Magellan Midstream Partners (MMP) guidance from its recent earnings report slightly disappointed investors. The stock has pulled back some since then and offers an attractive entry point for long term investors seeking yield and solid dividend growth as well.
Key recent highlights from Magellan:
- The company sees stable storage lease rates at the Cushing hub as well as long term opportunity there as more volume comes through the hub.
- In its recent earnings report, revenues rose 11% Y/Y to $493mm.
- The company raised its dividend 3% Q/Q and it is now up 9% Y/Y as the company continues reward its shareholders seeking income.
Magellan Midstream Partners (MMP) - "Magellan Midstream Partners, L.P. engages in the transportation, storage, and distribution of petroleum products in the United States". (Business Description from Yahoo Finance)
4 reasons Magellan is a solid value at under $70 a share:
- The stock yields almost 5 percent (4.8%) and has grown its dividend payout in a consistent manner by approximately 80% over the last seven years.
- The company has done a great job in producing cash flow. MMP grew operating cash flow by around 120% from FY2009 to FY2011.
- Credit Suisse recently raised its target price to $77 from $72 a share and the median analysts' price target on the stock is $75.
- The company has beat or met earnings estimates the last six quarters and consensus estimates for FY2013 have risen nicely over the last two months. Analysts also expect 10% revenue growth in FY2012.