To see how I’ve used this strategy to earn $49,000 in dividend checks since 2010, click here.
– Amy Calistri
The article Get A Paycheck From America’s Next Great Shale Field originally appeared on StreetAuthority and is written by Amy Calistri.
