18 Jan

7 MLPs Offering a Yield above 10%

WRITTEN BY Rekha Khandelwal, CFA

MLPs offering more than a 10% yield

In 7 MLPs Offering a Yield above 7%, we discussed MLPs with a market capitalization higher than $5 billion and trading at yields higher than 7%. In this series, we’ll discuss MLPs trading at yields higher than 10% with a market capitalization of $1 billion–$5 billion. In general, higher yields signal higher risk. Investors expect additional returns for assuming greater risks.

The selected MLPs are NGL Energy Partners (NGL), USA Compression Partners (USAC), AmeriGas Partners (APU), EnLink Midstream Partners (ENLK), Sunoco (SUN), Suburban Propane Partners (SPH), and Genesis Energy (GEL).

7 MLPs Offering a Yield above 10%

NGL Energy Partners

NGL Energy Partners is trading at a yield of ~14.1%. NGL Energy Partners’ distributions have been flat for the last ten quarters. The company cut its distributions 39% at the beginning of 2016.

NGL Energy Partners is taking steps to reduce its leverage. In December, NGL Energy Partners announced an agreement to sell its South Pecos water disposal assets to WaterBridge Resources for $239 million. The company also completed the sale of its Bakken saltwater disposal business to Tallgrass Energy (TGE) in December.

APU and SPH

Propane MLPs AmeriGas Partners and Suburban Propane Partners are trading at yields of 13.0% and 10.8%, respectively. AmeriGas Partners is scheduled to report its results for the first quarter of fiscal 2019 on February 6. The stock fell significantly in December, which pushed its yield higher. Suburban Propane Partners reduced its distributions in September 2017.

EnLink Midstream

EnLink Midstream Partners is trading at a yield of 12%. The company’s GP EnLink Midstream (ENLC) is trading at a yield of 9.8%. EnLink Midstream is expected to close the acquisition of EnLink Midstream Partners in the first quarter.

Genesis Energy

Genesis Energy is trading at a yield of 10.4%. On January 10, the company announced a 1.9% increase in its quarterly distribution for the fourth quarter. Genesis Energy cut is distributions 31% in October 2017.

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