Why Inter Pipeline Stock Cut Its Dividend

As recent as August 2019, Inter Pipeline (TSX:IPL) received a takeover bid – that it rejected – of CAD$30 per share. Who would have thought that the company would trade at only a third of that price today?

Personally, I avoided the stock for reasons that were unrelated to the headwinds that it and other energy infrastructure companies are facing today.

Specifically, I saw that Inter Pipeline had project concentration risk, as its major Heartland Petrochemical Complex project made up about 95% of its capital program at the time.

Inter Pipeline had project concentration risk, as its major Heartland Petrochemical Complex project made up about 95% of its capital program at the time.

Big projects are typically more complex than smaller ones. If there were delays or cost overruns in Heartland, it’d definitely drag down the stock.

Against its peers, Inter Pipeline stock tended to provide a higher dividend yield, which suggested that the company was a riskier investment.

Inter Pipeline’s Weak 2019 Results

Inter Pipeline’s 2019 results were …

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Disclosure: As of writing, we’re not long any stocks mentioned.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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