Conservative Income Feature

Rarely will you find a sector’s top-quality stocks on sale more than five years into a bull market. But that’s the case with this new Conservative Income Portfolio holding. Record demand has enabled this utility to grow its first-quarter earnings by 19.7 percent year over year.

Hedgeye and Barron's called Kinder Morgan Energy Partners LP and its general partner, Kinder Morgan Inc. a "house of cards."  Richard Kinder, the partnership's Chairman and CEO, responded, "I'll buy, you sell and we'll see who's right."  Since then, this diversified owner of fee-based midstream assets has beaten its own first-quarter guidance, turning the market and burning the critics.

America’s leading wireless company grew its earnings per share by 23.5 percent from year-ago levels, expanded its wireless margins to 52.1 percent from 50.4 percent, increased its revenue per customer by 6.3 percent and generated $2.95 billion in free cash flow. 

America's leading telecom doubles down on its US business with a key acquisition.

The newest member of the Conservative Income Portfolio operates regulated and unregulated utility businesses and is poised for impressive distribution growth.

In 2013, the Alerian MLP Index gained 27.6 percent. Energy Transfer Partners (NYSE: ETP) did much better at 43.4 percent, thanks to restoring regular quarterly distribution increases.

Oklahoma Natural Gas Company has provided regulated gas distribution service to Tulsa, Oklahoma since 1906. Today, successor company ONEOK (NYSE: OKE) serves 2.1 million customers as the largest gas utility in Kansas and Oklahoma, and third biggest in Texas.

Since World War II, no regulated utility has ever failed to make its bondholders whole from disaster. That gives utility bonds a level of safety no other sector can match, particularly after 11 years of systematically cutting debt and operating risk.

Utility bonds’ years of being under-rated may be coming to an end, now that Moody’s is considering a sector-wide upgrade. But for now, they’re under-priced and therefore yield more than debt of equivalent real risk.

Capital spending plus regulatory support equals rising earnings, dividends and share prices: That’s the formula for superior total returns in utility stocks. And it’s what new Conservative Income Portfolio recommendation SCANA Corp (NYSE: SCG) is locked in to deliver at least to the end of the decade.

Distribution growth shapes returns for master limited partnerships (MLPs).