​3 High-Yield MLPs

MoneyShow  |

These three high-yield MLPs have dividend yields ranging from 5% to 7%. Plus, their fundamentals have remained healthy during the current downturn, which means their dividends are sustainable, even at $50 oil, explains Bob Ciura, contributing editor to Wyatt Research’s Daily Profit.

Investors interested in dividend income should take a closer look at high-quality high yield MLPs like Magellan Midstream Partners (MMP), Enterprise Products Partners (EPD) and Buckeye Partners (BPL).

Magellan, Enterprise Products, and Buckeye Partners have all increased their dividends for more than 10 years in a row. These years include the Great Recession of 2007-2008, as well as the current downturn.

Investors might be reluctant to buy MLPs, and who could argue? Many MLPs were ravaged when oil and gas prices fell from 2014 to 2016.

Several MLPs had to cut their dividends to survive. Some suspended their distribution payments altogether. A few ended up in bankruptcy.

However, it is important to remember that the hardest-hit MLPs were in the upstream segment of the oil and gas sector. Upstream refers to exploration and production activities, which are highly reliant on the price of the commodity.

Magellan, Enterprise Products, and Buckeye are all midstream MLPs.

This means they operate oil and gas storage and transportation assets, such as pipelines and terminals. Magellan owns 9,700 miles of refined products pipeline, along with 80 terminals.

Enterprise Products is an industry goliath. It has a massive network of assets, which includes nearly 50,000 miles of natural gas, natural gas liquids, crude oil and refined products pipelines. It also has more than 250 million barrels of combined storage capacity.

Lastly, Buckeye Partners’ assets include 6,000 miles of pipelines and over 100 terminals. These facilities gave an overall capacity of 55 million barrels.

The major difference between midstream and upstream companies is that midstream companies operate more like toll roads . . . they collect fees based on volumes. Most of their revenues are not based on commodity prices.

Only a small portion of businesses of these high yield MLPs are devoted to activities that are reliant on a high price of oil and gas. This makes them heavily insulated against declines in commodity prices, and it is why all of them continued to raise their dividends over the past three years.

These three high yield MLPs are able to cover their hefty distributions. Magellan has a 5% current yield, while Enterprise Products and Buckeye Partners yield 6% and 7.7%, respectively.

Not only do all three MLPs have high dividend yields, but they raise their distributions on an annual basis. Their consistent dividend growth is thanks to their high cash flow.

Bob Ciura is contributing editor of Wyatt Investment Research.

Subscribe to Wyatt Research's Daily Profit here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


Discover: Trending Events

United Nations
EU Parliament
Humanity 2.0
World Economic Forum

Companies

Symbol Name Price Change % Volume
MMP Magellan Midstream Partners L.P. Limited Partnership 60.80 0.09 0.15 1,461,285 Trade
EPD Enterprise Products Partners L.P. 26.22 0.13 0.50 4,610,852 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

Blockchain in Healthcare - Discussion at the EU Parliament

From the recent Blockchain For Europe Summit in Brussels: Panel on Digital Health - How Blockchain technology can make health care systems more patient-centric and sustainable