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Master Limited Partnerships, otherwise known as MLPs, have obvious appeal for income investors. This is because MLPs widely offer yields of 5% or even higher in some cases.
This comprehensive article covers the 20 highest-yielding MLPs today.
High Yield MLP #20: Brookfield Infrastructure Partners LP (BIP)
- Distribution yield: 3.6%
Brookfield Infrastructure Partners is one of our top infrastructure stocks.
Brookfield Infrastructure Partners is one of the largest global owners and operators of infrastructure networks, which includes operations in sectors such as energy, water, freight, passengers, and data.
It is one of four publicly-traded listed partnerships that is operated by Brookfield Asset Management (BAM).
You can see an overview of the company’s 2021 operating highlights in the image below:
Source: Investor Presentation
Going forward, BIP will likely continue to deliver attractive FFO growth.
We expect 7.0% annual FFO-per-unit growth, while the MLP also offers a 3.6% yield after a recent 6% distribution hike.
Click here to download our most recent Sure Analysis report on BIP
High Yield MLP #19: Brookfield Renewable Partners LP (BEP)
- Distribution yield: 3.8%
Brookfield Renewable Partners L.P. operates one of the world’s largest portfolios of publicly traded renewable power assets. Its portfolio consists of about 27,000 megawatts of capacity in North America, South America, Europe, and Asia.
In early February, BEP reported (2/4/22) financial results for the fourth quarter of fiscal 2021. Its share of actual generation edged up 1% and its normalized funds from operations per unit grew 11%, from $0.37 to $0.41, thanks to strong asset availability and growth from recent acquisitions.
The company is resilient to the pandemic thanks to its diversified portfolio and the 14–year average duration of its contracts. It has more than 600 customers, with the largest non–government customer generating only 2% of the revenues of the company.
Click here to download our most recent Sure Analysis report on BEP
High Yield MLP #18: NextEra Energy Partners LP (NEP)
- Distribution yield: 4.0%
NextEra Energy Partners was formed in 2014 as Delaware Limited Partnership by NextEra Energy to own, operate, and acquire contracted clean energy projects with stable, long-term cash flows.
The company’s strategy is to capitalize on the energy industry’s favorable trends in North America of clean energy projects replacing uneconomic projects.
NextEra Energy Partners operates over 30 contracted renewable generation assets consisting of wind and solar projects in 12 states across the United States. The company also operates contracted natural gas pipelines in Texas which accounts for about a fifth of NextEra Energy Partners’ income.
Source: Investor Presentation
On January 25th, 2022 NextEra Energy released Q4 results. The partnership’s revenue increased by 9.4% to $232 million. Meanwhile, Q4 GAAP earnings per share came in at –$0.12, missing consensus estimates by $0.83.
Adjusted EBITDA and CAFD stood at $322M and $164M, respectively. FPL, NextEra’s largest business segment,
announced $0.28 earnings per share, up from $0.25 earnings per share in the same quarter last year. Meanwhile, the partnership expects Dec. 31. 2022 run rate for adjusted EBITDA of $1.775B to $1.975B and CAFD of $675 million to $765 million. NextEra Energy also continues to expect 12% to 15% per year growth through 2024.
Click here to download our most recent Sure Analysis report on NextEra Energy Partners
High Yield MLP #17: Lazard Ltd. (LAZ)
- Distribution yield: 5.3%
Lazard is one of the few MLPs that does not operate in the energy sector. Instead, is an international investment advisory company that traces its history to 1848.
The company has two business segments that are Financial Advisory and Asset Management. The Financial Advisory business includes M&A, debt restructuring, capital raising, and other advisory business. The Asset Management business is about 80% equities and focuses primarily on institutional clients.
You can see the highlights of the company’s 2021 performance in the image below:
Source: Investor Presentation
Click here to download our most recent Sure Analysis report on Lazard
High Yield MLP #16: Genesis Energy LP (GEL)
- Distribution yield: 5.5%
Genesis Energy is a diversified midstream energy limited partnership, which generates 48% of its operating income from offshore pipeline transportation, 29% from sodium minerals and sulfur services, 17% from onshore facilities and 6% from marine transportation.
Genesis has performed poorly in recent years, as it spent hefty amounts on capital expenses but the performance of its investments has been poor. As a result, it has posted negative free cash flows in five out of the last eight years. It has diluted its unit holders, as it has increased its unit count by 56% in the last nine years. Furthermore, it has markedly increased its debt load, with its interest expense currently exceeding its operating income.
The MLP cut its quarterly distribution by –73% in 2020, from $0.55 to $0.15. Still, units yield over 5% right now.
Click here to download our most recent Sure Analysis report on GEL
High Yield MLP #15: Cheniere Energy Partners LP (CQP)
- Distribution yield: 5.7%
Cheniere Energy Partners owns and operates regasification facilities at the Sabine Pass liquefied natural gas (LNG) terminal, which is in Cameron Parish, Louisiana, providing LNG to energy companies and utilities around the world.
LNG is natural gas in liquid form. It is a much cleaner fuel than the traditional fossil fuels and hence it is less impacted by the secular shift from fossil fuels to clean energy sources, which has accelerated lately. We expect LNG to continue to replace coal and thus play a major role in the transition to a cleaner energy landscape.
CQP went through a severe downturn last year, as the coronavirus crisis coincided with mild winter weather and thus caused record–low LNG prices. CQP is also facing a headwind due to the great increase in global LNG capacity in the last four years.
Nevertheless, despite the cancellation of many LNG cargos by its customers last year, CQP posted strong results thanks to the take–or–pay feature of its long–term contracts. The MLP grew its earnings–per–share 3% and raised its distribution 5%. It thus outperformed the vast majority of energy companies, which suffered from the pandemic.
Click here to download our most recent Sure Analysis report on CQP
High Yield MLP #14: Energy Transfer LP (ET)
- Distribution yield: 7.2%
Energy Transfer owns and operates one of the largest and most diversified portfolios of energy assets in the United States. Operations include natural gas transportation and storage along with crude oil, natural gas liquids and refined product transportation and storage totaling 83,000 miles of pipelines.
Energy Transfer also owns the Lake Charles LNG Company and stakes in Sunoco LP (SUN) and USA Compression Partners (USAC). On December 7th, 2021 Energy Transfer completed the acquisition of Enable Midstream Partners (ENBL) in a $7 billion stock–for–stock deal.
In mid–February, Energy Transfer reported (2/16/22) financial results for the fourth quarter of fiscal 2021. The company posted all–time high NGL transportation and fractionation volumes for a second quarter in a row and also benefited from higher commodity prices and the acquisition of Enable.
As a result, distributable cash flow grew 18% over the prior year’s quarter, from $1.36 billion to $1.60 billion. In the full year, Energy Transfer reduced its long–term debt by $6.3 billion and thus maintained a decent leverage ratio of 3.07.
Click here to download our most recent Sure Analysis report on ET
High Yield MLP #13: Plains All American Pipeline LP (PAA)
- Distribution yield: 7.2%
Plains All American Pipeline, L.P. is a midstream energy infrastructure provider. The company owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and natural gas liquids–producing basins at major market hubs in the United States and Canada.
On average, it handles more than 7 million barrels per day of crude oil and NGL through 18,370 miles of active pipelines and gathering systems. Plains All American generates around $40 billion in annual revenues and is based in Houston, Texas.
On February 9th, 2022, Plains All American reported its Q4 results for the period ending December 31st, 2021. Revenues came in at $12.95 billion, an increase of 117.2% year–over–year. The significant increase compared to last year was driven by global crude oil demand growing 5%, recovering back to near pre–COVID levels.
Click here to download our most recent Sure Analysis report on PAA
High Yield MLP #12: Alliance Resource Partners LP (ARLP)
- Distribution yield: 7.8%
Alliance Resource Partners is the second–largest coal producer in the eastern United States. Apart from its primary operations of producing and marketing coal to major domestic and international utility users, the company also owns both mineral and royalty interests in premier oil & gas regions, like the Permian, Anadarko, and Williston Basins.
Finally, the company provides terminal services, including the transportation and loading of coal and technology products and services. The company generates ~$1.3 billion in annual revenues and is based in Tulsa, Oklahoma.
On January 31st, 2022, Alliance Resource Partners reported its Q4–2021 results for the period ending December 31st, 2021. Revenues grew by 29.2% year-over-year to $473.5 million. This was the result of higher coal sales volumes and prices, which rose 12.7% and 5.6%, respectively, as well as significantly higher oil & gas prices, which increased by 93.1%.
Consequently, EPU jumped to $0.40, compared to $0.27 in the comparable period last year. This was despite the impact of inflationary cost pressures and increased labor costs as certain mines worked overtime to meet customer demand.
Click here to download our most recent Sure Analysis report on ARLP
High Yield MLP #11: Sunoco LP (SUN)
- Distribution yield: 8.0%
Sunoco distributes fuel products through its wholesale and retail business units. The wholesale unit purchases fuel products from refiners and sells those products to both its own and independently-owned dealers.
The retail unit operates stores where fuel products as well as other products such as convenience products and food are sold to customers.
Sunoco has an extremely high yield above 7%, but investors should generally be wary of yields this high. You can see our full list of high dividend stocks here.
Click here to download our most recent Sure Analysis report on Sunoco
High Yield MLP #10: Holly Energy Partners LP (HEP)
- Distribution yield: 8.0%
Holly Energy Partners (HEP) is responsible for transporting and storing crude oil and refined products. The company operates its own crude oil and petroleum pipelines and storage terminals in ten U.S. states, including Texas, Nevada and Washington. HEP also has refinery facilities in Utah and Kansas. Nearly all the revenues of HEP are fee–based.
On August 3rd, 2021, HEP announced its agreement to acquire the pipelines and terminal assets of Sinclair Transportation. The deal includes 1,200 miles of pipelines of crude oil and products, 8 product terminals and 2 crude terminals. HEP will pay $325 million and will issue 21 million of common units to pay for the deal, which is valued at $758 million.
Click here to download our most recent Sure Analysis report on HEP
High Yield MLP #9: Enterprise Products Partners LP (EPD)
- Distribution yield: 8.1%
Enterprise Products Partners was founded in 1968. It operates as an oil and gas storage and transportation company.
Enterprise Products has a tremendous asset base which consists of nearly 50,000 miles of natural gas, natural gas liquids, crude oil, and refined products pipelines. It also has storage capacity of more than 250 million barrels.
These assets collect fees based on materials transported and stored.
Continued growth is likely over the next several years. The company has over $2 billion in capital projects under construction.
Source: Investor Presentation
Click here to download our most recent Sure Analysis report on Enterprise Products Partners
High Yield MLP #8: Phillips 66 Partners LP (PSXP)
- Distribution yield: 8.8%
Phillips 66 Partners LP is a growth–oriented MLP, which owns, operates, develops and acquires primarily fee–based midstream assets. It generates its revenues by providing fee–based transportation, terminaling, storage and processing services to Phillips 66 and other customers. PSXP has a market capitalization of ~$9.6 billion.
Many of the assets of PSXP are connected to the operations of the refineries of Phillips 66. The MLP has signed long–
term contracts with Phillips 66 for transportation and storage of crude oil and refined products. As these contracts have minimum volume requirements, they secure reliable cash flows for PSXP.
Click here to download our most recent Sure Analysis report on PSXP
High Yield MLP #7: MPLX LP (MPLX)
- Distribution yield: 8.9%
MPLX, LP was formed by the Marathon Petroleum Corporation (MPC) in 2012.
The business operates in two segments: Logistics and Storage – which relates to crude oil and refined petroleum products – and Gathering and Processing – which relates to natural gas and natural gas liquids (NGLs).
The company’s Logistics and Storage segment has pipeline capacity of 4.7 million barrels per day.
You can see highlights from the company’s fourth-quarter performance in the image below:
Source: Investor Presentation
Click here to download our most recent Sure Analysis report on MPLX
High Yield MLP #6: Suburban Propane Partners LP (SPH)
- Distribution yield: 9.0%
Suburban Propane has been in operation since 1928. The partnership services most of the U.S. with propane and other energy sources, with propane making up around 90% of total revenue. It should generate about $1.3 billion in revenue this year. The partnership has over 3,200 full–time employees in 41 states, serving approximately 1 million customers.
Suburban reported first quarter earnings on February 3rd, 2022, and results were somewhat mixed. Total revenue soared 23% to $375 million, but that was mostly due to price increases. Retail propane gallons sold, which is a key volume metric for Suburban, declined 5.7% to 105 million gallons. This decline was due to the adverse impact of unseasonably warm temperatures on heat–related customer demand.
This was particularly true in December, which is of course a key month in the heating season for Suburban. The partnership said weather across its service areas were 16% warmer than normal, and 3% warmer than the year–ago period
Click here to download our most recent Sure Analysis report on SPH
High Yield MLP #5: Magellan Midstream Partners LP (MMP)
- Distribution yield: 9.0%
Magellan Midstream Partners has the longest pipeline system of refined products in the U.S., which is linked to nearly half of the total U.S. refining capacity.
Its network of assets includes 9,800 miles of pipeline, 54 storage terminals, and 47 million barrels of storage capacity. Refined products generate approximately 60% of its total operating income while crude oil and marine storage represents the remaining 40%.
MMP has a fee-based model; only ~10% of its operating income depends on commodity prices.
Source: Investor Presentation
Magellan has an excellent track record of steadily growing its distribution, and strong distribution safety. Magellan has increased its distribution 71 times since its initial public offering in 2001.
Click here to download our most recent Sure Analysis report on MMP
High Yield MLP #4: Shell Midstream Partners LP (SHLX)
- Distribution yield: 9.0%
Shell Midstream Partners was founded in 2014 and is headquartered in Houston, Texas. It owns, operates, develops and acquires pipelines and other midstream assets in the U.S. Its network of pipelines and terminals is used in the transportation and storage of crude oil, refined products and natural gas in the Gulf Coast and in the Midwest refining markets.
SHLX faced a strong headwind due to the pandemic last year. U.S. oil production decreased –7.4%, from 12.2 million barrels per day in 2019 to 11.3 million barrels per day in 2020, while the utilization of U.S. refineries plunged from 91% in 2019 to 79% in 2020. These were strong headwinds for SHLX, whose cash flows depend on the volumes of crude oil and refined products transported and stored through its network. However, volumes have begun to recover in recent months.
In late October, SHLX reported (10/29/21) financial results for the third quarter of fiscal 2021. Cash available for distribution plunged sequentially from $186 million to $122 million, due to Hurricane Ida, which forced many assets in the Gulf of Mexico to shut down. However, nearly all assets have returned to normal operation.
Click here to download our most recent Sure Analysis report on SHLX
High Yield MLP #3: USA Compression Partners LP (USAC)
- Distribution yield: 12.3%
USA Compression Partners, LP is one of the largest independent providers of gas compression services to the oil and gas industry. USAC was founded in 1998, completed its initial public offering in January 2013, and has paid a quarterly dividend continuously since the second quarter of 2013.
The partnership is active in several shale plays throughout the U.S., including the Utica, Marcellus, and Permian Basin. They focus primarily on infrastructure applications, including centralized high volume natural gas gathering systems and processing facilities, requiring large horsepower compression units. They design, operate, and maintain the compression units. USAC operate under fixed–fee, take–or–pay contracts, and does not have direct exposure to commodity prices.
In April 2018, USAC merged with CDM Compression. The merger provided better geographic diversification and access to areas where USAC was underrepresented. This merger essentially doubled the size of USAC.
Click here to download our most recent Sure Analysis report on USAC
High Yield MLP #2: KNOT Offshore Partners LP (KNOP)
- Distribution yield: 13.8%
KNOT Offshore Partners LP owns and operates shuttle tankers under long–term charters in the North Sea and Brazil. The company provides loading, transportation, and storage of crude oil under time charters and bareboat charters. The company’s sponsor, Knutsen NYK Offshore Tankers AS (Knutsen NYK) is responsible for identifying, ordering and dropping down ships to KNOP.
As of its latest filings, it had a fleet of sixteen shuttle tankers. As a result of its mostly passive operations, the company has only one employee and executive, its CEO Mr. Gary Chapman, who oversees the company and ensures that all tankers maximize their charter periods, maximizing their value through long–term contracts. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.
Click here to download our most recent Sure Analysis report on KNOP
High Yield MLP #1: Icahn Enterprises LP (IEP)
- Distribution yield: 14.6%
Icahn Enterprises L.P. operates in investment, energy, automotive, food packaging, metals, real estate and home fashion businesses in the United States and Internationally. The company’s Investment segment focuses on finding undervalued companies to allocate capital through its various private investment funds.
Significant positions include Cheniere Energy Inc. (LNG), Occidental Petroleum Corporation (OXY), Xerox Corporation (XRX), Newell Brands, Inc. (NWL), Hertz Global Holdings, Inc. (HTZ), Navistar International Corp. (NAV), and Cloudera, Inc. (CLDR). Some of its positions ultimately result in control or complete ownership of the target company.
Carl Icahn owns 100% of Icahn Enterprises GP, the general partner of Icahn Enterprises and Icahn Enterprises Holdings, and approximately 95% of Icahn Enterprises’ outstanding shares.
Click here to download our most recent Sure Analysis report on IEP
Final Thoughts on Highest Yielding MLPs Now
Income investors will find a lot to like about Master Limited Partnerships. Specifically, MLPs tend to have very high yields.
Of course, investors should always do their own research to understand the unique tax implications and risk factors of MLPs.
But for income investors primarily looking for high yields, these 20 MLPs may be attractive.
You may also be looking to invest in dividend growth stocks with high probabilities of continuing to raise their dividends each year into the future.
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This article was produced by Sure Dividend and syndicated by Wealthy Living.
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