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Pembina Pipeline: A stagnant stock with a nice dividend

I want to continue to examine the dividend paying stocks that Andrew has bought to fund his retirement (Click here for Part 1 of the discussion). He holds 25 per cent of his portfolio in Pembina Pipeline Corp. and his objectives were to harvest growth and income from his assets. As a 65-year-old retiree, I assume he also wants to preserve capital.

PPL is offering a dividend yield of 6.1 per cent, which is is enticing to say the least. A review of the charts will provide greater insight into this heavy weight in Andrew's holdings.

The three-year chart is very similar to the three-year chart for Keyera Corp. that makes up 50 per cent of Andrew's portfolio - with one major difference. It has been moving sideways in a rangebound pattern since July of 2011. Not that moving sideways in a range is a bad thing but if one of your objectives is growth then you might want to consider trading within the range, if it's wide enough, to achieve your objectives.

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The six-month chart indicates that the range is very tight with support at $24.50 and resistance at $25.50. The tight range does offer a 4 per cent spread top to bottom so you will need good execution and diligent monitoring to capture the potential profits.

At the moment the MACD and RSI are both turning lower, suggesting that PPL will be pulling back from these levels.

The shares of PPL have been generous in the past and the dividend is attractive. The only missing element is a sustained uptrend. The uptrend line was broken as the stock started its range bound trading in July. The company is expected to report its third quarter on Oct. 31. Make sure to put that on your calendar. The forecast for 2011 is for lower earnings compared to 2010, with earnings growth expected to return in 2012.

PPL is in a holding pattern. A 6.1 per cent dividend yield makes it worth collecting the rent while waiting for some of their expansion projects to come on stream.

Make it a profitable day and happy capitalism!

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