Because of their tax advantages and high distribution rates, many investors are attracted towards MLPs. The Alerian MLP ETF (AMLP), which tracks a basket of MLP companies, is down just shy of 2% over the past year. The ETF yields approximately 6.6%. The below listed companies are all MLPs, have Market Capitalizations above $16 Billion and Dividend Yields of at least 5.2%. This list is meant as a base for further research.
KMP Dividend Yield data by YCharts
Kinder Morgan Energy Partners LP (KMP)
Market Cap: $29 Billion
Dividend Yield: 6.32%
Kinder Morgan Partners is one of the nation's largest MLPs. The company owns and operates over 29,000 miles of pipelines throughout the United States. The company transports about 1.9 million barrels of petroleum products per day. The company has a history of increasing distributions to shareholders significantly. In the last few years, the company has spent a large amount of money on acquisitions to help boost shareholder returns. The company has placed itself to have a successful 2013.
Enterprise Product Partners LP (EPD)
Market Cap: $45 Billion
Dividend Yield: 5.27%
Enterprise Product Partners is also one of the country's largest MLPs. The 5.4% yield is slightly less than that of its nearest competitors, however, the company has added stability given its immense and diverse asset base. The company boasts that it has over 21,000 miles in Natural Gas pipelines and over 17,000 miles of Natural Gas Liquids and Petrochemical pipelines. From 1999 through the end of Q3 this year, EPD has increased distribution rates to shareholders at a CAGR of 7.5%. Clearly, investors are fond of the commitment by management to be able to grow distributions year after year. EPD is well positioned for 2013.
Williams Partners LP (WPZ)
Market Cap: $16 Billion
Dividend Yield: 7.09%
While slightly smaller than its competitors in this article, Williams Partners makes up for the scale disadvantage with its large distributions to shareholders. The company has significant assets in and around the US portion of the Gulf of Mexico. The company has strong plans for the future as the midpoint of its guidance shows the company increasing distributions to shareholders from 2010-2014 at a CAGR of 37%. The company has a few new projects coming online in the near future, and there is plenty of reason to be excited by the prospects for WPZ in 2013.
Companies organized as MLPs are required to pay out a very significant portion of their cash from operations to shareholders. When filing income taxes, investors often need to file additional forms in order to have MLP distributions correctly assigned.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.