MLPs trading at attractive yields

The Alerian MLP Index, a benchmark index for energy MLPs, currently has a yield of ~8%. With the ten-year Treasury yield is close to 2.9%, MLPs’ spread over the Treasury yield is nearly 5%. That’s higher than a ten-year average spread of 4.5%. Despite strengthening oil prices, the index is currently about the same level as it was two years ago.

Distribution cuts, high leverage, and commodity price exposure contributed to investors’ unease with this sector. At the same time, the ten-year Treasury yield crept up nearly 90 basis points to ~2.9%.

MLPs Offering Attractive Spread over Treasuries

As the above graph shows, MLPs’ spread over the Treasury yield has been 4%–6% over the last two years.

Top MLP yields

Enterprise Products Partners (EPD), Williams Partners (WPZ), Energy Transfer Partners (ETP), Energy Transfer Equity (ETE), and Plains All American Pipeline (PAA), the five largest MLPs by market capitalization, currently yield 6.8%, 6.5%, 12.6%, 6.2%, and 5.6%, respectively. We’ll analyze ETP’s high yield in a later part of this series.

In this series

In this series, we’ll look at some of the MLPs that are trading at significantly high yields. We’ll also look at the reasons behind the higher yields for selected MLPs and see what Wall Street analysts recommend for them. High yields are mostly associated with high risk. Investors expect to be compensated by a higher yield if they assume greater risks.

Next, let’s take a look at the top 20 oil and gas MLPs that are currently trading at high yields.

Latest articles

This year, Pfizer (PFE) stock has fallen 0.34% and Bristol-Myers Squibb (BMY) stock has fallen 6.48%. Both companies are focused on strengthening their position in the high-growth oncology and immunology markets. Let's take a closer look at each.

Walt Disney’s (DIS) latest movie, Toy Story 4, has reportedly broken records in the opening weekend with $118 million in sales. However, the opening weekend collection was behind analysts’ expectations of at least $150 million in the first weekend.

24 Jun

Will Home Depot’s Upward Momentum to Continue?

WRITTEN BY Rajiv Nanjapla

As of June 21, Home Depot (HD) was trading at $209.39, which implies a rise of 9.7% since the announcement of its first-quarter earnings on May 21. Also, the company was trading at a premium of 32.4% from its 52-week low of $158.09 and a discount of 2.8% from its 52-week high of $215.43.

On June 21, Aurora Cannabis (ACB) made an announcement that indicated that it will move towards higher margin vape products. In addition, the company also believes concentrates and edibles will command higher margins. In anticipation of this development, the company announced the expansion of its facility to capitalize on growth related to these segments.

Shares of Mondelēz International (MDLZ) are scaling new heights thanks to its stellar gains so far this year. Mondelēz stock is up 38.0% on a YTD (year-to-date) basis, and it closed at $55.25—just a shade lower than its 52-week high of $55.71—on June 21.

24 Jun

How Long Will Facebook's Libra Fuel Bitcoin Rally?

WRITTEN BY Mayur Sontakke, CFA, FRM

Ever since the news about Facebook’s (FB) cryptocurrency project broke, Bitcoin has rallied on the hope that Facebook’s entry in the space will help make cryptocurrencies mainstream. Facebook’s cryptocurrency will be called Libra and will be governed by an association with 28 founding members across industries.

172.31.16.229