Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

August 19, 2009 - Buckeye Partners L. P. (Limited Partnership) (BPL-NYSE) through its subsidiaries, engages in the transportation, terminalling, and storage of refined petroleum products for integrated oil companies, large refined products marketing companies, and users of petroleum products in the United States.

The Pipeline Operations segment transports refined petroleum products, including gasoline, jet fuel, diesel fuel, heating oil, kerosene, and natural gas liquids to terminals and airports located within end-use markets. This segment also transports other refined products, such as propane and butane, refinery feedstock, and blending components.

The Terminalling and Storage segment provides bulk storage and throughput services. The Natural Gas Storage segment provides natural gas storage services. The Energy Services segment involves the wholesale distribution of refined petroleum products, including gasoline, propane, and petroleum distillates, such as heating oil, diesel fuel, and kerosene in the northeastern United States.

The Other Operations segment offers pipeline operation and maintenance services, and pipeline construction services for third parties. This segment also provides engineering and construction management services to various chemical companies.

As of December 31, 2008, it owned and operated approximately 5,400 miles of independent refined petroleum products pipeline system; and operated approximately 2,400 miles of pipeline under agreements with oil and chemical companies in the United States. Buckeye GP LLC serves as the general partner of the company. Buckeye Partners was founded in 1986 and is based in Breinigsville, Pennsylvania.

That strong cash flow (and about $22 million in the bank) as well as an untouched $600 million line of credit and another $275 million just raised through a senior unsecured notes offering gives the company plenty of ammunition to make more acquisitions. It also gives income investors comfort to know the money is there for the dividend.

Operating earnings should set a record this year. Analysts' consensus estimate is for the full year to show $3.39, up from $3.13 last year. Next year they see $3.66. The September quarterly results are forecast at 83 cents a share, ahead of last year's 79 cents third quarter. For the fourth quarter, the estimate is 89 cents as well, tied with last year's final period. The most recent quarter showed losses of $1.17 because of reorganization expenses and asset impairment charge offs. Without the extraneous charges, the net income would have been $52.1 million (up 27.5%) or 78 cents a share, a 23.8% improvement over last year.

Part of the increase in earnings will come from higher volumes and prices with some analysts looking for revenues to be 10% better this year, going to over $2 billion. If there's any recovery in the economy, expect 2010 to show even better numbers than analysts already predict, for sales and earnings.

More numbers: Market Cap is $2.35 billion. Trailing P/E is 15 while the forward P/E is 12.5. Price to book is 1.98. Operating margin for the last 12 months was 15.24% while Profit margin was 5.92%. Return on Equity was 8.97%. Total debt is $1.46 billion. Current ratio is 1.4. Book Value per share is $23.15. Operating cash flow for the last 12 months was $206.66 million. Beta is a relatively stable .2.

This stock is a limited partneship. That means almost all of its earnings are passed through to the owners of the company in the form of a dividend. That dividend has gone from $2.83 in 2005 to $3.03 in 2006, then $3.23 in 2007, $3.43 last year. This year, the announced dividend is $3.65. Those are the kind of numbers that should get income investors' attention.

Company Web site: www.buckeye.com

 Ted Allrich