Matt Insley

Investing in your favorite oil driller or gold miner is risky business.

Resource companies, like these, go to great lengths. Whether it be mining for gold hundreds (or thousands) of feet underground in South Africa or drilling for oil amidst the rolling sea-swells in the North Sea, it takes a certain ilk to profit in this business.

Investing in these plays harkens the same level of expertise.

Today I want to remind you of a safer approach to resource investing. This approach will keep you ahead of the pitfalls in the resource space and should far-outpace the S&P. Better yet, with more debt ceiling chatter, there may be a way to get in on the cheap…

…the U.S. midstream sector is one of the safest places to stock some investment cash.

I’m talking about “midstream” players. These are the companies that transport and process the oil and gas flowing profusely from America’s shale patch. It’s all part of the “harvest” phase that we’ve covered before.

Today there’s mounting evidence that these players are going to continue to rake in money – by charging a fee for transport of oil and gas – and continue paying solid dividends.

The story is easy to follow, too. With each passing day the U.S. is producing more barrels per day. This simple up-tick in production is creating all sorts of opportunities around the country. All of a sudden there’s an unexpected glut of oil in the U.S.

Who profits from this glut? The guys that can move and process the oil.

Same goes for natural gas. With so much of the stuff flooding the market there’s plenty of opportunity to process and move it. Propane, Butane, Ethane… any company, from Texas to Pennsylvania, that can process this gas stands to make a buck. And better yet, pass some of that buck along to you!

Here’s a few of my favorite midstream players (along with their current yield):

  • Access Midstream Partners LP (ACMP)* — 4.0%
  • DCP Midstream Partners LP (DPM) – 5.7%
  • Enbridge Energy Partners LP (EEP) – 7.1%
  • Enterprise Products Partners LP (EPD) – 4.4%
  • Plains All American Pipeline LP (PAA) – 4.5%
  • Williams Partners LP (WPZ) – 6.5%

[*Note, this is the former Chesapeake Midstream... a spin off from Chesapeake’s ailing energy company]

With more oil and gas flowing – through pipelines, trucks and railways – these logistic companies are in the right spot of this budding market (and the list above is by no means exhaustive, either!)

Remember, production from many of the now-prolific shale plays in the U.S. is just ramping up. More oil and gas, regardless of price, will mean big things for the U.S. midstream sector.

That’s great news for us. But it gets even better…

First, these midstream companies love to pay consistent dividends. At a time when the Federal Reserve is printing U.S. dollars like Chinese carry-out ads, these stable dividends couldn’t come at a better time.

Second, with the latest installment of the debt ceiling taking center stage and a potential market pullback in the cards, now may be a great time to grab some of these companies on a pullback.

Indeed, if any of the midstream players listed above fall in price – due to the fumbling U.S. Congress – there could be a short window of time to pick em up on the cheap. That means lower entry price and higher dividend payout.

Getting back to our discussion above, the U.S. midstream sector is one of the safest places to stock some investment cash. A lot of the variables that can plague other resource sectors – dry holes, bad core results, high costs, and overzealous management – don’t apply here. Simply put, these are some of the most straightforward resource bets you can make.

Keep your boots muddy,

Matt Insley
for The Daily Reckoning

P.S. If you’re looking to stuff your portfolio with homegrown dividend plays, hopefully on the cheap, you’ll want to keep an eye on the midstream guys. And one of the best ways to do that is to read The Daily Resource Hunter. In it, I relay specific, boots-on-ground info on the most exciting resource plays in the market. And it’s completely free. Don’t wait. Sign up for free, right here, and start getting the most up-to-date info on this thriving investment sector.

This article originally appeared at Daily Resource Hunter

You May Also Like:


Burning Off the Cheapest Energy in the World

Matt Insley

T. Boon Pickens recently said that the U.S. has the "cheapest energy in the world." And he's right. Natural gas, for example, is so cheap that oil producers are literally burning up the byproduct. But how long will it be before gas prices come inline with demand, and production finally shoots up? Matt Insley takes a look...

Matt Insley

The Managing Editor of the Daily Resource Hunter, Matt is the Agora Financial in-house specialist on commodities and natural resources.  He holds a degree from the University of Maryland with a double major in Business and Environmental Economics.  Although always familiar with the financial markets, his main area of expertise stems from his background in the Agricultural and Natural Resources (AGNR) department.  Over the past years he's stayed well ahead of the curve with forward thinking ideas in both resource stocks and hard commodities. Insley's commentary has been featured by MarketWatch.

Recent Articles

Extra!
6 Reasons You’ll Love Being a Late-Stage Investor

Matthew Milner

When investing in a private company, there are two kinds of investors: early-stage and later-stage. And while early-stage investors have more upside potential, they're also exposed to far more risk. Today, Matthew Milner explains how you can be a successful later-stage investor, and still make great gains, with much less risk. Read on...


Video
How to Predict an Economic Collapse

Kate Incontrera

In his recently released book, A Viennese Waltz Down Wall Street, Mark Skousen gives the Austrian School's take on what triggered the 2008 financial crisis - and why you should be wary of the artificial boom that's driving the recovery.


Laissez Faire
Why Heartbleed Will Change the Internet as You Know It

Mike Leahy

The Heartbleed bug is a massive security flaw that could put you and your personal information at risk. And while there are things you can do to limit the damage, you haven't yet seen the ramifications of this security disaster. The Internet in the post-Heartbleed world won't look like anything you've seen before. Mike Leahy explains...


Big Opportunity in the “Baby Bakken” Oil Field

Matt Insley

As the U.S. "shale gale" nears its 10th birthday, it appears the America energy renaissance has outlived its critics. Still, it's natural to wonder whether all the big gains are behind us. Today, Matt Insley reveals the newest shale hotspot, and explains why there's still plenty of opportunity left in the U.S. energy boom. Read on...


Maestro
The Real Reason the US Media Hates Vladimir Putin

Marc Faber

The U.S., Russia, the EU and Ukraine all met in Geneva, where all sides agreed to halt all violence and provocations in Ukraine. But the news media are still taking an antagonistic stance toward Vladimir Putin and Russia. What gives? Today, Marc Faber explains the hypocrisy behind U.S. foreign policy... and the BS the news media are pushing about it...