13 Large-Cap MLPs For Defensive Investors

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Includes: BPL, BWP, CMLP, EEP, EPD, ETP, KMP, MMP, MWE, NRP, NS, PAA, WPZ
by: Insider Monkey

For many investors, publicly traded Master Limited Partnerships (MLPs) can be valuable tools for diversification. As partnerships, MLPs are subject to special tax considerations and avoid federal and state corporate income taxes. Hence, their “distributions” to investors are partially or entirely tax-deferred. Most MLPs are high yielders and increase their distributions to investors each quarter, achieving a consistent dividend growth for several years. However, investing in MLPs can be tricky due to the disadvantages of holding them in tax-deferred accounts. Investors should consult their tax advisors before adding MLPs to their portfolios.

Defensive investors like high dividend yielding stocks with long records of increasing payments. We believe MLPs are attractive options for conservative investors that seek downside protection. For such investors, we provided a list of 13 large cap MLP stocks with high dividend yields. The market data are sourced from Fidelity. All companies in this list have annualized dividend yields of at least 5%. These stocks also have market capitalizations above $3 billion and positive average dividend growth over the past 5 years.

Company

Ticker

Dividend Yield

5 Year Dividend Growth

YTD Return

Inergy LP

NRGY

10.22%

4.90%

-23.61%

Energy Transfer Partners

ETP

7.80%

3.57%

-6.68%

NuStar Energy

NS

7.75%

3.66%

-12.77%

Boardwalk Pipeline Partners

BWP

7.38%

5.69%

-2.92%

Natural Resource Partners

NRP

7.31%

5.29%

-3.06%

Enbridge Energy Partners

EEP

7.12%

2.86%

2.68%

Buckeye Partners

BPL

6.16%

5.49%

4.54%

Kinder Morgan Energy Partners

KMP

6.10%

7.45%

15.23%

Plains All American Pipeline

PAA

6.01%

5.82%

12.12%

Markwest Energy Partners

MWE

5.79%

8.52%

23.41%

Enterprise Product Partners

EPD

5.46%

5.89%

13.94%

Williams Partners LP

WPZ

5.15%

10.68%

31.27%

Magellan Midstream Partners

MMP

5.00%

6.28%

19.53%

AVERAGE

6.71%

5.85%

5.67%

Click to enlarge

The average dividend yield of the 13 MLP stocks on our list is 6.71%, while their 5-year average dividend growth is 5.85% on average. Since the beginning of 2011, these stocks returned 5.67% vs. 1.23% for the SPY.

Inergy LP (NRGY): Inergy LP is a US-based energy partnership distributing propane in the United States. NRGY lost -23.61% since the beginning of this year and has a 10.22% dividend yield. In the past 5 years, NRGY increased its dividend payments by 4.90% annually. The stock recently traded at $27.60 and has a market cap of $3.62B. Jean-Marie Eveillard First Eagle holds the largest NRGY position among the 300+ funds we are tracking (see Jean Marie Eveillard’s top stock picks here).

Energy Transfer Partners (NYSE:ETP): Energy Transfer Partners is a limited partnership that operates within the natural gas transportation business in the United States. ETP lost -6.68% year-to-date and the stock now has a 7.80% dividend yield. In the past 5 years, ETP increased its dividend payments by 3.57% annually. The stock recently traded at $45.85 and has a market cap of $9.59B. Jim Simons is the most prominent ETP investor (check out Jim Simons’ favorite stocks).

NuStar Energy (NYSE:NS): NuStar Energy is an American partnership that operates petroleum terminals and provides petroleum transportation services. NS lost -12.77% in 2011 and the stock now has a high dividend yield of 7.75%. In the past 5 years, NS increased its dividend payments by 3.66% annually. The stock recently traded at $56.54 and has a market cap of $3.65B. Jean-Marie Eveillard is among NS investors.

Boardwalk Pipeline Partners (NYSE:BWP): Boardwalk Pipeline Partners is an American energy partnership that provides natural gas transportation and storage services in the United States. BWP lost -2.92% since the beginning of this year and the stock now has a 7.38% dividend yield. In the past 5 years, BWP increased its dividend payments by 5.69% annually. The stock recently traded at $28.61 and has a market cap of $5.68B. Jim Simons and Chuck Royce are prominent BWP investors.

Natural Resource Partners (NYSE:NRP): Natural Resource Partners is a limited partnership that owns and manages coal regions in the United States. NRP lost -3.06% since the beginning of this year and the stock now has a 7.31% dividend yield. In the past 5 years, NRP increased its dividend payments by 5.29% annually. The stock recently traded at $30.09 and has a market cap of $3.19B. Chuck Royce had nearly $20 Million in NRP at the end of June 2011 (see Chuck Royce’s other stock holdings here).

Enbridge Energy Partners (NYSE:EEP): Enbridge Energy Partners is an American energy partnership providing crude oil, liquid petroleum and natural gas transportation and storage services in the United States. EEP returned 2.68% since the beginning of this year and it has a 7.12% dividend yield. In the past 5 years, EEP increased its dividend payments by 2.86% annually. The stock recently traded at $29.92 and has a market cap of $8.17B. Jim Simons is the most prominent EEP investor.

Buckeye Partners (NYSE:BPL): Buckeye Partners is a U.S. energy partnership that distributes petroleum in the United States. BPL returned 4.54% since the beginning of this year and it now has a 6.16% dividend. In the past 5 years, BPL increased its dividend payments by 5.49% annually. The stock recently traded at $66.60 and has a market cap of $6.19B. John Phelan’s MSD Capital and Michael Messner’s Seminole Capital are the most prominent BPL investors.

Kinder Morgan Energy Partners (NYSE:KMP): Kinder Morgan Energy Partners is a U.S. energy partnership providing energy products transportation and storage services. KMP has a 6.10% dividend yield and returned 15.23% since the beginning of this year. In the past 5 years, KMP increased its dividend payments by 7.45% annually. The stock recently traded at $76.12 and has a market cap of $25.35B. Michael Messner's Seminole Capital has the largest KMP position, holding more than $20 Million of the stock.

Plains All American Pipeline (NYSE:PAA): Plains All American Pipeline is a limited partnership that provides energy products transportation, storage and marketing services in the United States and Canada. PAA has a 6.01% dividend yield and gained 12.12% since the beginning of this year. In the past 5 years, PAA increased its dividend payments by 5.82% annually. The stock recently traded at $66.25 and has a market cap of $9.89B. Dmitry Balyasny holds nearly $40 Million of PAA.

Markwest Energy Partners (NYSE:MWE): Markwest Energy Partners is a U.S. partnership that provides natural gas transportation and processing services in the United States. MWE has a 5.79% dividend yield and gained 23.41% since the beginning of this year. In the past 5 years, MWE increased its dividend payments by 8.52% annually. The stock recently traded at $50.45 and has a market cap of $4.29B. Jim Simons is among MWE investors.

Enterprise Product Partners (NYSE:EPD): Enterprise Products Partners is an American partnership that distributes natural gas and crude oil in the United States, Canada and the Gulf of Mexico. EPD has a 5.46% dividend yield and returned 13.94% year-to-date. In the past 5 years, EPD increased its dividend payments by 5.89% annually. The stock recently traded at $44.87 and has a market cap of $39.27B. John Osterweis had nearly $70M in EPD at the end of June 2011.

Williams Partners (NYSE:WPZ): Williams Partners is an American energy partnership that engages in natural gas exploration, processing, storage and transportation. WPZ has a 5.15% dividend yield and gained 31.27% since the beginning of this year. In the past 5 years, WPZ raised its dividend payments by 10.68% annually. The stock recently traded at $58.02 and has a market cap of $16.85B. Jean-Marie Eveillard's First Eagle holds more than $85 Million of WPZ.

Magellan Midstream Partners (NYSE:MMP): Magellan Midstream Partners is a U.S. partnership that provides transportation and storage services for refined petroleum products. MMP has a 5.00% dividend yield and returned 19.53% since the beginning of this year. In the past 5 years, MMP increased its dividend payments by 6.28% annually. The stock recently traded at $64.08 and has a market cap of $7.22B. John Osterweis holds more than $60 Million of MMP.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.