If You Like Earning Steady Income, There's No Better Business Than This

"We've had a good turnout with them," said Sue Moore. "It upped our occupancy."

Sue Moore runs a Super 8 Motel in Bowling Green, Missouri. The recession has been hard on some areas of the Midwest, but in Bowling Green, things have held up well. A nearby construction project is the reason. Nearly 1,000 workers have been holed up in Bowling Green... filling up the motels, booking up the restaurants, and keeping the waitresses busy at the local diners.

The contractors are working on a project to lay a pipeline across America. The pipeline is 42 inches in diameter and – when finished – will run 2,053 miles from Colorado to New Jersey. This month, the workers will complete the Midwest section of the pipeline and move away from Bowling Green. 

They call this pipeline "Rex" for Rockies Express. It will be the largest natural gas pipeline in America... And at a cost of over $6 billion, it is one of the most expensive natural gas infrastructure projects ever undertaken. 

The western section of the pipeline is already operating. Now the Ohio section is complete, gas will start running across the Midwest, too. Construction on the final leg of the project – the piece from Ohio to New Jersey – will begin soon.

The Rockies Express will carry between 11.5 billion and 2 billion cubic feet of gas per day. According to the owners, there was so much demand for this pipeline, it will run at full capacity, immediately. 

Pipeline construction is a major headache, but once you've completed the project, there's no better business... especially if you like earning a steady income stream. Here's why:

There's almost no cost to run Rex. It needs almost no maintenance or labor. And it'll do its job for the next 100 years. Rex doesn't care about recessions or wars. Buried underground, your investment is completely safe. 

And Rex will always be full, so it'll keep cranking out cash flow. There's a massive surplus of gas in Wyoming and Colorado. There's a shortage of gas in the cities of the Northeast and the Midwest. There's no competition. Rex is fully subscribed under long-term contracts... even though it's still under construction. 

The government will set the tariffs for transporting gas in the Rex pipeline. This is a good thing. The government sets the tariffs high to make businesses undertake these costly construction projects. Price stability is another benefit of the government's regulation. Cash flows from Rex will be so steady, they'll resemble bond coupons.

In sum, Rex is a perfect investment for the investor who wants to earn 10% a year on his money without taking big risks. Unfortunately, you can't invest directly in Rex... it's owned by a syndicate of the biggest energy companies in the U.S. But it is easy to invest in pipelines with similar investment characteristics to Rex. 

The bear market trimmed most pipeline stock prices by over 50%. The Alerian MLP index is an index of the 50 largest pipeline companies. The index yields 10.5% right now, but it's easy to find individual pipeline companies with yields as high as 15%. Click here for a list of the pipeline companies in the index.

Good investing, 

Tom

P.S. We own the three best pipeline companies in my newsletter, The 12% Letter... including the company that owns the majority of Rex. This company is a $21 billion portfolio of the best pipeline assets in America, and it's paying a 9% dividend. If you like the sound of pipeline investing for earning income, you should check it out. Click here to learn more about The 12% Letter.