Daily Stock Pick: Phillips 66 Partners

I'm now looking for a third energy sector representative for my new Ivy portfolio.

That energy sector includes six industries all related to bringing oil and gas to market. They are: drilling, exploration and production (E&P), equipment and services, integrated, midstream, refining & marketing.  (Those six oily and gassy enterprises.)

Today I'm reviewing a mid-cap oil and gas midstream company named Phillips 66 Partners LP. Its trading ticker symbol is PSXP.

Phillips 66 Partners is a master limited partnership that transports crude, natural gas liquids, and refined products. Its assets operate under long-term agreements with Phillips 66.

The company operates pipeline assets in Lake Charles, Sweeny, Wood River, Borger/Ponca City, Billings, and Borger; terminal, rail rack, and storage assets in Louisiana, Texas, Illinois, Missouri, Kansas, Oklahoma, New Jersey, Washington, Wyoming, and Montana; marine assets in Lake Charles and Wood River; and natural gas liquids assets in Texas and Louisiana.

Phillips 66 Partners GP LLC operates as the general partner of Phillips 66 Partners LP. The company was founded in 2013 and is headquartered in Houston, Texas.

Phillips 66 Partners LP is a subsidiary of Phillips 66 Project Development Inc.

I use three key data points to gauge the value of any dividend equity-like Phillips 66 Partners LP:

(1) Price

(2) Dividends

(3) Returns

Besides those three, several other keys will finally unlock an equity or fund in which to invest.

Those first three primary keys, however, best tell whether a company has made, is making, and will make money.

PSXP Price

PSXP's price per share closed at $50.74 yesterday. A year ago its price was $50.87. So price fell  $0.13 per share last year, or 0.25%.

Assuming PSXP's stock trades in the range of $40 to $55 next year, PSXP's recent $50.74 price could rise by  $3.26 and go to $54.00 by mid-February, 2020.

PSXP Dividends

PSXP's most recent Quarterly dividend was $0.835 payable yesterday February 13th.

That quarterly dividend equates to a  $3.34 annual payout and a yield of 6.58% at yesterday's $50.74 closing price.

Gains For PSXP?

Adding the $3.34 annual estimated dividend to my $3.26 PSXP estimated price upside shows a $6.60 potential gross annual gain, per share, which will be reduced by costs to trade those shares.

Say we put a little over $1,000.00 today at the $50.74 recent stock price would buy us 20 Phillips 66 Partners LP shares.

A $10 broker fee paid half at purchase and half at sale costs $0.50 per share.

Subtract that $0.50 brokerage cost from the estimated $6.60 gross annual gain leaves a net gain of $6.10 X 20 shares

= $122.00  or a 12% net gain on a $1,014.80 investment.

Therefore, Phillips 66 Partners LP  whose trading ticker symbol is PSXP now shows a possible net gain of 12% including that 6.58% dividend yield.

Fourteen brokers cover this stock:

Three say 'buy' PSXP

Five say PSXP will 'outperform' peers.

Six say 'hold' your PSXP shares.

Therefore, you can look at Phillips 66 Partners LP and see it has made money, is making money, and could throw a net gain of 12% including that 6.58% dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. The actual results remain to be seen to determine if Phillips 66 Partners LP is worth your time and money.