In the last few years, Master Limited Partnerships (MLPs), have been a great investment tool for the income driven investor. One of the great things about an MLP is that
One of the most crucial criteria that must be met in order for a partnership to be legally classified as an MLP is that the partnership must derive most (~90%) of its cash flows from real estate, natural resources and commodities.
These five stocks have some of the highest yields within their respected sectors.
Boardwalk Pipeline Partners, LP (BWP) - Headquartered in Houston, Texas and according to their website,
the company is a limited partnership engaged, through its subsidiaries, in the transportation, storage and gathering of natural gas. Boardwalk operates approximately 14,300 miles of pipeline and underground storage fields with aggregate working gas capacity of approximately 186 Bcf.
BWP currently yields 7.6% ($2.13) and trades at P/E ratio of 27.39, making the stock affordable at these levels. Investors should note the company has been on quite the EPS streak surpassing analysts' estimates the last three quarters by an average of 8.166%. Analysts are expecting Boardwalk Pipeline to earn $0.26/share on $281.08 million in revenue for the June quarter, and I expect those numbers to right in line for BWP.
Chesapeake Midstream Partners, LP (CHKM) - Founded in 2008 and based in Oklahoma City, Oklahoma, CHKM engages in the operation, development and acquisition of natural gas, natural gas liquids and other midstream energy assets primarily in the United States. The company currently operates 3,629 miles of gathering pipelines to service the nearly 5,000 natural gas wells under the management of CHKM.
Chesapeake Midstream Partners, LP currently yields 6.1% ($1.62) and trades at a P/E ratio of 19.21 making it pretty inexpensive when compared to the other four MLP stocks I've featured. On May 8th, CHKM announced first quarter earnings along with a quarterly dividend increase of $0.055/share, bringing the new quarterly distribution to $0.405/share.
Energy Transfer Partners, LP (ETP) - Founded in 2002 and headquartered in Dallas, Texas, Energy Transfer Partners operates within the natural gas midstream storage and facilitation business. The company's primary focus within the midstream space is to facilitate the treatment, processing and marketing of natural gas in properties throughout Texas, West Virginia, New Mexico, Colorado, and Utah.
ETP currently yields 7.5% ($3.58) and trades at a P/E ratio of 41.88, which makes the stock a bit pricey, however, the yield in this case offsets the affordability. Investors should note ETP had a great quarter due largely in part to the sale of the company's propane business.
TC Pipelines, LP (TCP) - Founded in 1998 and based in Houston, Texas, TC Pipelines transports natural gas through the United States and the eastern portion of Canada. The company owns a 46.25% stake in the Great Lakes Gas Transmission Limited Partnership, which services markets in Minnesota, Michigan, Wisconsin and eastern segments of Canada.
TCP currently yields 7.4% ($3.08) and trades at a P/E ratio of 14.29 which is considered to be very inexpensive. Investors should note that TCP has increased its dividend by an average of 5% over the last 5 years even though EPS has been somewhat flat.
Williams Partners, LP (WPZ) - Founded in 2005, and based in Tulsa, Oklahoma, WPZ currently yields 5.5% ($3.11) and trades at a P/E ratio of 11.41, making the stock very cheap by most standards. Williams Partners engages in the transportation, gathering, treating, storage and processing of natural gas liquid fractionation and oil transportation solutions mainly in the United States. Investors should note that the company owns 13,900 miles of natural gas pipelines and crude oil facilitation properties supporting basins in Colorado, Wyoming, the Gulf of Mexico and Pennsylvania.
The last four quarters WPZ has surpassed analysts' estimates by an average of 17.98%, and the upcoming June quarter should be no different. The Street is expecting Williams Partners to earn $0.80/share on $2.02 billion in revenue; however, I can see the company posting a healthy beat of about $0.06/share on EPS and $0.15 billion - $0.60 billion on the revenue side.