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 dividend 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.
For other high dividend stocks to buy now, please read our article Best Dividend Stocks. Sorted in ascending order by their current dividend yield, below are the 7 best MLP stocks to buy now.
7 Best MLP Stocks to Buy Now: #7
Enviva Partners L.P. (NYSE:EVA)
Dividend Yield: 6.8%
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 year for the last 4 years, often increasing it every quarter. The most recent $0.77 quarterly payout amount was equivalent to a $3.08 annualized total payout and a 6.8% forward dividend yield. The rising dividends, combined with robust asset appreciation, have delivered a 40% total return in just the past 12 months. Eniviva Partners looks even better in the long term, having grown 112.5% in the last 3 years and 373.8% in the last 5.
7 Best MLP Stocks to Buy Now: #6
Enterprise Products Partners L.P. (NYSE:EPD)
Dividend Yield: 8.2%
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 stayed level at $0.44 per share for the first time in nearly two decades, before which the company maintained a 19 year streak of consecutive dividend increases. Annually, this amounts to a $1.76 payout and an 8.2% forward yield. Despite keeping its dividend the same in 2020, EPD still averages a 4.5% average annual dividend increase over the last 10 years.
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 early 2020 due to the economic crisis surrounding COVID-19, the company has recovered by 20% in the last month alone and is quickly regaining the value lost in March.
7 Best MLP Stocks to Buy Now: #5
Brookfield Property Partners L.P. (NASDAQ:BPY)
Dividend Yield: 8.4%
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 2020 was level with the previous year’s, but prior to this the company has consecutively increased its dividend for the last 6 years.
The current $0.33 quarterly payout corresponds to a $1.32 annual distribution and yields 8.4%. Regarding share price, over the last five years, Brookfield Property Partners has avoided volatility and stayed stable, managing to increase its dividend each year by an average of 4.6%. As of December 15, 2020, it trades at $15.81.
7 Best MLP Stocks to Buy Now: #4
Magellan Midstream Partners L.P. (NYSE:MMP)
Dividend Yield: 9.0%
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 $1.02 to $1.03 and has maintained this new rate for the whole of 2020. This new quarterly amount corresponds to a $4.12 annualized distribution and yields 9.0%, a rate likely to increase further if the company stays in line with its average annual dividend growth rate of 11% over the last 10 years.
The company suffered a significant pullback in March which hit a second time in the summer months, during which MMP saw its stock price decline by more than 30%. In these final 3 months of the year, however, the company has bounced back growing 6.68%, 8.37%, and 10.03% in October, November, and December, respectively.
7 Best MLP Stocks to Buy Now: #3
Westlake Chemical Partners L.P. (NYSE:WLKP)
Dividend Yield: 9.0%
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 December 2020, Westlake continued its quarterly dividend payout of $0.47 per share – a $1.88 annualized payout – and has grown its dividend 4.4% since last year.
The company’s current dividend yield is 9% and expected to increase in the new year. WLKP has kept an average 7.9% annual growth rate for its dividend, bringing income investors consistent and reliable profits to supplement its gradual capital appreciation.
7 Best MLP Stocks to Buy Now: #2
Delek Logistics Partners L.P. (NYSE:DKL)
Dividend Yield: 11.6%
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. The company has maintained a consistent upward trend for the last 5 years, growing its stock price by 10.6% in the trailing 12 months, outperforming its industry peers by nearly 26%.
The company has boosted its dividend amount every quarter since beginning distributions in 2013 – this corresponds to a 9.7% average annual dividend growth rate over the last 5 years, bringing the current distributions to $0.90 per share. In 2020, Delek Logistics has an annualized payout of $3.57 and an impressive dividend yield of 11.6%.
7 Best MLP Stocks to Buy Now: #1
Shell Midstream Partners L.P. (NYSE:SHLX)
Dividend Yield: 17.7%
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 nearly every quarter and averages an annual dividend growth rate of 13.1% over the last 3 years. The most recent $0.46 quarterly payout converts to a $1.84 annual payout and a whopping 17.7% forward dividend yield.
The share price is still recovering from a difficult economic blowback in April of 2020, having dropped 40.3% year to date (YTD). Its regrowth appears inconsistent but is absolutely present, having increased 11.3% in the last month alone.
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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.