It seems like an opportune time to revisit a few high quality and high yielding MLPs. Over the past few months, many investors have turned away from high yielding stocks because of the uncertainty over the tax regime for 2013. Although MLP taxation was not part of the Fiscal Cliff, investors have sold these companies because of the fiscal uncertainty created by Congress. This could give investors a chance to purchase these high quality companies at a good price. Investors also need to be aware of the special tax treatment of MLPs and their distributions shareholders. Both of the MLPs listed here yield at least 5.15% and have traded lower during the past three months, as the Fiscal Cliff has pressured the markets. This list is meant as a base for further research.
NGLS Dividend Yield data by YCharts
Targa Resources Partners (NGLS)
Market Cap: $3.5 Billion
Dividend Yield: 7.09%
Targa is an MLP, which operates in the Continental United States, with a large presence in Texas and Louisiana. The company is pursuing a change in its revenue structure, as it currently receives about 45% of its revenue from fee based contracts, Targa wants to increase this percentage to a range of 55%-65% by 2014 and maintain this percentage thereafter. Targa has grown its distribution to shareholders at a CAGR of 10% since the beginning of 2010. Additionally, the company plans on increasing distributions by 10-12% in 2013. Targa is planning to spend more than $1.9 Billion in organic capex through 2014. The stock is up less than 1% over the past 52 weeks, and is down by approximately 9% over the past three months.
Enterprise Product Partners LP (EPD)
Market Cap: $47 Billion
Dividend Yield: 5.15%
Enterprise Product Partners is one of the largest MLPs in the United States. The company 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 2012, EPD has increased distribution rates to shareholders at a CAGR of 7.5%. This shows that the company is committed to increasing distributions to shareholders over the long term. The stock traded down by approximately 3% over the past three months. This is definitely a company worth further research.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.