Protected Principal Retirement Strategy: Our MLPs - How Did We Do?

by: Akaralph

October, January, April and July are four of my favorite dividend months. It is in each of these months that master limited partnerships (MLPs) announce their quarterly distributions.

With October coming to a close I thought I would provide an update as to how the MLPs in the Protected Principal Retirement portfolio performed relative to distribution announcements. I will also include distribution information for those MLPs on our watch list as additional points of information.

Our portfolio presently consists of nine MLPs - Breitburn Energy Partners (BBEP); Calumet Specialty Products Partners (NASDAQ:CLMT); Crestwood Midstream Partners (NYSE:CMLP); Enterprise Products Partners (NYSE:EPD); Eagle Rock Energy Partners (NASDAQ:EROC); Global Partners (NYSE:GLP); Compressco Partners (GSJK); Transmontaigne Partners (NYSE:TLP); and Vanguard Natural Resources (NYSE:VNR). Crestwood Midstream Partners has been added earlier this week.


Breitburn always seems to be a late arriver to the distribution party. It is anticipated that it will announce on or around October 31. I will update this information as soon as the announcement is made.

By way of background, BBEP has raised the distribution for the past ten consecutive quarters, so I am guessing a small increase would be the norm.


Calumet has been one of the top MLP performers over the past few months, and I would expect the company to continue to outperform many of the other MLPs in the near-term.

On October 16, CLMT announced a quarterly distribution of $.62 per unit, payable on November 14, to owners of record as of November 2. This means that in order to receive the distribution, the stock must be purchased not later than October 30.

The $.62 distribution is a 5.1 percent increase over the distribution paid in August 2012, and a 24 percent increase over the third quarter distribution of 2011.


For the past few weeks, I have been researching midstream MLPs in search of an addition to our portfolio. I settled on Crestwood since I believe that natural gas and natural gas liquids are priced too low, and one of the safer ways to participate is through a midstream asset.

On October 17, CMLP announced a quarterly distribution of $.51. This is an increase of 6.3 percent over the third quarter of 2011, and an increase of two percent over that which was paid in the past quarter.

The distribution is payable on November 9, and the Ex-Div date is today, October 26, so it is too late to "buy" this quarter's distribution.


EPD, my favorite MLP, continued to increase its quarterly distribution for the 33rd consecutive quarter. The distribution of $.65 is an increase of 2.4 percent over the previous quarter, and 6.1 percent more than the distribution in the third quarter of 2011.

The $.65 is payable on November 8 to holders of record on October 31. That means that in order to receive the distribution, one would have to purchase the stock no later than today, October 26.


Eagle Rock announced a distribution of $.22 on October 24. This was the same amount as was declared for the previous quarter, and was a 10 percent increase above the comparable distribution in quarter three of 2011.

I continue to hold EROC as it remains quite broad-based in what it does, despite the company alluding to a distribution rate of $1.00 by late 2012. In my opinion, it does not appear that the company will achieve this level until 2013, at the earliest.

The distribution is payable November 14 to holders of record on November 7. If you wish to capture this distribution, you must purchase EROC not later than November 2.


GLP is more of a downstream company, selling and distributing a wide variety of refined products. Yesterday, October 25, GLP announced a distribution of $.5325, payable on November 14, to holders of record on November 5. This means that you will receive the distribution if you own the stock on October 31.

The current distribution is an increase of 1.4 percent above that paid in the prior quarter and 6.5 percent more than the distribution paid in the comparable quarter of 2011.


Compressco announced a distribution of $.3975 on October 19. This is equivalent to an increase of 2.6 percent over the distribution paid last quarter. Since GSJK is a newer MLP, there are no comparable data for the same quarter in 2011.

Record holders on November 1 will receive this distribution on November 15. So, in order to receive the distribution, GSJK must be purchased not later than October 29.


Transmontaigne continues to pump out the distributions. On October 15, TLP announced a quarterly distribution in the amount of $.64, payable on November 6, to holders of record on October 31. Therefore, in order to receive this distribution, you must own TLP today, October 26.

The $.64 distribution represents an increase of 3.2 percent over the comparable quarter of 2011, and is the same as the distribution paid last quarter.


As those of you who follow VNR are aware, the company switched from a quarterly distribution to a monthly distribution beginning in September of this year. The current distribution of $.20 per month has not as yet been increased, but I would expect it to go up a bit by the beginning of next quarter.

Prior Portfolio Candidates

On September 30, I published an article on SA (here) discussing the merits of three additional MLP portfolio candidates: Exterran Partners (EXLP), PetroLogistics (NYSE:PDH), and QR Energy (NYSE:QRE).

EXLP provides natural gas operations, repair and maintenance services, PDH is a producer of propylene, while QRE is an upstream MLP - an onshore producer of oil and natural gas.

I continue to actively watch each of these, but remain reluctant to "pull the trigger" on any of them.

QRE announced (and paid) a third quarter distribution of $.488 - the same as was paid in the prior quarter. PDH (speculative as previously mentioned) disappointed when it declared a distribution of only $.21, when somewhere in the $.45 - $.46 range was anticipated. EXLP should be announcing on or around October 31.

If EXLP announces a significant distribution increase, I might initiate a small position.

Other MLPs

As the overall markets remain tenuous (at best) and oil and natural gas prices have declined in the past week or so, I would much prefer to add midstream "toll roads" and/or downstream MLPs to our portfolio before considering any of the upstream MLPs.

I still await quarterly announcements from Enbridge (NYSE:EEP) and Northern Tier Energy (NYSE:NTI). EEP is one of the largest pipeline plays while NTI is a refiner - in some ways similar to CLMT.

Of the two, I am more looking forward to the NTI distribution, as I believe that in coming months, refining plays will be more profitable, providing a greater total return.

Disclosure: I am long BBEP, CLMT, CMLP, EPD, EROC, GLP, GSJK, TLP, VNR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The content of this article is not intended to constitute a buy recommendation for any of the stocks mentioned. The data is presented to assist readers in conducting their own evaluations.