5 Reasons I Tripled My Position In This 6.4%-Yielding Blue Chip

[unable to retrieve full-text content]
Tech

This Bomb-Simulating US Supercomputer Broke a World Record

Brad Settlemyer had a supercomputing solution in search of a problem. Los Alamos National Lab, where Settlemyer works as a research scientist, hosts the Trinity supercomputer—a machine that regularly makes the internet’s (ever-evolving) Top 10 Fastest lists. As large as a Midwestern McMansion, Trinity’s main job is to ensure that the cache of US nuclear weapons works when it’s supposed to, and doesn’t when it’s not.

The supercomputer doesn’t dedicate all its digital resources to stockpile stewardship, though. During its nuclear downtime, it also does fundamental research.

Settlemyer wanted to expand the machine"s scientific envelope. So he set out in search of a problem that even Trinity couldn’t currently solve. What he found was a physicist who wanted to follow only the most energetic particles through a trillion-particle simulation—a problem whose technological solutions have surprising implications for the bomb babysitters at Los Alamos.

Settlemyer and his team—a collaboration with Carnegie Mellon’s Parallel Data Lab—had been working for a while on a way to create huge numbers of files very fast. But they didn’t know how far could they push that capability. How many files, and how fast? “We were working on this tech, and we needed a use case,” he says. “What we really wanted to was find something over the top.”

So they started asking around Los Alamos, and found a lab scientist studying “Fermi acceleration,” a speed-up that happens to the particles in supernovae and solar flares. As particles oscillate back and forth, they gain speed along the way—acting kind of like pinballs bouncing between bumpers. The scientist wanted to simulate a plasma, the fourth state of matter that’s just a stew of dismembered nuclei and electrons, and see if its pinballs accelerated this way.

To do so, however, he needed to find out which few thousand particles—out of a trillion or so—accelerated to the highest speeds. “The problem,” according to Settlemyer, “is you don’t know until the end.” That made the particles essentially untrackable under the existing computing limits.

But maybe he and his team could fix that, if they could gin up files fast enough. They’d use a kind of program called a “vector particle-in-cell,” or VPIC code, invented at Los Alamos back [in 1955(http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.470.2911&rep=rep1&type=pdf). This program essentially allows scientists to keep track of individual particles, to see where they go and what they do in a certain situation. In nuclear research, scientists often use particle-in-cell code to understand how plasma mixes with plasma.

That mixing matters for Los Alamos because nuclear bombs produce plasma. Scientists don’t explode bombs with abandon anymore to understand them—as they did in the early days, turning islands into holes. Instead, they simulate bombs’ statuses, and look back at old videos to try to simulate what they see. To date, they haven’t been able to get at all the nuance in the footage. But with slick new simulations, Settlemyer says maybe they can.

But first, they had to test their file-creation speed limits using the physicist’s Fermi acceleration problem.

Here’s how such a simulation would classically work: The supercomputer would essentially take snapshots of all trillion particles at once, throughout the process. To find the most energetic characters in the final picture, and then rewind through their trajectories, the supercomputer would need to dig through each snapshot (each a couple of terabytes) to pull out the path of the relevant particles. “That was a huge cost,” says Settlemyer. Too huge: It would have crashed Trinity.

Settlemyer’s solution was, instead, to create more files with less information: one file for every particle, tracing each one through the entirety of the simulation. If Settlemyer put those files into a searchable index, the scientist could simply ask the computer, “Which of those particles’ lives ends with the biggest bang?”

The scientist can then just pull and parse those personal dossiers. “We’re able to retrieve the data between 1,000 and 5,000 times faster,” adds Settlemyer. Fast enough to make the scientist’s Fermi acceleration research doable. Trinity created a trillion files in two minutes—a world record.

It’s not just an academic achievement. That speed could allow scientists to follow the trajectory of a particle (or 10,000 particles) in a trillion-particle warhead simulation. The warheads whose integrity, remember, Los Alamos is tasked with maintaining.

The US hasn’t added new warheads to its stockpile in decades. But based on the nation’s first Nuclear Posture Review since 2010, that may be changing—and bringing more work to places like Los Alamos. “Many hoped conditions had been set for deep reductions in global nuclear arsenals, and perhaps for their elimination,” read a draft of the review. “These aspirations have not been realized. ... We must look reality in the eye and see the world as it is, not as we wish it to be.”

---

More Great WIRED Stories

Tech

Sentiment Speaks: This Is It For Gold

[unable to retrieve full-text content]
Tech

How This Keynote Speakers Bureau Hit The Inc 5000 And Nearly Doubled Its Revenue In Just Four Years

Executive Speakers Bureau is one of the most successful speakers bureaus in the U.S. and one of the only speakers bureaus to ever hit the Inc. 5000. Founded by Angela Schelp in Memphis in 1993 (husband and partner Richard Schelp joined as president and co-owner in 2001), Executive Speakers Bureaus offers and books hundreds of keynote speakers nationally and internationally and continues to grow at a pace rarely approached in this competitive industry, nearly doubling its overall revenue and number of bookings in just the last four years, while maintaining a reputation for customer service and community involvement that is widely viewed as second to none.

Micah Solomon, Inc.com: You"ve spoken in passing about the importance of your vision of success.  Can you explain what this means specifically as it relates to commercial success?

Richard Schelp, President and Co-Owner, Executive Speakers Bureau: In order to succeed in a competitive marketplace, you need a true plan or strategy.  Our ability to anticipate some of the challenges we have had to face in the industry and our understanding of how to address those challenges has kept us ahead of our competitors and driven our success in revenue and profitability.

Solomon: I"ve heard you and Angela speak about the power of your company"s culture and the pride you take in your employees.  Can you speak a bit about this? 

Schelp: From the beginning the culture of Executive Speakers Bureau has been built around respect for each other, a true sense of team, and the fact that both what we do within our business and in our community affects many people"s lives.  Very few work environments can promise its employees this kind of value.  

Our employees are some of the best you will see in any industry, and certainly in ours.  It is not just a job to them.  They are proud of where they work, and they truly feel responsible for the success of Executive Speakers Bureau.  This is the reason why they want to stay.  They want to see this thing through to the end.  

Solomon: What in your and Angela"s prior background led you to be able to take this approach and succeed with the culture of your company and your relationship to your employees?

Schelp: Both Angela and I have a wealth of corporate experience (IBM, AT&T, and other big firms) in which we have both managed and worked for a number of people.  When you have seen a lot of examples of great and terrible management, you start to get a feel for what works and what doesn"t.  All of the previous managers that I respected established environments in which I felt comfortable going to them, and they were the primary reason for me enjoying my job. 

 Solomon: Your bureau has grown quite quickly. How is life different now that you are an agency of significant size and pull?

Schelp: Life at Executive Speakers Bureau is definitely a little bit different now that we are much bigger.  With that does come a level of responsibility and respect.  Because of our increased size, we now have a larger role within our industry association.  As a matter of fact, I will become the president of the association next Spring. 

Also, in the early years of our bureau we used to base our decisions about processes, documents, fee recommendations, etc. on what the larger bureaus were doing.  Now we don"t check with others.  We make our decisions based on what we know and what we think makes the most sense.  Surprisingly many bureaus are following our lead, and they are calling us to ask how we do things. 

Solomon: Many of my readers are entrepreneurs and business leaders themselves. It"s very helpful and enjoyable (!) for them to hear about mistakes you"ve made or tricky situations you"ve endured in the past, what went sideways and how you either dealt with it or learned from it.

Schelp: A few years ago I faced an extremely tricky situation that taught me so many lessons as a business owner in our industry. A high-profile sports figure was supposed to speak for me at a large convention in New York.  He decided to fly in on his private plane the morning of the event.  However, there was a terrible electrical storm that morning, and his plane was grounded, leaving me without a speaker.  I received the call at 6:30AM and the speaker"s presentation was at 10:30AM.  I had four hours to find a replacement for a great speaker and get him to the event on time.  Immediately I went to work by calling all of the speakers and agents who were high quality and could get there-and, ultimately, I was fortunate enough to find a speaker who my client absolutely loved.

The lessons from this incident were numerous, but most importantly I realized just how crucial it is to have access to many resources, so that an emergency situation becomes doable, otherwise it is impossible.  Also, I learned that as long as you are determined and efficient any task can be accomplished.

 

Tech

Science Says This is the Best Way to Persuade Someone Who's Wrong (Jeff Bezos Will Hate It)

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

In today"s America, we tend to feel gray areas are a touch passé.

You"re either right or you"re wrong. And if you can"t see which you are, then you"re two slices short of a sandwich.

How, though, can you even begin to persuade someone who"s mistaken -- or even worse, vehemently disagrees with you?

A new study makes a curious suggestion, one that won"t please everyone.

The study, conducted by Brendan Nyhan of Dartmouth College and Jason Reifler of the University of Exeter, is entitled The roles of information deficits and identity threat in the prevalence of misperceptions.

They"re very polite about the fountains of knowledge pouring into today"s humans.

"Why do so many Americans hold misperceptions?" the researchers ask. 

To which I reply: "Why do many Americans now put mis in front of pleasant words, instead of calling them that they really are? Lying has become misspeaking? Oh, I don"t think it has."

Anyway.

Nyhan and Reifler come to a startling, even painful conclusion: "In three experiments, we find that providing information in graphical form reduces misperceptions. A third study shows that this effect is greater than for equivalent textual information."

Yes, if you want to persuade your half-cut, halfwitted neighbor or colleague about the parlous state of the world and the dangers of fascism/socialism/democracy/self-help books, your best bet is to show them a chart.

Worse, it seems that a chart is better than even text. Goodness, is that where I"ve been going wrong all my life?

I can, though, already see Jeff Bezos"s eyes rolling into the back of his head and emerging with a very red hue.

As the Amazon CEO explained in his latest letter to shareowners: "We don"t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of "study hall.""

So no slides or charts and graphics for Bezos. All he wants is a short story. Could he, perhaps, misperceive the benefits of charts? 

Still, charts surely can"t be so effective, otherwise everyone would have tried them. 

Moreover, it"s not as if you can create a chart to describe every false belief. How, for example, do you create a chart for a CEO who simply thinks his touch and feel is always right?

Nyhan and Reifler explain that a considerable reason why people hold on to false information is purely psychological. It confirms their world view.

"On high-profile issues, many of the misinformed are likely to have already encountered and rejected correct information that was discomforting to their self-concept or worldview," they say.

Yes, but it"s not as if that nice man on CNN with his Election Night charts has ever persuaded many people, is it?

Expect, though, the rising stars in many companies now rushing to create charts in order to show that they"re right and their brain-manacled bosses are wrong. 

Expect, too, that American politics will now be revolutionized with the presentation of definitive charts of right and wrong.

You think I"m wrong about that? 

Send me a chart to show me why.

Tech

Will Rising Rates Derail This 11.95% Yielding REIT?

[unable to retrieve full-text content]
Tech

Haven't We Seen This Movie Before? Ignore Rumors Of iPhone Production Cuts

Apple’s shares were down almost $ 2, or 0.9% on Friday to $ 191.70 while the NASDAQ was up 10 or 0.14%. At the low point, the company’s shares were down almost $ 4 or 1.9%. The main driver for the stock’s weakness was a report from Nikkei Asian Review that the company would order 20% fewer new iPhones to be built vs. last years 100 million iPhone 8, 8 Plus and X orders.

Apple CEO Tim Cook speaks during the 2018 Apple Worldwide Developer Conference (WWDC). Photo by Justin Sullivan/Getty Images

The report from Nikkei says “For the three new models specifically, the total planned capacity could be up to 20% fewer than last year"s orders" and “The U.S. company last year placed orders to prepare for production of up to 100 million units of the new iPhone 8, iPhone 8 Plus and iPhone X, but this year Apple currently expects total shipments of only 80 million units for new models, two people said.”

There are a few unknowns from the report, which could make for an apples to oranges comparison.

• Does the order timeframe match the same months as last years?
• Does the 80 million match what was initially ordered for the 8, 8 Plus and X (which was reported to be decreased) or the final tally?
• The report also says “could be up to 20%”

There are a few reasons to be skeptical of this report .

• Over the years many production cut rumors have turned out to be false
• Earlier this year there were multiple reports, including from Nikkei, that the production for the iPhone X had been cut, which turned out to be incorrect or misleading to Apple’s results
• Depending on what new models are introduced, demand for older models including the 8, 8 Plus and especially the X could still be strong enough to make up for what is being implied as lower total sales

I don’t believe Nikkei has the best track record scooping Apple’s iPhone production and eventual sales . It was just on January 30 this year, two days before the company announced its December quarter results, that it predicted that iPhone X production would be cut by half for the March quarter.

When Apple announced its December quarter results the iPhone inventory levels were at the low-end of its 5 to 7 weeks target, and the March quarter revenue guidance of $ 60 to $ 62 billion bracketed the $ 61 billion estimate. The stock initially fell but after a week rallied and climbed above the price when Nikkei came out with its article.

Add to that Tim Cook saying the X had been the best selling iPhone “each and every week in the March quarter, just as they did following its launch in the December quarter.” These didn’t match well with an iPhone X cut.

All new iPhone models could be available in September

The Nikkei report included “Apple"s supply chain was told to prepare earlier for the two OLED models, in hopes of avoiding a delay similar to last year"s, two industry sources said.”

This actually makes sense. I’m not surprised that the iPhone X’s availability was later than the 8’s due to incorporating an OLED screen. Just because the iPhone’s cadence has essentially been every 12 months doesn’t mean that production systems can meet that timeframe when new technology is introduced. Now that Apple’s production partners have experience with manufacturing tens of millions of OLED iPhones, moving to the next version shouldn’t be as challenging.

Tim Cook’s warning

Even back in 2013, Tim Cook warned investors about putting too much credence into supply chain checks. On the January 2013 financial results conference call, he said, “I suggest its good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.”

StockCharts.com

3 year Apple stock chart

Tech

If Elon Musk Had Lived 500 Years Ago, This Is The Audacious (and Profitable) Venture He Probably Would Have Launched

In the early 1500s, England faced an existential economic crisis: Demand for their most lucrative export, woolen cloth, was plunging in Europe. They needed to find new markets for their product --and fast.

So a group of merchants set their sights on the vast market of Cathay --the word used at the time to refer to China --then the largest economy in the world, with nearly 30 percent of global GDP. (By comparison, India during this period produced roughly 20-25 percent of global GDP. England was peripheral to the world economy, producing an inconsequential 1 percent of global GDP.)

These English merchants sent expeditions in search of a new overland sea route that, they hoped, would take them over the European continent to China, enabling them to avoid having to sail through waters controlled by the Spanish and the Portuguese, their arch rivals.

After failing to reach Cathay (though they did make it as far as Moscow), they decided to turn westward, eventually reaching the shores of America, where they established small trading outposts and, eventually, full-fledged colonies. 

This is how the tale begins in a captivating new book by Simon Targett and John Butman, New World, Inc.: The Making of America by England"s Merchant Adventurers. Through meticulous research and a flair for bringing a colorful cast of long-deceased characters back to life, Targett and Butman tell the story of the founding of one of history"s most successful startups: America.

"It"s the "prequel" to the Pilgrims," Targett told me in a recent podcast conversation. "You can"t really understand America today if you only go as far back as the Pilgrims. Of course they are an important part of the founding. But there were many trips for 70 years before the Pilgrims, who eventually arrived in Plymouth, Massachusetts in 1620. As we delved further, we tracked and traced an unbroken chain of voyages. And we felt the story of these merchant adventurers --what we call the "forgotten founders" -- provide a better narrative."

Targett and Butman relate the fascinating and largely untold story of the earliest days of globalization, of innovation and entrepreneurial risk-taking, and of the creation of some of the earliest venture-financed companies in the world.

"What they did initially was to setup a company," explains Targett. "This we think of as perhaps the forefrunner of all modern corporations. It was called "The Mysterie, Company, and Fellowship of Merchant Adventurers for the Discovery of Regions, Dominions, Islands, and Places Unknown.""

This was a period when the newly-coined word, "company," was just starting to become a part of the English language. In a fascinating bit of etymology, Targett explains how the word was formed through the conjunction of the Latin words, "com," meaning "together," and "panis," meaning, "bread." Together, the word loosely means, "the breaking of bread together."

Of course, English merchants had supported and funded voyages for decades, and these had often been funded either by private individuals or private syndicates. "But the idea of going across the world required a higher level of organization and financing, so they set up this company which not only allowed them to pool their resources, but also allowed them to attract their resources from people who didn"t want to get involved in the mundane running of company."

Like the startups of today, most of which are statistically prone to flop, failure was very much a part of the story. "It"s remarkable how many setbacks these people experienced and yet they continued to believe there was a pot of gold or a fortune to be made at the end of it," observes Targett. "And, in a way, that driving spirit was key to these people. It"s another feature of a modern America that we feel needs to be traced back to before the Pilgrims." 

Targett compares these risk-taking, adventurous "forgotten founders" of 16th and 17th-century England to one of the boldest entrepreneurs of our era, Elon Musk. "To some extent the people that we write about, these "forgotten founders," were venture capitalists. They were very much the Elon Musks of their day. Just as he is dreaming of new worlds, in his case Mars, their new world was America. And he"s pulling together some of the best minds to help him design some of the rockets and the spaceships that will be needed. Likewise, the merchants pulled together the very best minds of their days, the scientists, the navigators, the buccaneers, the marketers."

"These "forgotten founders" and the people they sent across were the first people to really experience and live the American dream. These were the people that often went across with nothing but made their place and made their home. They didn"t all make fortunes but they found a life, they found a place in society."

Tech

LeBron James is a Superstar. But Great Leaders Use This Superior Strategy to Find Success

For anyone who follows NBA basketball, there"s a war going on right now.

One one side, there"s LeBron James and the Cleveland Cavaliers, struggling to overcome the incredible team-based play of the Boston Celtics in the Eastern Conference Finals.

Meanwhile, in the Western Conference, it"s exactly the same scenario.

The Golden State Warriors are loaded to the gills with superstars like Steph Curry and Kevin Durant, but they play like a well-oiled machine. James Harden, meanwhile, is one of the most talented players we"ve seen in years and a likely league MVP--his dribbling and shooting prowess makes you do a double-take. Yet, it"s hard to ignore the fact that everyone else on the Houston Rockets (except Chris Paul) is often on the court standing around, waiting to see what happens. Four teams, but two completely different strategies. We"ll soon find out which strategy will prevail in the next few days.

The war raging between "team" and "superstar" has been around awhile. In business, you might be tempted to rely on a small group of overachievers. Yet, nothing quite compares to a larger group of people all working together in perfect synergy.

I was watching the Cavaliers the other night and realized the "old school" approach of driving the lane, passing the ball to the superstar on almost every play, and hoping that one person scoring 42 points is a good strategy matches up perfectly with how some leaders operate in business. "Give the ball to the superstar" is a common tactic.  

It doesn"t really work, and part of the reason has to do with how teams function. In my own experience, individuals who can ramp up sales quickly are like a meme or a viral marketing video. It"s a big hit, but it doesn"t really lead to long-term success. I agree James is one of the best ever, but you could easily argue that one-guy-driving-the-lane has not worked. It has not helped the Cavs win an NBA Championship. Only when James surrounds himself with exemplary players, not pawns in a chess match, does he usually win the final series.

It won"t help your prospects as a leader, either. Teams in business who work together are far stronger, far more productive, and find far more success than a couple of greats.

Here"s an example of what I mean.

In one startup, I remember hiring someone who had exceptional graphic design skills. She could make Photoshop dance. And, she could crank out brochures and other items faster than anyone else. At meetings, she was always a little bored. But the other team members were also hungry to learn. Over an entire year, the other team members eventually learned how to use the design apps, shared ideas with each other, found workarounds, and built up their repertoire. In meetings, they would come up with far better ideas as a group. That one superstar was wildly talented, but had to rely on her own prowess.

Eventually, we ended up switching her to a different department, one that needed a solo producer. The rest of the team flourished, grew creatively, and became way more productive. There"s something about how a team of, say, five people working together creates more productivity than five individuals working alone. Each person fuels the entire team, generates new ideas, and pushes every project forward.

Watching the Cavs lately reminds me of that designer. Just give the ball to LeBron is not a great strategy against teams like the Boston Celtics. It becomes one against five. We"ll see how it all works out, but I"ll still hold to my view. Teams win in the end.

Tech

After Supreme Court Decision, the Business of Sports Is About to Change Radically. This Expert Explains What You Need to Know.

I’m a baseball fan. When I lived in the Bay Area, I was a season ticket holder to the San Francisco Giants. And every baseball fan knows about Pete Rose, the preternaturally talented player who scandalized his sport when it was revealed he bet on baseball, including games involving his own team. Now, no one is contemplating allowing players or managers to bet on games in their own sport. But the Pete Rose story serves as a grim reminder of what can happen with sports gambling.

The trouble is that sports gambling is fun! The thrill of making some dough on your team just adds to the excitement of the sport. It’s also hugely profitable for business and government. So when the Supreme Court of the United States released their decision on Murphy vs. NCAA last week, the gambling-loving world rejoiced. SCOTUS determined that the 1992 federal law called Professional and Amateur Sports Protection Act (PAPSA) violated the Constitution’s anti-commandeering clause, thus striking down the law.

Mark Conrad is a professor of law and ethics at Fordham University, where he has taught in the School of Law and in the Gabelli School of Business. He’s also the director of Gabelli’s Sports Business Concentration, and is the author of The Business of Sports -; Off the Field, In the Office, On the News. Professor Conrad was kind enough to share with me some of his thoughts on this landmark decision.

1. Nothing’s Actually Changed…Yet.

The Court’s decision caused an avalanche of news and commentary, but, “At the moment, not much has changed,” says Conrad. The decision opened the door to huge change, but nothing is actually different yet. Conrad explains, “The court declared unconstitutional the Federal law that prohibits sports gambling. It did not sanction or permit sports gambling.” So what happens now? Conrad says no one really knows: “It is now up to the states, or the federal government, to decide.” Here’s where it get interesting!

2. The Devil Is in the Details.

“This story is only beginning,” says Conrad, who also has a degree from Columbia’s School of Journalism. “No state has enact a gambling scheme, although New Jersey may soon,” he says. The question is what happens next. For starters, Conrad asks, “Will states legalize it? And if so, which ones, and when?” Next comes the what. Conrad wants to know, “Will it apply to all sports or just pro sports?” And finally, the how. Conrad ponders: “What will be the license fees for companies wishing to do business in the state? Taxes? Anti-corruption measures?” The potential complexities are endless.

3. Congress May Not Be Done.

The Court may have struck down Congress’ PAPSA law, but that doesn’t mean Congress can’t still have the final word. Conrad explains, “The problem with PAPSA was it prevented states from exercising their powers. The law did not mandate a ban on sports gambling - rather, it told the states they were not allowed to enact laws ‘authorizing’ such gambling schemes.” The problem was the way this law was structured, but not the idea behind the law. In fact, Conrad says, “The decision did state that Congress has the power to enact a ban on gambling.” It’s possible Congress could throw some very cold water on all the excitement.

4. Integrity May Be an Issue…Or May Not.

The potential implications for the integrity of sport are fascinating. As with any gambling, there’s risk of corruption. Conrad recalls, “It has occurred in the past, notably in point-shaving in college sports.” But cheating isn’t a given. “In fact, the risk of corruption may decrease with a properly regulated integrity oversight,” Conrad explains. There are examples the US could look to for inspiration. Conrad says, “The UK model has worked well. The betting companies engage in analytics and metric systems to police suspicious gambling patterns and report these anomalies.” The key is not to over-regulate or over-tax it, which may push otherwise legal gambling underground.

5. This Decision Could Have Major Implications for State Versus Federal Authority.

“This is the underlying constitutional issue in this ruling,” Conrad explains. “Ultimately, it is a constitutional law case regarding state powers under the Tenth Amendment.” Here’s his plain-English explanation of the finer constitutional points: “PAPSA was problematic because it ‘commandeered’ states rights. Instead of banning sports gambling, it said could not enact laws authorizing gambling. It’s a subtle difference, but a constitutionally defective one.” This is an important decision in part of a greater shift. According to Conrad, “It continues a trend to give greater deference to state sovereignty.” It will be fascinating to watch as the complexities continue to develop.

Tech

3 Ways to Sow the Seeds of Your Startup's Success This Spring

Many business owners measure the success of their company by how much profit they"re bringing in. This isn"t necessarily the wrong way, and a large part of business is learning how to minimize expenses while maximizing revenue, but for fledgling startups that might not yet have a large customer base, these metrics aren"t ideal. Instead, a good indicator you"re on the road to startup success is when you find yourself in a productive, thriving ecosystem.

A Blossoming Ecosystem

An ecosystem is partly defined by the geographic area where you"ve chosen to put down your company"s roots, but it"s also made up of the people you choose to surround yourself with. These people might be your employees, advisors, and investors, in addition to other counselors such as law or finance professionals. The attitudes and outlooks of all of these individuals contribute to your ecosystem, and for your business to thrive, their impact needs to be positive.

Good influences will help you talk through decisions and support you when you"re not sure which option to pursue. They"ll also help you connect with other individuals who they think might have something to offer to you and your business -- and the best team members will do so without being asked. To get the most out of your ecosystem, though, you"ll also need to give back.

What can you do to help the people you work with? What are their goals and aspirations, and how are you and your business capable of helping them achieve those goals? In an unhealthy ecosystem, one organism hoards all of the resources for itself. In a healthy one, organisms cooperate to achieve mutually beneficial outcomes that are greater than what any party involved could have achieved on its own.

Once you"ve made sure your ecosystem is the kind that breeds successful businesses and partnerships, take these three steps to cultivate your startup"s success:

1. Network to help your startup sprout essential partnerships.

With the right mindset, networking can happen in any place and at any time, sprouting relationships that are valuable for your startup"s growth. Whether you"re on a bus, at the airport, or getting some work done at your favorite coffee shop, be approachable and strive to make connections on a daily basis. That"s not all there is to it, however. Justin Zastrow, CEO of Smart Armor, points out that "Networking and "showing up" is only half the battle. In addition to networking, you need to learn how to meaningfully and authentically connect with people. Otherwise, your networking efforts will be wasted."

So much of business is about relationships, but the literature tends to overemphasize forming new relationships and underemphasize nurturing the ones you create. Don"t let connections wither away by falling out of touch. Reach out to your contacts on a regular basis to see what you can offer or how you can help.

2. Join a startup support organization that will help you establish strong roots.

Accelerators and incubators are valuable communities that help startups and entrepreneurs build a solid foundation. These groups will help provide you with a number of key elements necessary to fertilize your startup, including mentorship, working space, networking opportunities, and even financial backing in some cases.

The Ameren Accelerator, for instance, is a partnership that combines the resources of a leading energy corporation, a lauded accelerator program, and a state university system to produce an ecosystem in which energy-focused startups can flourish. The accelerator selects five to seven companies for a 12-week program that connects them with mentors, including current and former business executives, in addition to providing funding opportunities, office space, and other perks.

Different accelerators cater to different industries, so find one that fits your startup idea and do everything you can to join the community.

3. Keep finances fertile by outsourcing.

Startup owners often feel the need to fill certain roles with full-time employees when they could save money and get a better product by outsourcing. If you"re running an e-commerce website, you don"t necessarily have a full team of developers on the payroll, and the same can be true for marketing or finance. An in-house CMO will end up costing a fortune, so don"t be afraid to outsource this role.

Erik Huberman, one of Forbes" 30 Under 30 and founder and CEO of Hawke Media, says outsourcing positions like a CFO or CMO can save your company between 40 to 65 percent. He explains, "For less money, you can contract someone who will not only get the job done efficiently, but who will also not be looking to justify, retain, or grow his or her in-house position."

If your startup is like most, you don"t have unlimited resources. Instead of blowing through your budget on one big hire, sow more than one seed by outsourcing certain positions.

Your product might not make it to market until late summer, or you might be hoping to secure a seed investment to finance your dream. No matter what stage of the startup process you"re in, you can set yourself up for success each day by taking the right steps to encourage healthy growth.

Tech

This Workaround Could Buy You Another Year of Amazon Prime for $99

Amazon has increased the price on Prime subscriptions. But that isn’t stopping some folks from finding ways around that price bump.

Over at Gizmodo’s deals site Kinja, writer Shep McAllister has come up with a novel way to sidestep Amazon’s $ 20 Prime subscription increase. He suggested you buy an Amazon Prime gift subscription now for the price of $ 99. When it’s time to renew your Prime subscription, simply redeem the gift card and take advantage of the lower price. That said, you’ll need to cancel your subscription ahead of the renewal so you can take advantage of the deal.

Amazon announced on Thursday that it would increase the price of its Amazon Prime subscription from $ 99 per year to $ 119 per year. The change goes into effect on May 11 for new customers and June 16 for those who already subscribe to Amazon Prime. If your subscription is set to auto-renew before June 16, you’ll be able to take advantage of the $ 99 pricing for one more year. If, however, your auto-renewal date is set to after June 16, you’ll need to drop $ 119.

Get Data Sheet, Fortune’s technology newsletter

The workaround McAllister has pitched was used with success the last time Amazon increased its Prime pricing, he said. But it’s unknown whether the company will allow you to take advantage of this loophole this time around or change policies so you can’t use the gift card trick. If it does work, be aware that next year when it’s time to renew your subscription, you’ll be subject to the $ 119.

Fortune has reached out to Amazon to find out whether the gift card trick will be allowed. We’ll update this story when we learn more.

Tech

This is How Small Business Owners Can Take Full Advantage of the Tax Cuts and Jobs Act

Tax time is no one"s favorite time of year. But for small business owners, this year"s filing deadline at least comes with the promise of better rates ahead: Many of the changes included in the Tax Cuts and Jobs Act, passed by Congress in December, are going into effect.

As entrepreneurs, we should expect to benefit--at least, temporarily--from the new tax plan. My company, Manta, conducted a poll in January and found that 83 percent of business owners anticipate their companies will be positively impacted by the changes. Nearly as many, 80 percent, said they support the Tax Cuts and Jobs Act.

Some are already feeling the benefits of having more money in their pockets, according to another poll we conducted last month. 34 percent of small business owners said their business income had increased as a result of the tax reform, just three months into the year. 42 percent have already changed their budgeting or financial planning because of the new tax law.

It"s time to start preparing for the changes--if you haven"t already.

For the most part, the provisions of the Tax Cuts and Jobs Act that benefit small businesses go into effect this tax year -- meaning they won"t impact the returns that are due this month. 

The 58 percent of small business owners who have not yet adjusted their budgets should get started, however. While that big refund check may be a year away, it"s not too early to plan accordingly and make sure you take full advantage of the potential savings. 

The first step is to review your company"s legal structure and determine how it will affect your taxes. One of the most important changes in the new tax law allows pass-through entities (such as S corporations and LLCs) to deduct up to 20 percent of their business income.

However, this doesn"t apply to certain professional services firms. Review your situation with a tax professional or attorney--you might be able to adjust your business structure to take advantage of this deduction. 

Make the most of your company"s tax savings.

The Tax Cuts and Jobs Acts allows businesses to immediately write off the full cost of new equipment and other property, instead of depreciating the expense over five or more years. The new law also protects these write-offs from being rescinded in the future. 

This is great news for business owners who want to invest in their growth. According to our polls, 28 percent of small business owners plan to use their tax savings to invest in new technology and 21 percent plan to open a new location or expand. The immediate write-off should make these investments (and your cash flow) much more manageable in the short term.

Just check with your tax advisor before making a major purchase--you could run into unforeseen obstacles. For example, the depreciation rules for "heavy" SUVs--those with a gross vehicle weight above 6,000 pounds--are different than for light trucks and vans. You want to be prepared for the potential impact on your taxes.

Streamline your expense tracking and tax prep.

Make sure you accurately track and document all business expenses. Our polls found that 21 percent of small business owners still use paper receipts to track expenses.

Think about that for a second. It"s messy and inefficient, and you risk losing receipts or miscategorizing expenses.

Hiring a pro is probably the best way to ensure that you take full advantage of the new deductions and stay on the right side of the law. The U.S. tax code is confounding to even the most experienced business owners--20 percent of poll respondents told us they didn"t understand all the deductions available to them. Whatever else Congress accomplished with the Tax Cuts and Jobs Act, they definitely didn"t simplify things.

Use a mobile application or accounting software to scan and save digital copies of your receipts and categorize the expenses. Then, when tax time rolls around, you can output a well-organized report or import the data directly into your tax prep software. And if you use an outside accountant or tax preparer, they"ll greatly appreciate you providing a digitized expense report instead of handing over shoeboxes full of paper receipts.

Tech

Buy This Oversold Blue-Chip Bank With A 5.4% Dividend

On April 4th, Bloomberg reported that HSBC (HSBC) is considering an exit or sale from smaller consumer operations such as Bermuda, Malta, and Uruguay. In addition, the bank plans to expand its asset management division and is currently looking at a potential merger with a rival.

In our view, the news confirms that the group"s management will remain committed to transforming HSBC into a more focused and more efficient banking institution. More importantly, even though HSBC"s operations in Bermuda, Malta, and Uruguay are small compared to the group"s total assets, we believe a potential sale of these units would have a positive impact on the bank"s capital position, supporting stock buybacks and special dividends.

The recent rise in LIBOR should support HSBC"s NIM

LIBOR has grown by more than 130bps since the beginning of the year. Such a notable increase is currently among the most widely discussed topics. Several analysts suggest that this is an early indicator of a bear market or even a severe financial crisis. In our view, the increase has been driven by idiosyncratic reasons, in particular, higher supply of short-term Treasuries and lower demand from corporates due to the US tax reform.

Source: Bloomberg

With that being said, despite the reasons of the rise in LIBOR, HSBC should benefit from higher short-term rates. As shown below, the bank discloses its NII (net interest income) sensitivity to a shift in yield curves. However, this analysis is based on a parallel shift, while yield curves in most global economies continue to flatten.

Source: Company data

What is important here is that HSBC has a variable-rate loan book. More importantly, a significant part of its credit portfolio is priced off short-term rates. This suggests to us that the rise in LIBOR should be a positive for the bank"s asset yields and its NIM.

Source: Company data

One may argue that higher short-term rates will also affect HSBC"s funding costs, especially given that wholesale sources and corporate deposits are generally tied to the short-end of the yield curve. The caveat here is that HSBC has a unique funding position. As shown below, the bank has one of the lowest LtD (loans-to-deposits) ratios among European banks. In other words, HSBC does not need expensive deposits in order to fund its loan growth. HSBC had been struggling from abundant liquidity for many years as a low interest rate environment has virtually crippled its NIM. Given that rates have started rising, the bank"s excessive liquidity is gradually turning into a positive that will protect HSBC"s NIM in a rising interest rate environment.

European banks: Loans-to-deposits ratio

Source: Bloomberg, Renaissance Research

Saudi Aramco"s IPO

Saudi Aramco (Private:ARMCO) has appointed HSBC as an adviser on its much-awaited IPO. JPMorgan (JPM) and Morgan Stanley (MS) will also act as consultants. As such, HSBC is the only non-US bank that will have a crucial role in Aramco"s IPO.

Anecdotal evidence suggests that while many US and UK investors are skeptical on Saudi Aramco"s IPO, as state-owned oil companies have been underperforming their private peers for quite a while now, Chinese investors would be interested in Aramco"s shares. Hong Kong Exchanges and Clearing (OTCPK:HKXCF) (OTCPK:HKXCY) plans to introduce the so-called Primary Connect program, which would allow mainland Chinese investors to participate in initial public offerings on the HKEX.

We believe Aramco"s IPO would strengthen HSBC"s position in the region. In our view, it would also underpin the fact that HSBC is a global banking group with unique access to Chinese investors.

Buybacks and dividends

HSBC pays a $ 0.51 dividend per ordinary share or $ 2.55 per ADR. That corresponds to a 5.4% dividend yield, based on the current ADR price. We believe that a 5.4% dividend from a global blue-chip bank with a strong presence on Asian markets looks very attractive.

Additionally, it is also worth noting that the bank has temporarily suspended its buyback program due to technical reasons related to the issuance of additional Tier 1 capital. We expect HSBC to announce a new buyback in the second half of 2018.

Final thoughts

The shares have fallen by almost 15% since January, and we believe this sell-off represents a great opportunity to buy a global bank with an attractive dividend yield. HSBC has excess capital, thanks to its US unit, and, as a result, we expect the bank to announce a new buyback program in the second half of the year.

If you would like to receive our articles as soon as they are published, consider following us by clicking the "Follow" button beside our name at the top of the page. Thank you for reading.

Disclosure: I am/we are long HSBC, JPM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Tech

This Week in the Future of Cars: Working Through the Chaos

About 8 months ago, Tesla CEO Elon Musk warned his troops that building the Model 3 would require “production hell." For once, the man known to sometimes be a bit too optimistic about timelines nailed it. Last year’s Tesla’s production numbers were dismal; now, according to numbers released this week, they’re looking up.

Meanwhile, WIRED’s Transpo team explored why self-driving car crashes look different from human ones; how the electric car could fare after Environmental Protection Agency rolled back fuel economy standards this week; and why an electronic logging rule has truckers shaking their horn-honking fists at the Trump administration.

It was a messy week. Let’s get you caught up.

Headlines

Stories you might have missed from WIRED this week

• Last Friday night, Tesla announced that its Autopilot feature was activated when a Model X carrying driver Wei Huang crashed into a highway barrier last week, killing him. As senior writer Jack Stewart reports, the crash comes amidst a wider debate about the role of humans in semiautonomous vehicles. Should engineers ever expect (imperfect) to compensate for (imperfect) tech?

• EPA Administrator Scott Pruitt went ahead and rolled back rules that would have forced the auto industry to nearly double 2012’s fuel economy standards by 2025. But transportation editor Alex Davies explains why there’s still hope for electric vehicles: China’s aggressive electric vehicle quotas and environment-loving millennials.

• When a video showing the fatal collision between a self-driving Uber and a woman on an Arizona road came out, it almost made sense at first—of course the car didn’t see the pedestrian on a darkened road. But as I discovered, self-driving car crashes and fender-benders don’t look like human crashes. Car software can miss things that seem obvious to humans, and yet also prevent collisions that look downright unpreventable.

• Tesla’s last week of the first quarter looked pretty good, Model-3-production-wise. But as Jack reports, the electric carmaker still needs to bring consistency to its production line.

• Contributor Nick Stockton reports on the hottest topic at this year"s Mid-American Trucking Show: electronic logging devices. The tech, now required by law, replaces the pen and paper logging systems that truckers have used to keep track of their hours for decades. But truckers aren"t happy with the new system—and had hoped the Trump administration would fix it.

Educational Work Distraction of the Week

If your goal is to waste time like a WIRED transportation staff writer, have I got a tip for you. Streetmix lets the armchair urban planner fuss about with the elements of the city street, adding bike lanes, bus lanes, sidewalks, parklets, and streetcars as they see fit. The game—created by Code for America whizzes back in 2014—is a good reminder of the tradeoffs that cities face every day. Because there’s only so much street space!

Required Reading

News from elsewhere on the internet

In the Rearview

Essential stories from WIRED’s canon

Last year, when the Trump administration swept into Washington, Alex anticipated the conversation we"d be having today: Can the federal government really roll back pollution regulations? As he explained then, it will have a hard time—and it"s all because of California.

Tech

Avoid This High-Yield Value Trap And Buy An Insanely Undervalued Blue Chip Instead

(Source: imgflip)

The core strategy of my high-yield retirement portfolio is to build a diversified collection of quality dividend growth companies bought at good to great prices. That means that I"m more than willing to consider beaten down industries and in today"s market that means pipeline MLPs have my attention.

BPL Total Return Price data by YCharts

That"s thanks to a perfect storm of negativity that has beaten down even the highest-quality blue chip MLPs to ridiculous levels. However, at the same time, I"m also aware that the pass-through business model of MLPs means that they have certain risks that investors need to watch out for.

Because the fact is that no matter how great an MLP"s core business may be, and how impressive its distribution growth record appears, at the end of the day any payout that isn"t safe isn"t worth owning.

Buckeye Partners (BPL) is one MLP that I"ve been watching closely because it"s become a favorite among income investors courtesy of 20 years of consecutive distribution growth. Readers have asked me to take a look at it because the MLP"s recent slide has sent the yield to an all time high.

(Source: Ycharts)

So I decided to do a deep dive on Buckeye to see whether it is a classic deep value opportunity or a yield trap to be avoided. Unfortunately as much as I would love to recommend Buckeye at today"s apparently mouth watering valuation, I can"t due to what I consider to be a very real risk of a future payout cut.

On the other hand Enbridge Inc (ENB), which I consider to be the Berkshire Hathaway (BRK.B) of the midstream industry, is indeed a screaming buy today. That"s because its fundamentals are rock solid, including a generous, safe, and fast growing payout that signals enormous market beating total return potential. Enbridge"s yield is also at some of its best levels ever. In fact today is the best time in nearly a quarter century to add this industry blue chip to your portfolio.

(Source: Ycharts)

Let"s take a closer look at why I think investors should avoid Buckeye right now, and instead choose the far superior Enbridge.

Buckeye Partners: Great Payout Growth Track Record But...

Buckeye Partners got its start in 1886 as the Buckeye Pipeline company, and part of John D. Rockefeller"s Standard Oil empire. Over 30 years ago it converted to an MLP. Today it owns a highly diversified collection of midstream assets under two business segments.

(Source: Buckeye Partners Investor Presentation)

The first is its domestic pipelines and terminals, (51% of 2017 adjusted EBITDA), business which owns:

• 6,000 miles of pipeline
• 110 delivery terminals
• 115 active liquid petroleum product terminals
• 57 million barrels of liquid petroleum product storage capacity

The other major segment is global marine terminals, (46% of 2017 adjusted EBITDA), which owns a network of marine terminals. These are located primarily on the East Coast and Gulf Coast regions of the United States as well as in the Caribbean, Northwest Europe, the Middle East and Southeast Asia:

• 22 liquid petroleum product terminals located in key global energy hubs
• 120 million barrels of liquid petroleum product tank capacity

The remaining cash flow comes from the merchant services business, (2.5% of 2017 adjusted EBITDA), which markets liquid petroleum products in areas served by the other two business segments.

95% of cash flow is from fixed fee contracts. In recent years Buckeye has moved away from its legacy FERC regulated pipeline business and been focusing more on growing its marine storage business.

(Source: Buckeye Partners Investor Presentation)

Since 2010 it"s acquired over 75 storage terminals, including a 50% stake in Vitol, a Dutch owner of global oil storage and import/export terminals. That last deal was completed in 2017 and Buckeye paid $ 1.2 billion for its stake. In September 2017 Vitol and BPL bought out VTTI Energy Partners, VTTI"s MLP, for $ 476 million in cash.

The VTTI deal added 15 marine storage terminals to Buckeye"s portfolio, as well as two new facilities under construction in Panama and Croatia. In addition BPL and Vitol are planning expansions of VTTI"s terminals in Antwerp and Rotterdam that will further fuel growth in distributable cash flow or DCF. DCF is the MLP equivalent of free cash flow and what funds the distribution. VTTI"s cash flow is 100% fee based with no direct commodity exposure, making it a perfect fit for BPL"s low risk business model.

(Source: Buckeye Partners Investor Presentation)

Over the past seven years, Buckeye has invested over $ 8 billion to grow and diversify its operations, resulting in some truly impressive cash flow growth.

(Source: Buckeye Partners Investor Presentation)

Going forward, Buckeye"s growth plans rely on two major growth catalysts. The first is the ongoing growth of global oil demand that"s largely being fueled by strong economies in emerging economies such as India and China.

(Source: Exxon Mobil Investor Presentation)

In fact, according to Exxon Mobil (XOM), by 2040 global oil consumption is expected to rise 20%, or about 20 million barrels per day. This is likely to create strong demand growth in oil storage and import/export terminals.

Which ties into Buckeye"s other major growth catalyst, which is America"s accelerating energy boom.

(Source: EIA)

Thanks to incredible growth in efficiency caused by OPEC"s 2015 oil price war, US shale production costs have plummeted to about $ 30 per barrel. Companies like Exxon are investing heavily into even more advanced fracking and drilling technology and believe they can lower this to about $ 20 per barrel.

The combination of hyper prolific and low cost shale formations such as the Permian basin, (about 70 billion barrels of recoverable reserves), and huge growth in overseas demand is why US oil and oil condensate production is expected to rise by about 30% in the next five years to about 13 million barrels per day. In fact the International Energy Agency or IEA projects that the US will increase its oil exports from 2 million barrels per day today, to 5 million barrels per day by 2023. That would make the US the world"s largest oil producer and the second largest net exporter behind Saudi Arabia.

Buckeye has already launched an open season for a potential 600 miles Southwest Texas Gateway pipeline connecting West Texas’ Permian basin with export facilities in Corpus Christi. Once long-term fixed fee contracts are in place it expects to start construction on the pipeline which would move 600,000 barrels per day to export terminals on the Texas coast.

In addition to the Southwest Texas Gateway, the MLP is also working on expansion projects connecting Midwest refineries to major markets such as Chicago and Philadelphia. This is in addition to several other projects in Florida, New York State, and Pennsylvania. In total, Buckeye expects to spend about $ 300 million on growth capex in 2018, to increase its highly stable and recurring cash flow.

The highly predictable and recession resistant nature of that cash flow is what has allowed the MLP to create one of the most impressive payout growth records in the industry. Specifically Buckeye delivered unit holders 30 uninterrupted years of distributions, including 20 straight years of increases. Also helpful was that Buckeye was one of the first MLPs to eliminate its incentive distribution rights or IDRs when it bought out its general partner in 2010. This allowed it to stop paying 50% of its marginal cash flow to its GP, which both lowered its cost of capital, and allowed for faster payout growth to regular investors.

Or to put another way, Buckeye was a dividend achiever and well on its way to becoming an aristocrat. However, that dream is now dead, because Buckeye has fallen on some very hard times. In fact it now faces immense growth challenges that potentially threaten its sky high distribution.

...Massive Risks Mean Distribution May Not Be Safe

(Source: BPL earnings release)

As you can see BPL enjoyed strong top line growth in 2017 thanks to its large investments over the previous year. However, that didn"t translate to what counts, DCF. In fact thanks to $ 346 million in new units it sold in 2017 its DCF/unit actually declined, causing its distribution coverage ratio to fall to 1.0. In the MLP industry 1.1 is considered the minimum safe level to allow for continued long-term distribution growth.

(Source: Buckeye Partners Investor Presentation)

Buckeye actually has a pretty terrible history of maintaining a safe coverage ratio. This is due to that same strong payout growth streak. Basically BPL"s issue has been that it"s historically retained almost no DCF to fund growth, but relied exclusively on debt and equity markets for growth capital, (47% debt, 53% equity).

That was okay a few years ago when oil prices over $ 100 and record low interest rates made MLPs the darlings of Wall Street. However, today any MLP that relies exclusively on external capital is at a huge disadvantage. This is because if BPL wanted to pursue its historical funding model then it would not be able to grow profitably.

Metric	2017 Results
Revenue Growth	12.3%
Distributable Cash Flow Growth	0.7%
Unit Count Growth	7.7%
DCF/Unit Growth	-6.5%
Distribution Growth	3.1%
Distribution Coverage Ratio	1.0

(Source: Morningstar, FastGraphs, GuruFocus, earnings release)

That"s because the MLP"s cost of capital is now nearly 14%. Meanwhile the average interest rate it enjoys is still a reasonable 4.5%. However, Buckeye faces major challenges to borrowing heavily in the fixed debt market. That"s because it has a BBB- credit rating, meaning just one notch above junk bond status. If BPL gets downgraded even once its future borrowing costs will increase significantly and raise its cost of capital even more.

(Source: Buckeye Partners Investor Presentation)

And with $ 1.25 billion in debt coming due in the next two years that"s not something that Buckeye can afford.

This means that the majority of the MLP"s liquidity, ($ 1.13 billion at the end of 2017), is from its revolving credit facility. The trouble is that this is variable rate debt, with a cost of LIBOR + 1% to 1.75%. Today this means that BPL"s revolving credit interest rate is between 3.66% and 4.41%, and has risen 0.86% over the past year.

Worst still? That credit facility has strict covenants in place that limits its debt/EBITDA ratio to 5.0, (5.5 after an acquisition for a brief time). Today Buckeye"s covenant leverage ratio is 4.3. While that is still nicely below its cap it does limit the amount of borrowing the MLP can do to fund its growth.

This is why BPL had to resort to highly dilutionary secondary offerings in 2017 under its ATM program. In addition it"s now pursuing some alternative financing techniques that might threaten the safety of the current distribution.

In fact, management recently announced that:

Buckeye believes that greater unitholder value can be generated by maintaining its distribution rate and retaining capital rather than by continuing distribution growth." -BPL statement

In other words the MLP"s 20 year payout growth streak is dead. But on the plus side the MLP says that "Buckeye has never cut its distribution and has no intention to do so now." However, ultimately the MLP may have no choice.

That"s because to fund its growth in 2018 Buckeye recently issued $ 265 million in class C units, with investors having the right to buy an extra $ 50 million later for a total of $ 315 million in potential additional equity.

These class C units pay a distribution equal to BPL"s regular units, but in stock, instead of cash. But these units convert to regular units that do pay cash within two years. That means that potentially BPL is facing between 5.5% and 7.1% dilution by the end of 2019. In fact the lower BPL"s unit price falls the greater the potential dilution will be, since those class C units are getting paid in stock.

That means that Buckeye would need to grow its DCF by at least 6% to 8% by the end of 2019 in order to cover the distribution and avoid a potential payout cut. The trouble is that management doesn"t provide DCF guidance that far out. However, the analyst consensus is that BPL"s cash flow will shrink 14% in 2018 and then remain flat in 2019.

Now analysts can be wrong of course, and BPL"s legendary status as a safe income stock means that many investors are probably assuming that management won"t cut the payout unless absolutely necessary. But keep in mind that there is one final risk that might make it necessary.

The marine storage business, while fixed fee, is not under the kind of long-term, (5 to 25 year), contracts often seen in the pipeline business. Rather these contracts usually range from one to three years in duration.

Here"s why that matters for BPL investors. In 2017 Buckeye"s marine storage facility utilization fell from 92% to 88%. That is because the huge oil supply glut has now reversed, thanks to OPEC partnering with Russia to cut output by 10%.

Thanks to an extra 1.5 million bpd in oil demand projected for 2018, this means that what was once a huge surplus of oil that filled global storage facilities, today the world is facing a 2.3 million bpd shortfall that is rapidly emptying them.

And since BPL"s top three marine storage customers account for 59% of that segment"s revenue, they have a strong position to negotiate from once contracts expire. But won"t increased demand from US exporters help raise utilization rates? Eventually but not necessarily by 2019 when the MLP"s class C units convert to common units and increase the distribution cost by up to 8%.

Want some even worse news about those OPEC + Russia cuts that are hurting the storage business? Well they were set to expire at the end of 2018. That potentially created some hope that increased oil production would once more start refilling global storage facilities.

However, Saudi Arabia has indicated it wants to prolong those cuts well beyond 2018 to maintain long-term global oil prices of about $ 70. In fact the so called "Vienna Consensus", or the partnership between Russia and OPEC, is now apparently considering a formal 10 to 20 year extension of those cuts.

If that actually happens it effectively means that Russia joins OPEC and the cartel would greatly increase its influence in global oil markets. More importantly for BPL investors, it would mean that the major growth catalyst, (major expansions of marine storage), for which the MLP is planning might face several years of highly variable cash flow.

That could create nasty downturns in DCF just when BPL is facing a potentially large dilution cliff and its payout coverage ratio has absolutely no safety cushion. All of which means that BPL"s sky high yield is not a market mispricing of a blue chip MLP. Rather it represents a warning to investors that this distribution might be set for its first cut in over 30 years.

That means that Buckeye represents a potential value trap, and I must recommend that all but the most risk tolerant income investors avoid it. On the other hand Enbridge Inc is a high-yield blue chip that has indeed been unfairly punished by the market"s all consuming hatred of the midstream industry.

Enbridge: The Gold Standard Of Midstream Remains A Future Dividend Aristocrat

(Source: Enbridge Investor Presentation)

Enbridge was founded in 1949 making it among the oldest midstream operators in North America. It owns one of the continent"s most extensive and integrated energy transmission systems including:

• 34,410 miles of natural gas pipelines
• 17,511 miles of oil pipelines
• 11.4 billion cubic feet/day of gas processing capacity
• 437 billion cubic feet of gas storage capacity
• 307,000 barrels/day of natural gas liquids or NGL production capacity
• 3.5 million natural gas utility customers
• 3GW of renewable energy capacity

You can think of Enbridge as almost a regulated utility because its wide moat, cash rich assets are vital to the health of North America"s booming energy industry. That"s why regulators on both sides of the border grant it guaranteed returns on equity usually in the low to mid teens. The actual permitted ROE on its gas utilities is usually over 10%, which is better than the US average for regulated utilities of 9.6%.

The key competitive advantage Enbridge has is that while a single pipeline is useful to customers, an extensive network is invaluable because it allows oil & gas producers to sell their commodity products in far flung markets at the highest possible price.

Enbridge"s network is among the best on the continent for two main reasons. First in Canada Enbridge owns the Mainline system, which at 2.8 million barrels per day of capacity accounts for 70% of Canada"s total oil pipeline capacity. The mainline is connected to numerous regional oil pipelines that connect to 3.5 million barrels per day of refining capacity, making it the go-to choice for many of America"s largest oil producers.

Enbridge has historically been focused on crude oil pipelines, but in 2016 it purchased Spectra Energy to add Spectra Energy Partners" (SEP) giant network of gas pipelines to its empire. Today Enbridge"s gas pipeline system is one of the largest on the continent and transports 20% of America"s natural gas. One of the main reasons for buying Spectra was because combining its gas pipelines with Enbridge"s means that the company"s gas transportation network can now tap into several key growth markets.

For example in the US liquefied natural gas exports and NGL production/transport are expected to be major growth opportunities in the coming five years. In fact by 2022 analysts project that US gas production will rise by 34%, and NGL production by 51%.

Meanwhile the Western Canadian Sedimentary Basin is expected to be a strong source of Canadian natural gas production as well. In fact over the next decade analysts project 9% annual growth in Canadian gas production, most of which will flow through Enbridge"s gas pipeline system.

Finally, through Spectra Energy"s Valley Crossing pipeline, which was just approved by FERC and has a capacity of 2.6 billion cubic feet/day, Enbridge has access to the thriving gas export market of Mexico. Mexico is in the process of switching over its coal fired power plants to natural gas. Its largest utilities are signing 25 year fixed-rate (with annual inflation adjusters) contracts with Spectra. And since Enbridge owns 83% of Spectra"s shares the majority of that cash flow will end up in the parent company"s pocket.

Which brings me to the three biggest reasons to invest in Enbridge. The first is the extremely low risk nature of this regulated toll booth business model.

(Source: Enbridge Investor Presentation)

Enbridge"s average contract length is 20 to 25 years, and its cash flow sensitivity to commodity prices is just 4%. In addition 93% of its customers are large investment grade corporations or regulated utilities. This means there is very little counterparty risk, (that bankrupt customer defaults on payments).

In addition Enbridge"s balance sheet is composed almost exclusive of fixed rate, long-term loans, meaning that just 3% of its DCF is at risk from rising interest rates.

(Source: Enbridge Investor Presentation)

And since the company has a policy of paying out just 55% to 65% of DCF as dividends, it ends up retaining about two to three times as much cash flow to fund internal growth as most MLPs.

Combined with the strongest credit rating in the industry, (tied with EPD, MMP, and SEP), and no IDRs, this means that Enbridge"s cost of capital is very low and allows it to grow profitably.

Weighted Average Cash Cost Of Capital	9.6%
Historical DCF Yield On Invested Capital	7.7%
Gross Investment Spread	-1.9%

(Source: Morningstar, FastGraphs, GuruFocus, earnings release)

Note that Enbridge"s DCF yield is currently artificially suppressed because of the Spectra Energy merger. As its growth projects come online that figure will climb rapidly. And speaking of growth few midstream companies are as well positioned to take advantage of America"s energy boom as Enbridge.

(Source: Enbridge Investor Presentation, note figures in CAD)

In fact over the coming three years Enbridge has $ 17.6 billion in growth projects scheduled to come online. More importantly it has already raised the funding to complete them, with no anticipated needs to tap the fickle equity markets before 2021.

(Source: Enbridge Investor Presentation, note figures in CAD

Enbridge"s growth plans are expected to generate 10% growth in adjusted cash flow from operations, (what it calls DCF), through 2020.

(Source: Enbridge Investor Presentation, note figures in CAD)

That in turn is why Enbridge is expecting to grow its dividend at 10% annually through 2020. That"s the same year it becomes a dividend aristocrat by hitting 25 consecutive years of payout increases.

(Source: Enbridge Investor Presentation)

More importantly for long-term investors by 2020 the company expects to be generating about $ 5 billion in annual excess DCF. That can be invested in Enbridge"s enormous shadow backlog of growth projects. These are projects that don"t yet have contracts, and are expected to be completed beyond 2020.

(Source: Enbridge Investor Presentation, figures in CAD)

This collection of projects that management is working on for the long-term represents as much as $ 30 billion in highly profitable investments. How realistic is that shadow backlog? Well given that the coming US energy boom is expected to require up to $ 900 billion in new midstream investment by 2040, I"d say it"s pretty reasonable.

Usually such a backlog would be expected to take four to five years to complete, meaning that Enbridge would be able to fund $ 20 billion to $ 25 billion of it with retained DCF. The rest could easily be funded with low cost debt, with no further equity issuances needed. Or to put another way Enbridge has successfully shifted to a self funding business model, as Kinder Morgan (KMI), Magellan Midstream (MMP), and Enterprise Products Partners (EPD), have all done or announced plans to do.

This is great news for investors because it means that Enbridge"s strong growth potential is very unlikely to be quashed by a low share price, as is the concern for Buckeye Partners and other non self funding MLPs.

The bottom line is that Enbridge is truly one of the bluest of blue chips in the midstream industry. And it offers one of the best combinations of generous but safe yield, and excellent long-term growth prospects.

Payout Profiles: Looks Can Be Deceiving, Enbridge Is The Far Better Choice

Weighted Average Cash Cost Of Capital	3.9%
Historical DCF Yield On Invested Capital	5.8%
Gross Investment Spread	1.9%

(Sources: earnings releases, GuruFocus, FastGraphs, Multpl, CSImarketing)

The most important aspect to successful long-term dividend investing is the payout profile which consists of three parts: yield, payout security, and long-term growth potential.

When it comes to yield Enbridge offers more than triple the S&P 500"s paltry payout, but Buckey Partners offers an even richer forward yield. However, any distribution that isn"t safe isn"t worth owning. That"s why payout security is so important.

This is composed of two parts. First a good coverage ratio, which Enbridge has, but Buckeye is badly lacking. Remember that most MLPs have coverage ratios of 1.1 to 1.2, and Buckeye"s is likely to decline by 0.05 to 0.7 in 2019 when its class C units convert to common units.

The second part of payout security is a strong balance sheet. After all as many midstream operators showed during the oil crash, too much debt means that credit rating agencies and creditors can force a payout reduction even if the distribution is well covered by cash flow.

Stock	Yield	Distribution Coverage Ratio	Projected Payout Growth	Total Return Potential
Buckeye Partners	13.50%	1.0	0% to 1%	13.5% to 14.5%
Enbridge	6.60%	1.53	6% to 9%	12.6% to 15.6%
S&P 500	1.90%	3.3	6.20%	8.10%

(Sources: Morningstar, earnings releases, FastGraphs, Gurufocus)

At first glance, it appears as if Buckeye actually has Enbridge beat in certain key debt metrics. It sports a lower leverage ratio, higher interest coverage ratio, and even enjoys slightly lower borrowing costs.

However, note that Buckeye has a far weaker credit rating. In addition, its borrowing costs could rise given that it"s now so reliant on variable rate loans under its revolving credit facility. Meanwhile, Enbridge"s energy empire continues to enjoy strong access to low cost borrowing that is bringing its borrowing costs down over time. That"s even in a rising rate environment.

For example, on January 9th, a subsidiary of Spectra Energy Partners was able to sell $ 800 million in long duration bonds at highly favorable rates.

• $ 400 million in 10 year bonds with an interest rate of 3.5%
• $ 400 million in 30 year bonds with an interest rate of 4.15%

Remember that as 83% owner of Spectra Energy Enbridge lists that MLPs debt on its consolidated balance sheet. And because its borrowing costs are actually declining as it refinances, Enbridge"s interest coverage ratio is only going to improve over time. In contrast Buckeye"s is likely to decline in the coming years.

(Source: Enbridge Investor Presentation)

And given that Enbridge has no further need to borrow to complete its growth plans, by 2020 its leverage ratio is expected to decline to about 4.5. That"s in line with the industry average and given the low risk nature of its decades-long contracts, might be enough to get it a credit upgrade to A-.

Finally, we can"t forget long-term payout growth potential. Under a best case scenario Buckeye Partners" distribution remains intact, but remains essentially frozen. The analyst consensus is for 1% DCF/unit growth over the next decade. That"s despite the enormous growth potential of the midstream industry. Basically what analysts are forecasting here is that Buckeye Partners" high cost of equity is likely to require so much equity dilution that DCF/unit barely grows at all. This means that investors buying BPL today are counting pretty much 100% on its distribution remaining intact, despite its worsening liquidity trap.

In contrast Enbridge"s enormous growth potential, in all aspects of North American, (and even international), energy means that it can be expected to continue generating strong dividend growth for years, if not decades to come. Remember that Enbridge already owns 3GW of renewable power and is investing heavily into offshore wind in Europe.

Put it together and you get both MLPs potentially offering market crushing total return potential. But Enbridge offers that in a low risk package while BPL"s potential is totally reliant on a highly uncertain distribution and its incredibly low valuation.

Valuations: Both Stocks Are Dead Cheap, But Only Enbridge Is Worth Buying Today

BPL Total Return Price data by YCharts

To say it"s been a rough year for midstream investors would be an understatement. The entire industry has been hammered, even blue chip giants like Enbridge. However, Buckeye has been decimated which is why so many value focused income investors are attracted to it.

Stock	Debt/ Adjusted EBITDA	Interest Coverage	S&P Credit Score	Average Interest Cost
Buckeye Partners	4.4	4.9	BBB-	4.50%
Enbridge	5.0	4.7	BBB+	4.60%
Industry Average	4.4	4.5	NA	NA

(Sources: earnings releases, Gurufocus)

That"s certainly understandable because on a trailing 12 month basis BPL"s price/DCF, (MLP equivalent of a PE ratio), is incredibly low. Usually a stock trading at single digit multiples indicates atrocious fundamentals such as: a payout not covered by cash flow, a dangerous balance sheet, and no growth prospects.

Buckeye does still have decent DCF growth prospects, though that 2019 dilution cliff is a major concern that will keep DCF/unit from rising significantly over time. The question is whether or not the market pricing in -0.6% DCF/unit growth over the next decade is reasonable. I tend to think that BPL"s DCF/unit will be able to achieve a positive, though small figure, meaning that it might be an attractive "dirty value" investment.

After all the yield is currently more than double its historical norm and is at an all time high. This means that, assuming you believe management can preserve the current distribution, it"s literally the best time ever to buy Buckeye Partners.

However, note that while BPL is trading as if it were marked for death, Enbridge is trading nearly as cheap! In fact ENB is also priced as if its DCF/share were not going to grow at all over the next decade. Given the company"s: enormous and fully funded growth backlog, even bigger shadow backlog, self funding business model, and the industry"s strong tailwinds, I find such a pessimistic forecast preposterous.

The final way I like to value an income stock, and a good rule of thumb I recommend for many investors, is to compare its forward yield to its five year average yield.

(Source: Simply Safe Dividends)

Usually over the long-term yields are mean reverting to a certain level, meaning that this historical comparison can be a useful approximation for fair value. Note that Enbridge"s forward yield is actually 6.6% after the recent dividend hike.

Under this methodology, both MLPs are insanely cheap, with BPL trading at half its fair value, and Enbridge being about 89% undervalued. However, this methodology only applies under "all else being equal" conditions. In other words had BPL"s fundamentals not deteriorated to the point that it"s in a liquidity trap and its distribution is at risk, it would certainly be a screaming buy. However, given the decline in its payout profile I can"t recommend BPL except for the most risk tolerant investors.

However, ENB"s fundamentals are not impaired. In fact they are strong and moving quickly in the right direction. That means that I have no problem giving Enbridge my strongest possible endorsement at today"s prices.

That is of course, assuming you understand and are comfortable with that blue chip"s risks.

Enbridge Risks To Consider

While I"m a big fan of Enbridge no stock is risk free.

First realize that as a Canadian stock US investors face a 15% tax withholding in non retirement accounts. Fortunately a US/Canadian tax treaty means that US investors can deduct a dollar for dollar tax credit that reduces US dividend tax liability. However, be aware that to use the simpler 1040 tax form you are limited to $ 300/$ 600 per individual/couple. That applies to your entire portfolio"s foreign tax withholdings. Above that limit you need to use the more complicated form 1116.

In addition Enbridge pays its dividends in Canadian dollars. That means that there is some currency risk because should the US dollar appreciate against the Canadian dollar then your effective dividend payment will be less.

As to risks to Enbridge itself? Well there are several. First let"s get the recent FERC rule change out of the way. On March 15th the Federal Energy Regulatory Commission changed a 2005 rule that allowed for income tax allowance to be applied to cost of service contracts on interstate pipelines regulated by FERC. The market flipped out over concerns that many MLPs would see a permanent decrease in DCF. In recent weeks MLPs and midstream companies have looked at the rule and most have said it will have no material impact on their cash flow or growth plans. These include:

• Enterprise Products Partners (EPD)
• Kinder Morgan (KMI)
• Energy Transfer Partners (ETP)
• MPLX (MPLX)
• Spectra Energy Partners (SEP)
• EQT Midstream Partners (EQM)
• Tallgrass Energy Partners (TEP)

Enbridge has officially stated that:

it does not expect a material impact to its previously disclosed financial guidance over the 2018-2020 horizon as a result of the Federal Energy Regulatory Commission (FERC) revised policy statement on interstate pipeline tax allowance recovery in Master Limited Partnerships (MLPs) nor from FERC"s Notice of Proposed Rulemaking (NOPR)." -Enbridge Statement

Now it should be noted that Enbridge Energy Partners (EEP) will be one of the few MLPs affected, due to how its contracts are structured.

Enbridge Energy Partners, L.P. (NYSE:EEP) derives a portion of its revenue from a Facility Surcharge Mechanism that applies cost of service tariffs which would be impacted by this policy change. As a result of lower tax rates under US Tax Reform, EEP previously guided to a decrease in distributable cash flow (DCF) of $ 55 million for 2018. This new FERC policy would cause a further decrease to DCF of roughly $ 80 million on an annual basis, or roughly $ 60 million on a prorated basis in 2018." - Enbridge Statement

However, while this will have a significant impact on EEP, Enbridge will not actually take a hit to its cash flow. That"s because:

Under the International Joint Toll mechanism, reductions in the EEP tariff will create an offsetting revenue increase on the Canadian Mainline system owned by Enbridge Income Fund Holdings Inc. (ENF). Financial guidance at ENF remains unchanged; however, this could provide a further tailwind for financial results. The combined impact at both EEP and ENF are offsetting for Enbridge on a consolidated basis." - Enbridge Statement

Finally, there"s Spectra Energy Partners which has said the following:

Spectra Energy Partners LP (NYSE:SEP) does not expect any material impact to its financial guidance from the FERC policy actions. Roughly 60% of SEP"s gas pipeline revenue comes from negotiated or market-based tariffs and therefore not directly affected by the FERC policy revisions. The remaining 40% of gas pipeline revenue is from cost of service based tariffs which could be subject to tax recovery disallowance. The liquids assets within SEP are predominantly negotiated tariffs and also not materially affected by the policy revisions. SEP anticipates no immediate impact to its current gas pipeline cost of service rates as a result of the revised policy, and therefore, no impact is expected to its previously provided 2018 financial guidance. Any future impacts would only take effect upon the execution and settlement of a rate case. In the event of a rate case, all cost of service framework components would be taken into consideration, which is expected to offset a significant portion of any impacts related to the new FERC policy. Any unmitigated impacts are not anticipated to materially change SEP"s distributable cash flow outlook beyond 2018." - Spectra Energy Partners Statement

So that Spectra statement may be a bit confusing, so let me clarify it. What Spectra is saying is that potentially about 40% of its gas revenue MIGHT be affected by the rule change, starting in 2020. That represents about 36% of total cash flow for the MLP. However, Spectra would only be facing a potential price cut on what it charges customers if, and only if, they file a rate case with FERC.

Or to put another way if a customer complains that Spectra is overcharging then FERC might force Spectra to lower its pipeline rates. However, keep in mind that in 25 years Spectra has never faced a customer complaint or been forced by FERC to reduce its pipeline rates. In fact Enbridge has actually be charging sub FERC cap pipeline rates and is planning to file rate cases to increase its pipeline tariffs

The bottom line is that Enbridge has sailed through both tax reform and the FERC ruling with no material impact and has reaffirmed its previous guidance, both for 2018, and through 2020. All of which means the company remains on track to deliver solid growth over the next three years. That"s because it has already raised all the capital it needs in order to fund its enormous growth backlog.

But here is where the potential risk crops up. Because whether or not Enbridge actually does have enough money, (as management believes), depends on two things. First its projects come in on time and on budget.

There is no guarantee of this for two reasons. First President Trump"s new 25% steel tariffs could potentially raise the average cost of a new pipeline project by $ 76 million, and over $ 300 million for larger ones. The good news is that these have been waived for most countries, including Canada, which is the largest steel exporter to the US.

This means that as long as those waivers remain in place Enbridge should not face additional construction costs. However, those waivers expire in May and are largely believed to be a bargaining chip for the ongoing NAFTA negotiations. That means that they might end up taking effect and causing Enbridge to have to revise its capex budget higher, potentially requiring it to raise more capital.

The other concern I have is over Enbridge Energy Partners, which is one of the few MLPs to get hit hard by the FERC ruling. Canadian credit ratings agency DBRS has warned that the FERC ruling"s $ 80 million hit to DCF, “would eliminate a significant portion of the remaining cushion currently embedded in EEP’s ratings...and could significantly weaken” the MLP"s credit metrics.

The problem is that Enbridge Energy Partners previously cut its distribution by 40% in an effort to make it sustainable and achieve a 1.15 coverage ratio. This was considered a safe and sustainable level that would allow EEP to fund its portion of Enbridge"s growth efforts without relying on equity issuances at insanely dilutive prices.

However, the FERC change means that EEP"s coverage ratio will now fall to about 1.0, meaning it will effectively have no cushion in case anything goes wrong. And since EEP"s unit price has now collapsed even more, its cost of equity has now risen to about 14%.

Worse still, a credit downgrade at this point might end up lowering its credit rating to junk, which would mean that EEP would have to raise far higher cost debt in the junk bond market. With interest rates potentially set to rise in the coming years, (Morningstar projects 10 year hitting 4.5% by 2022), that might make it impossible for EEP to grow profitably.

Unless there is a dramatic turnaround in EEP"s unit price soon, Enbridge might be forced to bail out its MLP via a roll up. In other words it might have to buy Enbridge Energy Partners because it"s no longer capable of serving the function it was created for. That would be to raise cheap capital independently of the parent company.

However, the issue here is that Enbridge doesn"t have the cash to buyout EEP, so would likely either have to issue debt, or pay for the transaction with a lot of shares. But with Enbridge"s share price in the toilet that would be highly dilutionary and could force it to scale back its future dividend growth plans.

Now note that I"m not saying that an Enbridge rollup of EEP is necessarily a sure thing. After all as my colleague Daniel Jones has pointed out, EEP could simply cut its distribution again in order to preserve its credit rating and free up enough DCF to fund the equity portion of its backlog. However, this too might cause Enbridge Inc some troubles down the line.

That"s because cost of equity isn"t the distribution yield, but rather the DCF yield since this represents the dilutionary cost of selling new units. Or to put another way since new units represent a permanent claim on future DCF, the DCF yield is what investors need to focus on.

When a stock cuts its payout, even if the yield is sky-high, the price will usually fall in proportion to the cut. That means that if EEP were to cut the payout another 30% for example, the price might fall 30% as well. In that case EEP"s cost of equity would rise to about 18% and it would remain locked out of equity markets for the foreseeable future.

That means that going forward EEP would likely have to adopt a self funding model, in which it needs to retain enough DCF to fund the equity portion of any future growth capex that Enbridge might find for it.

Remember that Enbridge"s shadow backlog is enormous and its investment thesis requires it to be able to raise enough low cost capital to execute on it. That means that while Enbridge itself is not facing a liquidity trap, EEP"s troubles might end up hindering its ultimate growth potential.

Any future rollup might end up helping to solve this EEP problem, however, Enbridge could only pursue such a course if the share price recovers strongly. Given the market"s distaste for the midstream industry that might take a long time.

Bottom Line: Enbridge Is A High-Yield Blue Chip Worth Buying, Buckeye Partners Is A Potential Yield Trap To Avoid

Don"t get me wrong, I"m not rooting for Buckeye to fail and I sincerely hope management can ultimately preserve and eventually grow the distribution. However, given the challenges the MLP faces including: a worsening liquidity trap, a large dilution cliff coming in 2019, and negative short-term fundamentals in a key growth catalyst, I consider it a high risk stock.

On the other hand, Enbridge, while offering less than half the yield, has a better risk-adjusted total return potential. That"s because, despite its own challenges, Enbridge continues to have: ample access to low cost capital, a massive and diversified growth pipeline, and far less reliance on external capital markets.

This ultimately means that Enbridge is a source of not just generous, safe, and fast growing income but is more likely to generate market beating total returns in the future. And at today"s valuation I am more than willing to recommend Enbridge even for conservative income portfolios.

As for Buckeye? Well I"m avoiding it for now, until management can show me how it can plausibly make the payout sustainable. If you must own BPL, I recommend making sure it"s only as a small part of a well diversified portfolio.

Disclosure: I am/we are long ENB, SEP, EPD, MPLX, EQM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Tech

Stock	P/DCF	Implied Growth Rate	Yield	Historical Yield
Buckeye Partners	7.3	-0.60%	13.50%	6.60%
Enbridge	8.3	-0.10%	6.60%	3.20%