Finding good yielding plays is getting harder these days. The market has a nice run so far in 2012, but I believe the sledding will be rougher for the rest of the year. High yielding MLP's with improving earnings prospects should be one sector that will hold up well should the market hit turbulence. One I like at these levels that yields over 8% is Calumet Specialty Products Partners (CLMT).
7 Reasons to pick up CLMT at around $24.50 a unit:
- It yields a robust 8.6% and dividend payouts have been raised roughly 20% over the last two years.
- Earnings are going in the right direction. CLMT earned 98 cents in FY2011, and analysts project $2.09 in earnings in FY2012 and $2.50 in FY2013.
- Insiders have been net buyers over the past six months.
- Consensus earnings estimates for FY2012 and FY2013 have improved significantly over the last month.
- Unlike most refiners, CLMT gets significant amount of its revenues from specialty products which have much higher margins and also do well in an expanding economy.
- This is the highest yielding play in billionaire manager David Tepper's portfolio and he holds a $26mm stake. In addition, crack spreads are much better than 2011 and improving.
- The stock was double these levels prior to the financial crisis. In addition, the stock is showing increasing technical strength and recently crossed its 200 day moving average (See Chart).