5 Oil Transporters Offering Yields of 5% or Higher

Includes: EPB, MMP, NS, SEP, SXL
by: Efsinvestment

Transportation costs go up in accordance with oil prices, forcing transportation companies to raise prices in order to balance their profit margins. As brent crude is currently around $110, I expect oil transporters to keep raising prices even though things are currently relatively quiet in the Middle East. One could turn this situation into a profitable opportunity. Here is a list of the top 5 oil and gas transporters offering fat dividends. All of the companies have a minimum market cap of $2.8 billion, and a maximum P/E ratio of 20.

El Paso Pipeline Partners (NYSE:EPB): El Paso is planning to split its subsidiary El Paso Exploration & Production (EPEP) by the end of 2011. As of Friday’s close, the Houston-based El Paso had a $6.7 billion market cap. P/E ratio is 13.0, and forward P/E is 15.07. The company had an EPS growth of 23.14% during the last five years. With a profit margin of 27.4% and a dividend yield of 5.26%, El Paso is an excellent stock to pick.

El Paso double topped recently. The company has not had a serious downfall since December, 2008. Debts and assets have both increased sharply for the last four years. Insiders own 50.04% of the company, and insider transactions have increased by 36.01% over the last six months. The company's operating margin is 55.80%; Its target price is 41.50, implying an about 18% increase. What I see is that El Paso is a snowball rolling down a cliff and getting bigger consistently. El Paso is offers a good opportunity for dividend seekers. Recent dividend payments look like this:

Apr 27, 2011


Jan 28, 2011


Oct 28, 2010


Jul 28, 2010


Magellan Midstream Partners (NYSE:MMP): Magellan recently said that one of its docks in Louisiana has been reopened. The Oklahoma-based company, as of the July 1 close, had a market cap of $6.79 billion, and a P/E ratio of 19.76. Forward P/E ratio is 17. Earnings increased by 28.38% this year. Dividend yield in 2010 was 5.11%, whereas the company's profit margin was 20.18%.

Magellan has been doing well since Mar, 2009. The company's debt-to-assets ratio has stabilized over the last five quarters. Yields are consistent. Morgan Keegan, RBC, Ladenburg, Wunderlich, and UBS suggested an outperform rating for Magellan. The company's operating margin is 26.3%. Its SMA50 is 2.72%, whereas SMA200 is 8.28%. Magellan is enjoying momentum and I believe it would be advantageous to join their party. Recent dividend payments have been:

May 5, 2011


Feb 3, 2011


Nov 3, 2010


Aug 4, 2010


NuStar Energy (NYSE:NS): NuStar and Velocity Midstream recently signed a letter of intent to develop a joint pipeline. As of Friday’s close, NuStar had a $4.2 billion market cap. Its trailing P/E ratio is 19.82, and forward P/E ratio is 17.62. Although earnings decreased by 8.03% this year, analysts expect the company to enjoy 13.54% EPS growth for the next year. With a dividend yield of 6.61%, and a profit margin of 5.28%, NuStar is a decent pick for anyone looking to make some serious income.

Earnings increased by 56.77% this quarter. Although debts are increasing, assets can easily outrun them. Yields are fat and consistent. P/S is 0.9. Insiders have been buying stock for a while. Analysts give a 2.90 recommendation for the company (1=Buy, 5=Sell). Here is the recent dividend history for NuStar Energy:

May 5, 2011


Feb 4, 2011


Oct 28, 2010


Aug 4, 2010


Spectra Energy Partners (NYSE:SEP): Spectra recently bought Big Sandy Pipeline from EQT Corp. With a market cap of $3.13 billion, as of the July 1 close, the Houston-based Spectra had a P/E ratio of 18.30, and a forward P/E of 17.12. Analysts estimate 10.71% EPS growth for the next year, whereas earnings increased by 9.10% this quarter. With a magnificent profit margin of 79.49%, and a dividend yield of 5.78%, Spectra is a superb stock for dividend lovers.

Debts slightly outrun assets for the last five quarters. Insiders own 41.19% of the company. Operating margin is 44.25%. What I like about this company is that it never paid out the same dividend twice. Although SEP recently double bottomed, it could do remarkably well in the long run. Following is the recent dividend history of Spectra:

Apr 29, 2011


Feb 2, 2011


Oct 29, 2010


Jul 30, 2010


Sunoco Logistics Partners (NYSE:SXL): Sunoco Logistics recently bought Eagle Point tank farm from Sunoco, Inc. (NYSE:SUN). As of the July 1st close, Sunoco had a market cap of $2.86 billion. P/E is 9.24, whereas forward P/E is 15.5. The company had an EPS growth of 31.78% during the last five years, while earnings increased by 44.20% this year. Although the profit margin is thin (4.22%), the company offers a satisfactory dividend of 5.54%.

Since October, 2008, Sunoco has been doing all right. The company's debt-to-assets ratio has been going down for the last five quarters straight. Yields are impressive. P/S is 0.3. Insiders own 30.22% of the company. Analysts give a 2.80 recommendation for the company (1=Buy, 5=Sell). Here is the recent dividend history of Sunoco:

May 5, 2011


Feb 4, 2011


Nov 4, 2010


Aug 5, 2010


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.