Boardwalk Pipeline Partners, L.P is a master limited partnership company. This company is publicly traded on the NYSE under the sybmol (BWP).
Boardwalk Pipeline Partners owns and operates three natural gas pipeline systems. The company owns and operates over 14,000 miles of pipelines and the company provide about 11% of the nations natural natural gas. The company has a market cap of around 6 billion dollars. Boardwalk Pipeline has most of it's pielines in Louisiana, but they stretch as far as Ohio. Boardwalk is one of the least volatile companies in the stock exchange with a beta of only .23. The company also has a 7% dividend yield.
Like most master limited partnerships today, Boardwalk is expanding their operations With a debt to equity ratio of around 100 and a debt to assets ratio of about 50, Boardwalk is highly leveraged. In December of 2011 Boardwalk entered into a joint venture with Boardwalk Pipelines Holding Corp. (BPHC) to buy Petal Gas Storage, L.L.C., Hattiesburg Gas Storage Company. Boardwalk contributed 70 million dollars and currently runs the business, While Loews Corporation contributed 280 million dollars. Boardwalk owns 20% of the business and Loews Corporation owns 80%. More recently in June of 2012, one of Boardwalk's subsidiaries, Gulf South Pipeline Company, LP announced the issuance of 300 million dollars in senior note bonds due in 2022. The issuance of so much debt, may mean that Boardwalk is restructuring the company and going on a trajectory of growth.
Boardwalk is looking to expand into new market outlets. With the issuance of debt and acquisitions, Boardwalk will expand and this could result in more money for shareholders. Not only are they expanding their pipeline business, they are expanding their natural gas storage and refining business.
I highly recommend buying Boardwalk. The company may be overleveraged, but they are taking a vital risk by expanding. In this fast paced world, companies need to adapt and Boardwalk Pipeline Partners, L.P is certainly doing that. Revenues have increased for the past 4 years and will continue to increase if more people start drilling in the U.S. Every day more and more people, drill for natural gas and oil in America, and they transport it through pipelines.
There is only one issue with investing in Boardwalk Pipeline. There is a small tax implication to investing in master limited partnerships. When you invest in Boardwalk, your dividends will be taxed at your individual tax rate. They may seem bad but a portion of dividends can be tax free, because some of the dividends can be claimed as a depreciation allowances. Meaning that they are tax free. Also taxes are not payable until the company is sold.
As a result of these tax implications, some investors stay away from master limited partnerships. If you do not want to deal with these tax implications, you can invest in an exchange traded fund that buys master limited partnerships. ALPS Alerian MLP ETF is one of the best MLP ETF's available. The ticker symbol is (AMLP). Hopefully for those who do not want to invest in Master limited Partnerships directly, this offers an attractive alternative.