MPLX’s yield

MPLX (MPLX) is trading at an attractive yield of ~7.5%. The company’s coverage ratio for the third quarter was 1.47x. With a healthy coverage and conservative leverage, MPLX’s yield looks attractive. MPLX had impressive earnings growth over the years, driven by drop-down assets from parent Marathon Petroleum (MPC). The company reported strong volume growth in the third quarter of 2018.

What Makes MPLX’s 7.5% Yield Attractive

MPLX’s market capitalization of ~$26 billion is higher than ONEOK (OKE) and Plains All American Pipeline’s (PAA). OKE and PAA are both currently trading at a yield of ~5.7%.

As the above graph shows, MPLX stock has fallen 7% year-to-date, outperforming the Alerian MLP ETF (AMLP) over this period.

Recommendations for MPLX

Analysts look bullish on MPLX. Of the 16 Reuters-surveyed analysts covering MPLX, eight have rated the stock a “strong buy,” seven rated it a “buy,” and one analyst rated MPLX a “hold.” The median price target for the stock is $43, which implies an upside potential of ~28% from the current price.

Learn what institutional investors did with their MPLX holdings in Q3 in How Institutional Investors Played MPLX in Q3 2018.

Next in this series, we’ll discuss another MLP GP, Western Gas Equity Partners (WGP), which is trading at a high yield currently.

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