MLPs - Part 9: Top 20 Relative Performance Vs. AMJ (JP Morgan Alerian MLP ETN)

| About: JPMorgan Alerian (AMJ)

Pipeline master limited partnerships are popular among equity income oriented investors.

The JP Morgan Alerian MLP ETN (NYSEARCA:AMJ) is probably the most popular packaged way to invest in MLPs. It has a trailing yield of 4.94%.

AMJ invests in the 50 largest MLPs, which are mostly pipelines, but it includes some other types as well, such as oil and gas exploration, coal mining, and retail propane distribution.

There are also other ETFs and ETNs that track one of the Alerian MLP indexes, focused purely on pipelines.

Investing in the individual pipeline MLPs is a potentially higher yield approach by avoidance of the management fees, and by selecting MLPs with higher yields than the packaged vehicles.

There are 14 of the top 20 MLPs by market-cap that have a higher yield than AMJ, 8 of which yield over 6%. Higher yield does not necessarily make them better choices, but some may be worth further study.

Good selection and sufficient diversification is, of course, necessary for the total return to turn out better than owning a full index in an ETN or ETF.

For those interested in owning individual pipeline MLPs, this current data may be helpful.

We identified the 20 largest dividend paying listed master limited partnerships, shown in this table:

Enterprise Products Partners LP EPD
Kinder Morgan Energy Partners LP KMP
Plains All American Pipeline LP PAA
Energy Transfer Partners LP ETP
Magellan Midstream Partners LP MMP
ONEOK Partners LP OKS
Energy Transfer Equity LP ETE
Enbridge Energy Partners LP EEP
MarkWest Energy Partners LP MWE
Williams Partners LP WPZ
Buckeye Partners LP BPL
El Paso Pipeline Partners LP EPB
NuStar Energy LP NS
Regency Energy Partners LP RGP
Targa Resources Partners LP NGLS
Sunoco Logistics Partners LP SXL
Copano Energy LLC CPNO
Boardwalk Pipeline Partners LP BWP
Western Gas Partners LP WES
Genesis Energy LP GEL
Click to enlarge

You can read a summary business description for each at our blog, which also provides a link to the MLP website.

The summary business descriptions on our blog, and the full business descriptions on the website and their SEC filings are important to understanding and comparing the businesses [e.g. where the pipelines are; how extensive they are; what they transport; and what additional business they conduct, such as processing and storage; and other issues].

We then produced weekly relative percentage performance charts from the 2009 U.S. stock market low through today by dividing the performance of each MLP by the performance of AMJ.

All of the charts begin at zero. The charts also show the 40-week moving average of the relative performance, as seen below:

Click to enlarge

Click to enlarge

Next we looked up the trailing yield for each, and the Wright Rating (liquidity, financial strength, profitability and growth) -- rating scale defined on our blog. Then we determined "A" whether the MLP outperformed AMJ since March 2009, "B" whether the relative performance was above its 40-week simple moving average, and "C" whether the direction of the 40-week moving average during 2012 is sloping up -- as shown in the table below.

SYMBOL YIELD RATING A B C
EPD 4.72 ABC10 x x x
KMP 5.53 ABC0 x x
PAA 5.01 ACC5 x x x
ETP 7.46 ACNN x
MMP 4.58 ACB3 x x x
OKS 4.38 ABB6 x x x
ETE 6.12 ADNN
EEP 6.83 ACDO x
MWE 4.83 ACNN x x x
WPZ 5.54 ABA12 x
BPL 7.10 ACD0
EPB 5.87 ACNN
NS 7.35 BBD0
RGP 7.38 LCNN x
NGLS 5.58 BBB11 x x x
SXL 4.16 BCA15 x x x
CPNO 6.29 BDNN x x
BWP 7.75 BBL0
WES 3.77 BANN x x x
GEL 5.50 BBL7 x x x
Click to enlarge

A = outperformed AMJ since March 2009

B = above 40-week moving average

C = positive slope of 40-week average in 2012

Last we captured charts showing the price, earnings and distributions for the past five years.

The earnings figures are part of the charts, but really aren't terribly useful, because like REITs, MLPs have high non-cash charges and are better evaluated in terms of cash flow. In our next article on MLPs on operations and valuation, we will provide cash flow data.

Click to enlarge

Click to enlarge

What you make of the data is up to you, but we are sure that for MLP interested investors, this is useful raw material.

We have produced a series of other articles on MLPs that can be accessed from this January 24, 2011 article: "MLPs -- Part 8: What to Own? ETFs, ETNs or Individual MLPs".

In Part 10 on MLP's, we will review the operational and valuation data for these top 20 MLPs.

We own AMJ and some other MLPs not identified in this article. We will probably add one or more of the individual MLP's discussed here to some regular taxable investment accounts.

Disclosure: QVM has positions in AMJ as of the creation date of this article (April 28, 2012).

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.