Monthly Summary: June 2021

Read Portfolio Notes ► View Strategy Tables ►

Updates

Portfolio Notes

CSX Corporation (CSX)

On June 4, 2021, CSX Corporation (NASDAQ: CSX) announced that its board of directors approved a 3-for-1 stock split to be distributed to shareholders as a stock dividend. Each shareholder of record at the close of business on June 18, 2021 would receive two additional shares of CSX common stock for each share held as of this record date. The new shares were distributed on June 28, 2021.

The regular, quarterly cash dividend of $0.28 per share payable on June 15, 2021 was not impacted by the stock split. Based on the current dividend rate, the post-split quarterly dividend on the company's common stock would be $0.093* per share.

*On a post-split basis, the dividend will be carried out six decimal places to most closely approximate the current dividend amount.

CSX is held in Miller/Howard Infrastructure.

Strategy Tables

Income-Equity Strategy*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	20	2


% of Holdings to Declare Dividend Increase YTD:	54
% Approx. Indicated Yield:	3.4

Portfolio Changes
Buys:	OKE: Our research suggests that OKE’s dividend should be secure at current oil prices. SBRA: Bought because of high yield and improving supply/demand balance as the COVID-19 pandemic recedes in the US, increasing demand and tenant financials, while COVID-19 building halts should curb supply. BK: Bought because of the company’s strong capital position, reflected in a 9.7% dividend increase and aggressive stock buyback plans, as well as its ability to restart core fee growth, improved sales, and increased client retention.
Increases:	BBY: Increased due to attractive yield and fewer competitive pressures, as compared to Target (TGT), as brick-and-mortar retailers reopen.
Sells:	C: Sold because of the company’s lack of clarity on the potential for dividend increases in their capital update following the Fed’s stress test. PFE: We believe that the dividend at PFE is secure, but earnings will shrink as COVID-19 vaccine sales decline. OGN: Sold spinout received from Merck (MRK) as a stock dividend. OGN does not fit the IE strategy.
Trims:	TGT: Trimmed low yielding position to reduce concentration risk and redeploy capital. MGA: Trimmed low yielding position to reduce concentration risk and redeploy capital. IPG: Trimmed to reduce concentration risk and redeploy capital.

Income-Equity Strategy (No MLPs)*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	19	2


% of Holdings to Declare Dividend Increase YTD:	51
% Approx. Indicated Yield:	3.3

Portfolio Changes
Buys:	OKE: Our research suggests that OKE’s dividend should be secure at current oil prices. SBRA: Bought because of high yield and improving supply/demand balance as the COVID-19 pandemic recedes in the US, increasing demand and tenant financials, while COVID-19 building halts should curb supply. BK: Bought because of the company’s strong capital position, reflected in a 9.7% dividend increase and aggressive stock buyback plans, as well as its ability to restart core fee growth, improved sales, and increased client retention.
Increases:	BBY: Increased due to attractive yield and fewer competitive pressures, as compared to Target (TGT), as brick-and-mortar retailers reopen.
Sells:	C: Sold because of the company’s lack of clarity on the potential for dividend increases in their capital update following the Fed’s stress test. PFE: We believe that the dividend at PFE is secure, but earnings will shrink as COVID-19 vaccine sales decline. OGN: Sold spinout received from Merck (MRK) as a stock dividend. OGN does not fit the IE strategy.
Trims:	TGT: Trimmed low yielding position to reduce concentration risk and redeploy capital. MGA: Trimmed low yielding position to reduce concentration risk and redeploy capital. IPG: Trimmed to reduce concentration risk and redeploy capital.

Infrastructure*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	19	1


% of Holdings to Declare Dividend Increase YTD:	49
% Approx. Indicated Yield:	2.9

Portfolio Changes
Buys:	NEP: NEP is a growth-oriented yieldco with a focus on contracted renewables with a current average life of 15 years and has 60 credit-quality counterparties. It is structured as a limited partner but taxed as a C-corp and sponsored by NextEra Energy (NEE), the largest wind and solar owner/developer in the world. It provides a healthy 3.7% dividend yield and expects 12-15% annual growth through at least 2024. We believe NEP is a conservative way to participate directly in renewable opportunities.
Increases:	None.
Sells:	None.
Trims:	MPC: Trimmed in order to reallocate into more attractive opportunities. MDU: Trimmed in order to reallocate into more attractive opportunities.

MLP Strategy*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	7	0


% of Holdings to Declare Dividend Increase YTD:	44
% Approx. Indicated Yield:	6.8

Portfolio Changes
Buys:	ENLC: ENLC trades at a higher free cash flow yield and lower EV/EBITDA multiple than recently exited and trimmed positions.
Increases:	None.
Sells:	WMB: Exited to reallocate to new idea.
Trims:	KMI: Trimmed to reallocate to new idea. TRGP: Trimmed to reallocate to new idea.

Drill Bit to Burner Tip^®*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	6	0


% of Holdings to Declare Dividend Increase YTD:	26
% Approx. Indicated Yield:	3.8

Portfolio Changes
Buys:	None.
Increases:	None.
Sells:	None.
Trims:	None.

Drill Bit to Burner Tip^® (No K-1s)*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	7	0


% of Holdings to Declare Dividend Increase YTD:	30
% Approx. Indicated Yield:	3.3

Portfolio Changes
Buys:	None.
Increases:	None.
Sells:	None.
Trims:	None.

Utilities Plus*

(Preliminary numbers)

As of June 30, 2021	YTD	MTD
Dividend Increases:	16	0


% of Holdings to Declare Dividend Increase YTD:	47
% Approx. Indicated Yield:	3.3

Portfolio Changes
Buys:	None.
Increases:	NEP: NEP is a growth-oriented yieldco with a focus on contracted renewables with a current average life of 15 years and has 60 credit-quality counterparties. It is structured as a limited partner but taxed as a C-corp and sponsored by NextEra Energy (NEE), the largest wind and solar owner/developer in the world. It provides a healthy 3.7% dividend yield and expects 12-15% annual growth through at least 2024. We believe NEP is a conservative way to participate directly in renewable opportunities. NEE: Added to our weight in NEE, the largest wind and solar owner/developer in the world.
Sells:	None.
Trims:	FTS: Trimmed in order to reallocate into more attractive opportunities. MDU: Trimmed in order to reallocate into more attractive opportunities. PPL: Trimmed in order to reallocate into more attractive opportunities.

* Representative account performance and yield are preliminary.

FOR INVESTMENT PROFESSIONAL USE ONLY.
This information is for your use only and may not be forwarded or distributed.

To receive a list of all recommendations for the previous year, please email compliance@mhinvest.com.

Top of Page ►

DISCLOSURE
Past performance is not indicative of future results.
Miller/Howard Investments (MHI) Strategy Performance is preliminary and based on a representative account from each strategy. The performance in this report is gross performance and does not reflect the deduction of investment management fees and other expenses.

Dividend yields shown for Miller/Howard portfolios exclude cash. Common stocks do not assure dividend payments. Dividends are paid only when declared by an issuer's board of directors and the amount of any dividend may vary over time. Dividend yield is only one component of performance and should not be the only consideration for investment.

Securities shown as Buys and Sells are being shown for informational purposes only. Buy and sell rationales are the expressed opinions of MHI's investment team. These securities should not be considered a recommendation to buy, sell or hold any of the securities and is not intended to imply that any one security listed above, or the portfolio as a whole, is appropriate for a particular client. There is no assurance that the securities purchased have remained or will remain in the portfolio or that securities sold have not been or will not be repurchased. To receive a list of all recommendations for the previous year, please email compliance@mhinvest.com.

The information and analyses shown are not intended as tax, legal or investment advice and may not be appropriate for your specific circumstances; accordingly, you should consult your own tax, legal, investment or other advisors, at both the outset of any transaction and on an ongoing basis, to determine such appropriateness. The views expressed here represent Miller/Howard Investments' views and are subject to change at any time. Nothing stated herein, including the mention of specific company names, should be construed as a recommendation to buy, hold, or sell any security, sector, or MLPs in general. The material may also contain forward-looking statements that involve risk and uncertainty, and there is no guarantee they will come to pass. It is not possible to invest directly in an index.

Past performance is not a guarantee of future results.

Risk Factors to Consider When Investing in Master Limited Partnerships (MLPs)

Cash distributions are not guaranteed and may fluctuate with the MLP's operating or business performance.
MLPs have a General Partner. Unit holders will have limited voting rights and do not own an interest in, vote with, or control the General Partner. The General Partner often cannot be removed without its own consent, and the General Partner has conflicts of interest and limited fiduciary responsibilities, which may permit it to favor its own interests to the detriment of unit holders.
The MLP may issue additional common units, diluting existing unit holders' interests.
Unit holders may be required to pay taxes on income from the MLP even if they do not receive cash distributions.
The IRS could reclassify the MLP as a taxable entity, which could reduce the cash available for distribution to unit holders.
If at any time the GP owns 85% or more of the issued and outstanding limited partner interests, the GP will have the right to purchase all of the limited partnership interests not held by the GP at a price that may be undesirable.

Tax Considerations of MLPs
The tax treatment for investors in MLPs is different than that of an investment in stock, including (a) the investor's share of the MLP's income, deductions and expenses are reported on Schedule K-1, not Form 1099, (b) because of the possibility of unrelated business taxable income, charitable remainder trusts should not invest in this strategy, and other non-taxable investors (such as ERISA and IRA accounts) should carefully consider whether to invest in this strategy, (c) investors may have to file income tax returns in states in which the MLP's do business and (d) MLP tax information is sent directly from the partnership, which generally has until April 15th to provide this information. You should discuss these and any other tax implications with your tax advisor.