Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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A Railroad Powerhouse You Should Not
Ignore |
Published:
June 11, 2009
With a modest yield of around 2.5%, Burlington Northern currently
has the lowest payout of the group. As they say, it's not how you start
the race, but how you finish. And with dividends climbing +22% annually
since 2004, BNSF has been chugging along at a brisk pace -- doubling its
payments every 3.5 years on average.
Formed between the merger of Burlington Northern and Santa Fe Pacific,
BNSF is now the nation's second-largest railroad. The company operates
about 32,000 miles of track winding through 28 states, mostly in the
western U.S. Burlington Northern Santa Fe (BNI)
BNSF transports a wide variety of everyday products across the country,
including: consumer staples like beverages and canned goods, industrial
products such as rubber and cement, agricultural products like soybeans
and corn, and chemicals such as petroleum and chlorine.
As you might expect, barriers to entry are extremely high in this
business. Aside from regulatory hurdles, the high cost of building and
maintaining railroads acts as a powerful deterrent to keep potential
competitors away. But BNSF has other factors working in its favor as
well.
In recent years, escalating prices for natural gas have forced many
power plants to switch to coal. And no other company has better access
to the Powder River Basin in Wyoming, home to the world's largest
deposit of low-sulfur coal. In fact, BNSF's coal shipments account for
roughly one-tenth of the electricity produced in the entire country.
Meanwhile, the nation's roads have become increasingly congested, and
railroads are approximately three times more fuel efficient than trucks.
Not surprisingly, many freight routes that used to be entirely driven by
trucks now rely on so-called "intermodal" traffic, which means that more
than one type of transportation is used.
Intermodal shipping volume is one of the industry's true bright spots,
quadrupling over the past 25 years -- and BNSF is a leader in this
particular segment. The equivalent of an 18-wheeler's worth of freight
is loaded on to a BNSF intermodal train every six seconds. It would take
280 trucks to transport the goods that just a single one of these trains
can carry.
As long as things need to be moved from point A to point B, BNSF's
services will never go out of style. Consider these factoids about what
the company's 6,700 trains haul each year:
Enough bread grain to
feed 900 million people.
Enough fertilizer to
bury a field the size of Kansas.
Enough sugar to bake 3
million batches of cookies.
Enough lumber to build
over 500,000 new homes.
Enough asphalt to lay a
four lane road stretching around the world
What does all that add up to in dollars and cents?
Despite economic turmoil, revenues still rose +14% last year to $18
billion, while earnings advanced even faster to hit $6.08 per share. The
firm managed to convert about 7% of its revenues into free cash flow (an
impressive feat for a capital-intensive business) and post a
double-digit return on capital.
With all this in mind, it doesn't come as a surprise to see that
Berkshire Hathaway's (NYSE: BRK-A) latest 13-F filing shows an increased
stake in BNI, as Warren Buffett continues to scoop up large blocks of
the stock.
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Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
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in-depth guidance on today's leading value opportunities, plus educational guidance, please subscribe to
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Disclosure: Nathan Slaughter
does not own shares of BNI.
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
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what the Fed is up to -- because every "bad" economic development
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Go here to learn about Amy's simple investing strategy.
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