7 Best MLP Stocks to Buy Now
By: Ned Piplovic,
Investors who enjoy the tax benefits of limited partnerships but would also like to have the liquidity of publicly traded securities at their disposal can have it all by investing in master limited partnerships (MLPs). However, what are the best MLP stocks to buy?
MLPs issue units that are publicly traded on security exchanges like stocks. MLPs have two types of partners – general partners, who are the company’s owners and manage the daily operations of the partnership, and limited partners, who provide the capital for a partnership’s operation by buying partnership units.
In addition to potential capital growth on the money that is invested, limited partners also receive distributions, which are equivalent to the dividends that are paid by a C corporation.
To identify the best MLP stocks to buy, let’s focus on evaluating MLPs from an extended horizon viewpoint. Under that criterion, we will define the best MLP stocks to buy as those with high yields and long records of rising annual or quarterly distributions.
Investors who are interested in doing their own research to find MLPs that better fit their own investment portfolio strategy can find a complete MLP Directory with filter and sort capabilities on DividendInvestor.com. The following seven MLPs were chosen based on the highest distribution yields and their record of consecutive distribution hikes. All the entries on this list — which happen to be from the Energy sector — yield more than 6% and have hiked their total annual distributions for at least four consecutive years.
Sorted in ascending order by their respective current dividend yield, below are the MLP stocks to buy now.
7 Best MLP Stocks to Buy Now: #7
Enterprise Products Partners L.P. (NYSE:EPD)
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and petroleum products. The quarterly dividend payout amount is set to increase 0.6% from the previous $0.4425 payout amount to a $0.445 distribution for the next round of dividends in mid-February. This new amount converts to a $1.75 annualized payout and a 6.15% forward dividend yield, which is in line with the company’s own five-year average.
Enterprise Products Partners has maintained an average annual growth rate of 6.4% over the past two decades and has advanced its total annual distribution by 250% over that period. While experiencing a double-digit-percentage decline in mid-2019, EPD’s share price has managed to recover most of those these. When combined with its dividend income payouts, EPD has produced 13.7% total return over the trailing 12 months. The total returns over the past three years were nearly 25%.
7 Best MLP Stocks to Buy Now: #6
Magellan Midstream Partners L.P. (NYSE:MMP)
Magellan Midstream Partners engages in the transportation, storage and distribution of refined petroleum products and crude oil in the United States. The company boosted its quarterly dividend payout from $1.0125 to $1.02 for its most recent distribution in Nov. 2019. This new quarterly amount corresponds to a $4.08 annualized distribution and yields 6.3%, which is more than 20% higher than Magellan’s own 5.2% five-year average.
After a fourth-quarter 2019 pullback, the share price was able to reverse most of those losses and has gained more than 10% since the end of Nov. 2019 to deliver a small one-year gain. This stock’s asset appreciation has delivered nearly half of its total gain of 12% over the trailing 12-month period. The total return on shareholders’ investment was significantly higher than the 2.2% return over the past three years.
7 Best MLP Stocks to Buy Now: #5
Brookfield Property Partners L.P. (NASDAQ:BPY)
Brookfield Property Partners L.P. owns and manages approximately $85 billion in real estate assets. In addition to its portfolio of office and retail assets, the company also has interests in multifamily, logistics, hospitality, self-storage, student housing and manufactured housing assets. The $0.33 quarterly payout in 2019 was nearly 5% higher than in the previous year. After boosting its quarterly payout at the beginning of each of the past five years, the company should declare a similar dividend boost for its February distribution.
The current $0.33 quarterly payout corresponds to a $1.32 annual distribution and yields nearly 7%. This is almost 17% above Brookfield’s own 6% average yield over the past five years. While asset depreciation over the past five years has contributed to the dividend yield increase, the share price has delivered positive gains and contributed more than half of the 15.4% total returns over the trailing year.
7 Best MLP Stocks to Buy Now: #4
Enviva Partners L.P. (NYSE:EVA)
Based in Bethesda, Maryland and founded in 2013, Enviva produces and supplies utility-grade wood pellets that are used as fuel for large-scale electric power generators that are operated by utility companies in the United Kingdom and in other European markets.
Enviva has boosted its dividend payout every quarter for the past 17 consecutive periods. The most recent $0.67 quarterly payout amount was equivalent to a $2.68 annualized total payout and a 7.2% forward dividend yield. Investors should expect another quarterly dividend hike for the upcoming distributions in Feb. 2020. The rising dividends, combined with robust asset appreciation, have delivered a 35% total return in just the past 12 months. Longer term returns were even better because they were 61% for the three-year period and 122% since the onset of dividend payouts in 2013.
7 Best MLP Stocks to Buy Now: #3
Westlake Chemical Partners L.P. (NYSE:WLKP)
Westlake owns and operates ethylene production facilities and related assets, which primarily convert ethane into ethylene, in the United States. In addition to ethylene, Westlake also sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline and hydrogen. In Nov. 2019, Westlake increased its quarterly dividend 1.5% over the previous period to $0.465, which corresponds to a $1.86 annual payout and a 7.6% yield.
This most recent dividend escalation marked Westlake’s 20th consecutive dividend boost. This advancement corresponds to an average growth rate of 2.8% each quarter or 14% per year. The rising share price has accompanied the expanding dividend payouts to produce a total return of 14.5% over the past year as well as a total gain of nearly 40% over the past three years.
7 Best MLP Stocks to Buy Now: #2
Shell Midstream Partners L.P. (NYSE:SHLX)
Shell Midstream Partners owns and operates oil pipelines, storage terminals and other midstream assets for transportation of onshore and offshore crude oil production to the Gulf Coast and Midwest refining markets.
The company has boosted its total dividend payout every year since its foundation in 2014. Furthermore, Shell Midstream Partners has hiked its dividend payout every quarter at an average growth rate of 5%, which is more than 20% per year. The most recent $0.445 quarterly payout converts to a $1.78 annual payout and a 7.94% forward dividend yield.
The share price hit its five year low of less than $17 in late 2018. However, a trend reversal in December 2018 delivered capital gains that reversed the losses over the last three and five years. Then, these gains combined with rising dividend distributions to produce a total gain of nearly 28% over the past 12 months.
7 Best MLP Stocks to Buy Now: #1
Delek Logistics Partners L.P. (NYSE:DKL)
Delek Logistics Partners, L.P. owns and operates logistics and marketing assets for the transportation and storage of crude oil, as well as intermediate and refined products. While starting off the trailing five-year period with a slow decline, Delek’s share price reversed and supported the ascending dividend distributions to deliver robust total returns over the past year.
The company has boosted its dividend amount every period since beginning distributions 27 quarters ago in 2013. The most recent boost in Nov. 2019 increased the quarterly distribution amount by 3.5%. That new quarterly payout corresponds to a $3.52 annualized distribution and a 10.6% forward dividend yield. These distributions have delivered nearly half of the company’s total returns of 24% over the trailing one-year period.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.