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Energy & Income Advisor Live Chat July 2020
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RBB
5:16
In regards to TRSWF (TransAlta Renewables), why would they be considered to be a 'hold' and what would need to change in order to be considered a 'buy' ? . . . T I A
AvatarRoger Conrad
5:16
I've actually been rating the yieldco a buy below USD10 in CUI Utility Report Card coverage universe.  I've held off raising the highest recommended entry point until there's more visibility on the next dividend increase. But the portfolio of contracted assets is pretty solid and management has done a good job of controlling currency risk of garnering cash flows from the US and Australia in addition to its home country Canada. Next earnings are July 31 and depending on what I see I may change the buy target in the upcoming August issue of CUI.
Dragomir
5:22
Hi Roger & Elliott. Could you comment on PSXP? I've held it for several years and was quite happy with the large dividend increases. Of course the latest downdraft has eaten into years of income. Buy, hold, sell? Thanks.
AvatarRoger Conrad
5:22
They get roughly 18-20% of their cash flow from the Dakota Express Pipeline. So when the federal District Court judge ordered it closed, shares took a big hit. That was enough for me to put the company on the Endangered Dividends List, since losing DAPL cash flow would basically eliminate any cushion.

On the other hand, the reaction in the share price to the news was enough to make shares a bargain even factoring in a dividend cut. And one is far from certain at this time--as even a temporary shut down of DAPL is far from a forgone conclusion. Consequently, we rate this otherwise solid MLP a buy up to 35.
Steve
6:46
Context around VNOM ?
AvatarRoger Conrad
6:46
Hi Steve. Basically Viper Energy depends on two things for cash flow and by extension dividends--one is the realized selling price for oil and gas from its lands and the other is how much drilling its parent/GP Diamondback Energy is doing. Both looked pretty weak in the first half of the year, which is why VNOM cut its payout to 10 cents a share in May. There are some signs FANG is starting to juice output again and management had some encouraging comments for the second half of the year--with Viper reporting all curtailed production back on line as of mid-July. We like the Diamondback family. We currently rate Viper a hold--as we prefer other producers but that may change as the recovery we expect for energy unfolds.
AvatarRoger Conrad
6:47
Well that looks like all we have in the chat queue as well as from emails we received prior. Once again, we want to thank everyone who participated today, as well as all Energy and Income Advisor readers. Remember there will be a complete transcript of all of the Q&A on this chat available shortly after we sign off. We'll be sending you a link to it, and the transcript will also be posted on the EIA website.
6:48
Thanks again everyone. Have a great rest of the summer and Elliott and I will look forward to hosting you again next month. Stay well and cool.
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