Over the last few years Master Limited Partnerships (MLPs) have been some of the best income-driven investments the market has to offer. On that note, I wanted to examine two MLPs yielding at least 4.00% that are expected to report quarterly EPS results on August 2nd.
Genesis Energy
Genesis Energy, L.P. (GEL) trades in a 52-week range of $20.85 (52-week low) and $33.81 (52-week high), and closed trading at $30.36/share on Wednesday as the company prepared to announce its quarterly EPS numbers on August 2nd. Analysts are expecting GEL to earn $0.24/share on revenue of $993.34 million for the June quarter, which is roughly $0.05/share, lower than expectations from the same year-ago period.
The last four quarters have been a bit rocky to say least with regard to Genesis Energy. They've consisted of two misses, one beat and one in-line report during the March 2012 quarter. Even though the EPS trends would deter plenty of growth investors, there is one catalyst attracting plenty of income investors and that is the company's yield. Genesis Energy currently yields 6.00% ($1.84), and has increased its dividend every quarter since June 2005.
Sunoco Logistics Partners
Sunoco Logistics Partners, L.P. (SXL) trades in a 52-week range of $24.40 (52-week low) and $42.11 (52-week high), and closed trading at $40.61/share on Wednesday as the company prepared to announce its quarterly EPS numbers on August 2nd. Analysts are expecting SXL to earn $0.71/share on revenue of $2.99 billion for the June quarter, which is roughly $0.28/share higher than expectations from the same year-ago period.
Potential growth investors looking to establish a position in Sunoco Logistics should certainly consider the company's recent EPS trends over the last four quarters as the company has performed very well. In three out of the last four quarters, we've seen an average surprise of 48.10%, with the only anomaly coming during the December 2011 quarter when the company missed estimates by 7.70%. Potential Income investors may consider the EPS as a secondary catalyst, but for them the primary catalyst is SXL's current yield of 4.30% ($1.71).
Final Analysis
From an income standpoint, I like the fact both companies continuously increase their quarterly distributions. From a growth standpoint, both companies stand to surpass analyst estimates for the quarter in terms of EPS, which could be a positive variable during the second of the year. I'd use income as a primary objective followed by growth because the yields are very attractive and for those of you who like to reinvest your dividends like I do, there is certainly an opportunity here. An over position should be established from a conservative standpoint and that position should be added to prior to the distribution date.
Disclosure: I am long SXL.
