1. With the exception of SEP, all MLPs were credited with their calendar Q2-14 distributions in the spreadsheet below.
2. After years of writing that "growth sells at a discount" because it is the "two birds in the bush" while yield is "the bird in the hand" - I am very hesitant to write that now. The unit prices of the growth MLPs have boomed in 2014.
3. The change in the target prices of the growth MLPs is also booming. Notice the changes in the targets for EQM, MMP, OILT and SXL.
4. After years of being in the dog house, NS is on the way to recovery - and the change in the target price is showing that recovery. NS still sells at a low "yield + CAGR" when using a short term CAGR. But the CAGR projections are growing from zero to moderately anemic.
5. Do target prices lead market prices - or do market prices lead target prices? After years of watching, I still can not tell. The cynic in me wants to believe that market prices cause the analysts to change their targets - and change them quickly. But there are always a few exceptions where the targets are rising while the market prices are not. The academic in me wants to believe it is all about the change in the CAGR projections. The companies report their earnings - and based on that data, the market and the analysts are in step with each other in the changes in their growth projections.
6. Why have MLPs out performed in 2014? Here is my current thinking. REITs are doing even better than MLPs in 2014 - and REITs are interest rate sensitive. The yield on the ten year treasury has fallen in 2014 - so REITs have done well. There is also a decent correlation between MLPs and interest rates. So it is very probably than MLPs have out performed because interest rates have fallen.
7. No one knows where interest rates are headed. In recent years, it has been a decent bet to go against the consensus. And I believe that the consensus believes that interest rates can not fall much lower. I believe that too - but I believe it without much conviction.
8. So --- what should you do with "new money"? I would say to diversify. Be agnostic about the future direction of interest rates. For any REIT or MLP purchase - buy something that will tend to rise as the economy heats up and interest rates rise. Be "half right" about something.
The data:MLP Midstream 05-09-14
The consensus DCFs were last updated on 05-10-14. The CAGR projections were updated 4-09-14. Yields are based on the Q2-14 distribution. Under the 'year to date' header, the change in the distribution is the change since Q2-13 - or the change over the last twelve months. The change in the target, EPS, DCF and CAGR is the percentage change in the consensus 2014 projection that has happened since the beginning of the year.
|Company||Current||Distrib/||Q2 Dist||Dist/dcf||Dist/dcf||Year-to-Date Percent Change|
|Access Midstream Partners, L.P.||(NYSE:ACMP)||58.88||0.5750||3.91||67.65||65.53||4.07||6.10||6.21||12.34||5.59||23.13||0.00|
|American Midstream Partners, LP||(NYSE:AMID)||27.43||0.4625||6.74||97.88||80.43||1.29||4.71||0.00||7.32||-8.70||6.94||33.33|
|Atlas Pipeline Partners, L.P.||(NYSE:APL)||31.60||0.6200||7.85||95.38||87.32||-9.84||-6.31||-83.81||-14.46||-11.86||5.08||0.00|
|Blueknight Energy Partners, L.P.||(NASDAQ:BKEP)||8.99||0.1300||5.78||49.52||34.67||5.64||8.70||-35.85||0.00||1.94||10.64||0.00|
|Buckeye Partners, L.P.||(NYSE:BPL)||76.82||1.1000||5.73||96.07||87.48||8.18||11.28||1.08||8.63||-2.55||4.76||20.00|
|Boardwalk Pipeline Partners, LP||(NYSE:BWP)||15.92||0.1000||2.51||23.26||24.10||-37.62||-37.23||-31.40||-40.44||-13.13||-81.22||0.00|
|Crestwood Midstream Partners LP||(NYSE:CMLP)||21.92||0.4100||7.48||90.11||80.39||-11.93||-8.64||12.50||-5.30||-1.62||3.80||16.67|
|DCP Midstream Partners LP||(NYSE:DPM)||53.64||0.7450||5.56||91.41||82.09||6.53||9.49||-4.58||4.82||-0.91||6.43||0.00|
|El Paso Pipeline Partners, L.P.||(NYSE:EPB)||33.11||0.6500||7.85||100.78||94.89||-8.03||-4.42||-16.99||-12.00||0.00||4.84||8.70|
|Enbridge Energy Partners, L.P.||(NYSE:EEP)||29.55||0.5435||7.36||106.57||100.18||-1.07||2.57||-16.07||-3.16||-3.77||0.00||0.00|
|Enterprise Products Partners L.P.||(NYSE:EPD)||73.10||0.7100||3.89||67.94||64.99||10.26||12.40||3.02||9.81||0.72||5.97||0.00|
|Energy Transfer Partners, L.P.||(NYSE:ETP)||56.12||0.9350||6.66||80.78||84.81||-1.97||1.29||6.17||3.51||-1.28||4.62||8.11|
|EQT Midstream Partners, LP||(NYSE:EQM)||76.37||0.4900||2.57||61.44||52.27||29.90||31.57||1.91||35.54||2.90||32.43||1.05|
|Exterran Partners, L.P.||(EXLP)||28.85||0.5375||7.45||82.06||89.21||-4.57||-1.01||-17.46||7.00||0.38||3.86||0.00|
|Genesis Energy LP||(NYSE:GEL)||54.94||0.5500||4.00||86.61||66.47||4.51||6.60||-10.16||5.24||-13.61||10.55||0.00|
|Holly Energy Partners L.P.||(NYSE:HEP)||33.96||0.5075||5.98||91.44||82.86||5.04||8.18||-1.69||1.18||1.37||6.28||0.00|
|Kinder Morgan Energy Partners, L.P.||(NYSE:KMP)||73.92||1.3800||7.47||95.50||94.20||-8.36||-4.93||2.57||-4.95||0.87||6.15||-31.91|
|Magellan Midstream Partners LP||(NYSE:MMP)||78.14||0.6125||3.14||74.02||67.12||23.50||25.44||3.96||30.25||7.82||20.69||2.27|
|MarkWest Energy Partners, L.P.||(NYSE:MWE)||63.40||0.8700||5.49||81.88||74.68||-4.13||-1.50||-24.69||-7.49||-2.07||4.82||-19.54|
|Targa Resources Partners LP||(NYSE:NGLS)||61.63||0.7625||4.95||76.44||70.93||17.84||20.76||17.22||13.17||13.68||9.32||0.00|
|NuStar Energy L.P.||(NYSE:NS)||57.33||1.0950||7.64||113.77||98.21||12.43||16.73||3.76||20.88||1.05||0.00||0.00|
|ONEOK Partners, L.P.||(NYSE:OKS)||54.95||0.7450||5.42||90.03||82.09||4.37||7.20||2.97||4.34||-0.90||4.20||0.00|
|Oiltanking Partners, L.P.||(NYSE:OILT)||86.22||0.4950||2.30||57.23||54.10||38.91||40.50||-4.61||35.24||22.70||22.22||16.88|
|Plains All American Pipeline, L.P.||(NYSE:PAA)||57.17||0.6300||4.41||84.28||79.25||10.43||12.86||-8.24||2.35||-4.47||9.57||0.00|
|Regency Energy Partners LP||(NYSE:RGP)||27.67||0.4800||6.94||91.87||84.21||5.37||9.03||1.92||3.74||0.97||4.35||25.00|
|Spectra Energy Partners, LP||(NYSE:SEP)||52.42||0.5563||4.24||83.97||89.01||15.59||16.82||0.00||8.47||2.71||10.97||0.00|
|Sunoco Logistics Partners L.P.||(NYSE:SXL)||92.55||0.6950||3.00||62.75||59.15||22.62||24.46||-4.33||27.22||-3.90||21.40||1.12|
|TC PipeLines, LP||(NYSE:TCP)||49.95||0.8100||6.49||85.04||81.82||3.14||6.48||0.86||2.96||2.97||3.85||0.00|
|Tesoro Logistics LP||(NYSE:TLLP)||67.96||0.5900||3.47||80.00||73.07||29.84||32.10||-13.08||14.63||-3.91||20.41||0.00|
|Transmontaigne Partners L.P.||(NYSE:TLP)||47.63||0.6600||5.54||70.59||77.65||12.07||15.18||0.90||2.09||6.86||3.13||0.00|
|Western Gas Partners LP||(NYSE:WES)||70.10||0.6250||3.57||75.99||65.10||13.63||15.66||-3.03||7.15||7.87||15.74||0.00|
|Williams Partners L.P.||(NYSE:WPZ)||52.55||0.9045||6.88||95.21||93.97||3.32||6.88||-1.40||-0.77||6.44||6.73||0.00|
|EnLink Midstream Partners, LP||(NYSE:ENLK)||29.95||0.3600||4.81||92.90||76.60||8.51||11.12||-23.91||15.02||-1.27||9.09||0.00|
|Navios Maritime Partners L.P.||(NYSE:NMM)||18.42||0.4425||9.61||111.32||97.25||-3.66||0.97||-2.74||7.55||-9.14||0.00||0.00|
|Martin Midstream Partners LP||(NASDAQ:MMLP)||41.00||0.7875||7.68||93.75||77.78||-4.21||-0.53||-3.75||-0.90||-3.45||1.61||0.00|
|Teekay LNG Partners LP.||(NYSE:TGP)||43.48||0.6918||6.36||94.12||90.73||1.80||5.04||6.07||-1.07||-0.34||2.49||0.00|
|The (price change only) Alerian MLP index [the ^AMZ - which includes other MLP sectors] is 4.40% year to date.|
|The Alerian MLP index ETN AMJ is 5.65% and with dividends is 6.87%.|
|The S&P500 index ETF SPY is 1.77% and with dividends is 2.22%.|
|The Russell 2000 index ETF IWM is -4.62% and with dividend is -4.36%.|
|With the 10yr Treasury @ 2.63% & the sector average yield [on Q2 distrib's] at 5.58% - the spread is 295 bps.|
|With the JNK yielding 5.79% - spread to the Lehman U.S. High Yield Index is -22 bps.|
|With the HYG yielding 5.82% - the spread to the iBOXX High Yield Index is -24 bps.|
Historical MLP Month-End Yields:
|Jan 05: 5.97%||Feb: 6.10%||Mar: 6.07%||April: 6.15%||May: 6.16%||June: 6.03%|
|July 05: 5.87%||Aug: 6.10%||Sept: 6.07%||Oct : 6.45%||Nov: 6.79%||Dec: 6.92%|
|Jan 06: 6.56%||Feb: 6.68%||Mar: 6.56%||April: 6.68%||May: 6.76%||June: 6.82%|
|July 06: 6.61%||Aug: 6.65%||Sept: 6.70%||Oct : 6.58%||Nov: 6.44%||Dec: 6.28%|
|Jan 07: 6.05%||Feb: 5.96%||Mar: 5.77%||April: 5.54%||May: 5.54%||June: 5.43%|
|July 07: 5.44%||Aug: 6.05%||Sept: 6.26%||Oct : 6.20%||Nov: 6.64%||Dec: 6.70%|
|Jan 08: 6.79%||Feb: 6.79%||Mar: 7.43%||April: 7.08%||May: 7.44%||June: 7.56%|
|July 08: 8.16%||Aug: 8.45%||Sept: 10.76%||Oct : 11.73%||Nov: 16.53%||Dec: 19.50%|
|Jan 09: 14.76%||Feb: 14.54%||Mar: 13.90%||April: 14.66%||May: 9.80%||June: 9.59%|
|July 09: 8.39%||Aug: 8.61%||Sept: 7.96%||Oct : 7.84%||Nov: 7.62%||Dec: 7.13%|
|Jan 10: 6.64%||Feb: 6.50%||Mar: 6.34%||April: 6.23%||May: 6.71%||June: 6.27%|
|July 10: 5.85%||Aug: 6.14%||Sept: 5.89%||Oct : 6.14%*||Nov: 6.00%||Dec: 5.79%|
|Jan 11: 5.87%||Feb: 5.62%||Mar: 5.65%||April: 5.59%||May: 5.95%||June: 5.90%|
|July 11: 6.21%||Aug: 6.73%||Sept: 7.10%**||Oct : 6.51%||Nov: 6.80%||Dec: 6.45%|
|Jan 12: 6.45%||Feb: 6.43%||Mar: 6.43%||April: 6.42%||May: 7.26%||June: 7.06%|
|July 12: 6.81%||Aug: 6.87%||Sept: 6.75%||Oct : 6.79%||Nov: 7.08%||Dec: 7.31%|
|Jan 13: x.xx%||Feb: x.xx%||Mar: x.xx%||April: x.xx%||May: x.xx%||June: 6.14%|
|July 13: 6.18%||Aug: 6.51%||Sept: 6.39%||Oct : 6.34%||Nov: 6.21%||Dec: 5.77%***|
|Jan 14: 5.92%||Feb: 5.84%||Mar: 5.69%||April: 5.64%||May:||June:|
* The increase in month end yields occurring in the October 2010 stats was mainly due to APL and XTEX re-starting distributions, and not due to a decrease in the unit prices of the MLPs. And the same cause was evident in the increase in the MLP to ten year treasury spread.
** The deletion of low yielding DEP from the data base added 7 bps to the sector average yield.
*** The deletion of high yielding EROC combined with the addition of low yielding EQM, OILT and TLLP to the coverage universe subtracted about 20 bps to the sector average yield. Historical MLP to 10 Year Treasury Spreads:
|Jan 05: 178||Feb: 152||Mar: 156||April: 195||May: 216||June: 211|
|July 05: 159||Aug: 208||Sept: 174||Oct : 177||Nov: 230||Dec: 252|
|Jan 06: 206||Feb: 213||Mar: 171||April: 161||May: 164||June: 167|
|July 06: 161||Aug: 192||Sept: 206||Oct : 198||Nov: 198||Dec: 158|
|Jan 07: 123||Feb: 138||Mar: 122||April: 89||May: 65||June: 40|
|July 07: 71||Aug: 152||Sept: 167||Oct : 172||Nov: 269||Dec: 267|
|Jan 08: 319||Feb: 327||Mar: 401||April: 335||May: 338||June: 358|
|July 08: 420||Aug: 463||Sept: 694||Oct : 801||Nov: 1360||Dec: 1728|
|Jan 09: 1191||Feb: 1152||Mar: 1294||April: 1154||May: 634||June: 606|
|July 09: 491||Aug: 551||Sept: 488||Oct : 485||Nov: 443||Dec: 329|
|Jan 10: 305||Feb: 288||Mar: 251||April: 257||May: 341||June: 333|
|July 10: 294||Aug: 367||Sept: 337||Oct : 354||Nov: 321||Dec: 250|
|Jan 11: 250||Feb: 224||Mar: 219||April: 230||May: 289||June: 273|
|July 11: 341||Aug: 454||Sept: 518||Oct : 439||Nov: 472||Dec: 457|
|Jan 12: 457||Feb: 421||Mar: 421||April: 450||May: 570||June: 546|
|July 12: 534||Aug: 531||Sept: 511||Oct : 510||Nov: 546||Dec: 555|
|Jan 13:||Feb:||Mar:||April:||May:||June: 366|
|July 13: 360||Aug: 373||Sept: 378||Oct : 379||Nov: 347||Dec: 274|
|Jan 14: 327||Feb: 319||Mar: 304||April: 299||May:||June:|
Disclosure: I am long CMLP, DPM, EPD, GEL, KMP, MMP, MWE, WES.
Additional disclosure: I also have investments in the general partners of PPA, NGLS and WPZ.