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Five MLPs with Handsome Total Return Potential

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Updated

Strong upside potential

After a fairly strong start, MLPs have been dull for the last few months. So far, crude oil has risen more than 40% this year, while the Alerian MLP ETF (AMLP) has risen ~15% during the same period. In this series, we’ll discuss MLPs with solid potential upsides and a handsome distribution yield.

MLPs 1

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MLPs offer solid total return potential

The above chart shows the MLPs with handsome estimated upside potentials based on analysts’ target price estimates. Energy Transfer (ET) offers a potential upside of more than 35%, while EQM Midstream Partners (EQM) has a potential upside of 15% for the next 12 months—the lowest among these MLPs.

AMLP has a distribution yield of 8.1%, which is a spread of more than 5%–6% compared to broader markets and Treasury yields. MLPs offer a strong total return potential considering their higher distribution yield and upside potential based on the estimates.

The top MLPs recorded solid earnings growth last year due to strong production and new projects coming into service. We’ll have to see how 2019 turns out for the top MLPs. Along with crude oil prices, the first-quarter earnings will be an important indicator driving these MLPs.

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