Oppenheimer: Some high-yield MLPs may be forced to cut distributions

|By:, SA News Editor

MLPs typically return ~90% of their income to unitholders, and a new report from Oppenheimer suggests some MLPs may have a tough time doing that; some companies are way too aggressive and may be forced to cut their distributions if suitable acquisitions and capital are not available, the firm says.

Oppenheimer's top energy MLPs to buy: BreitBurn Energy Partners (BBEP), LRR Energy (LRE), Memorial Production Partners (MEMP), New Source Energy Partners (NSLP) and the more aggressive Mid-Con Energy Partners (MCEP).

MLP stress is far less prevalent on the leading large cap names, such as Enterprise Products Partners (EPD), Kinder Morgan Partners (KMP), Plains All American (PAA) and Energy Transfer Partners (ETP); all have consistently raised their distributions over the years and appear likely to continue to do so.

ETFs: AMJ, AMLP, MLPG, MLPI, MLPN, MLPY, MLPL, MLPW, MLPS, YMLP, MLPA, EMLP, AMU, IMLP, MLPJ, ATMP, YMLI.

This was corrected on 10/10/2013 at 09:53 AM. This item originally suggested that MLPs were required to pay out 90% of taxable income to shareholders.