Top 20 Highest-Yielding MLPs Now | Yields Up To 14.6%

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Top 20 Highest-Yielding MLPs Now | Yields Up To 14.8%


Published on February 12th, 2023 by Aristofanis Papadatos

Master Limited Partnerships, otherwise known as MLPs, have obvious appeal for income investors. This is because MLPs widely offer yields of 5% or even higher in some cases.

With this in mind, we created a full downloadable list of nearly 100 Master Limited Partnerships in our coverage universe.

You can download the Excel spreadsheet (along with relevant financial metrics like dividend yield and payout ratios) by clicking on the link below:

 

Click here to instantly download your free spreadsheet of all MLPs Stocks now, along with important investing metrics.

This comprehensive article covers the 20 highest-yielding MLPs today.

The table of contents below allows for easy navigation of the article:

Table of Contents

High Yield MLP #20: KNOT Offshore Partners LP (KNOP)

KNOT Offshore Partners LP owns and operates shuttle tankers under long–term charters in the North Sea and Brazil. The company provides loading, transportation, and storage of crude oil under time charters and bareboat charters. The company’s sponsor, Knutsen NYK Offshore Tankers AS (Knutsen NYK) is responsible for identifying, ordering, and dropping down ships to KNOP.

As of its latest filings, it had a fleet of 17 shuttle tankers. As a result of its mostly passive operations, the company has only one employee and executive, its CEO Mr. Gary Chapman, who oversees the company and ensures that all tankers maximize their charter periods, maximizing their value through long–term contracts. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.

The investment proposition of KNOT Offshore Partners is summarized in the image below:

Source: Investor Presentation

Unfortunately, KNOT Offshore Partners recently cut its distribution by 95% due to a heavy dry-dock (maintenance of vessels) schedule in 2023, which has reduced the visibility in earnings going forward. The stock plunged 33% on the news.

Click here to download our most recent Sure Analysis report on KNOP (preview of page 1 of 3 shown below):


High Yield MLP #19: Brookfield Infrastructure Partners LP (BIP)

Brookfield Infrastructure Partners is one of our top infrastructure stocks.

Brookfield Infrastructure Partners is one of the largest global owners and operators of infrastructure networks, including operations in energy, water, freight, passengers, and data sectors.

It is one of four publicly-traded listed partnerships that is operated by Brookfield Asset Management (BAM).

You can see an overview of the business of the company in the image below:

Source: Investor Presentation

In 2022, BIP grew its FFO by 20% thanks to solid performance in the midstream and transport segments. BIP is in the process of selling some assets in order to strengthen its balance sheet and invest the proceeds in higher-return projects. BIP has a strong track record of selling mature assets and redeploying the proceeds in high-return projects. Going forward, BIP will likely continue to deliver attractive FFO growth.

We expect 7.0% annual FFO-per-unit growth, while the MLP also offers a 4.5% yield after a recent 6% distribution hike.

Click here to download our most recent Sure Analysis report on BIP (preview of page 1 of 3 shown below):

High Yield MLP #18: NextEra Energy Partners LP (NEP)

NextEra Energy Partners was formed in 2014 as Delaware Limited Partnership by NextEra Energy to own, operate, and acquire contracted clean energy projects with stable, long-term cash flows.

The company’s strategy is to capitalize on the energy industry’s favorable trends in North America of clean energy projects replacing uneconomic projects.

NextEra Energy Partners operates 34 contracted renewable generation assets consisting of wind and solar projects in 12 states across the United States. The company also operates contracted natural gas pipelines in Texas, which accounts for about a fifth of NextEra Energy Partners’ income.

Source: Investor Presentation

On January 25th, 2023, NextEra Energy released Q4 results. Q4 adjusted earnings per share of $0.40 missed the analysts’ consensus by $0.09. Revenue of $266 million grew 14.7% year-over-year but missed consensus estimates by $70.74 million. Nevertheless, the company raised its distribution by 15% thanks to a positive business outlook.

Click here to download our most recent Sure Analysis report on NextEra Energy Partners (preview of page 1 of 3 shown below):


High Yield MLP #17: Brookfield Renewable Partners LP (BEP)

Brookfield Renewable Partners L.P. operates one of the world’s largest portfolios of publicly traded renewable power assets. Its portfolio consists of more than 23,000 megawatts of capacity in North America, South America, Europe, and Asia.

Source: Investor Presentation

In early February, BEP reported (2/3/23) financial results for the fourth quarter of fiscal 2022. Its FFO per unit grew 6%, from $0.33 to $0.35, thanks to high power prices and acquisitions. In 2022, BEP invested a record $2.8 billion in growth projects.

BEP is resilient to the prevailing highly inflationary environment, as about 70% of its contracts are indexed to inflation. BEP also has most of its costs fixed, with limited exposure to rising labor costs, and is resilient to rising interest rates. It has no material debt maturities until 2027, and 97% of its debt is at fixed interest rates. As past growth projects will begin generating cash flows, we expect a record FFO per unit of $1.80 in 2023.

Click here to download our most recent Sure Analysis report on BEP (preview of page 1 of 3 shown below):


High Yield MLP #16: Lazard Ltd. (LAZ)

Lazard is one of the few MLPs that does not operate in the energy sector. Instead, it is an international investment advisory company that traces its history to 1848.

The company has two business segments: Financial Advisory and Asset Management. The Financial Advisory business includes M&A, debt restructuring, capital raising, and other advisory businesses. The Asset Management business is about 80% equities and focuses primarily on institutional clients.

You can see the highlights of the company’s 2022 performance in the image below:

Source: Investor Presentation

Click here to download our most recent Sure Analysis report on Lazard (preview of page 1 of 3 shown below):


High Yield MLP #15: Genesis Energy LP (GEL)

Genesis Energy is a diversified midstream energy limited partnership, which generates 48% of its operating income from offshore pipeline transportation, 29% from sodium minerals and sulfur services, 17% from onshore facilities and 6% from marine transportation.

Source: Investor Presentation

Genesis has performed poorly in recent years, as it spent hefty amounts on capital expenses, but the performance of its investments has been poor. As a result, it has posted negative free cash flows in five out of the last eight years. It has diluted its unit holders, as it has increased its unit count by 56% in the last nine years. Furthermore, it has markedly increased its debt load, with its interest expense currently exceeding its operating income.

The MLP cut its quarterly distribution by –73% in 2020, from $0.55 to $0.15. Still, units yield over 5% right now.

Click here to download our most recent Sure Analysis report on GEL (preview of page 1 of 3 shown below):


High Yield MLP #14: Cheniere Energy Partners LP (CQP)

Cheniere Energy Partners owns and operates regasification facilities at the Sabine Pass liquefied natural gas (LNG) terminal, which is in Cameron Parish, Louisiana, providing LNG to energy companies and utilities around the world.

LNG is natural gas in liquid form. It is a much cleaner fuel than traditional fossil fuels, and hence it is less impacted by the secular shift from fossil fuels to clean energy sources, which has accelerated lately. We expect LNG to continue to replace coal and thus play a major role in the transition to a cleaner energy landscape.

CQP went through a severe downturn in 2020, as the coronavirus crisis coincided with mild winter weather and thus caused record–low LNG prices. CQP is also facing a headwind due to the great increase in global LNG capacity in the last five years.

Nevertheless, despite its customers’ cancellation of many LNG cargos last year, CQP posted strong results thanks to the take–or–pay feature of its long–term contracts.

Even better, CQP is thriving right now thanks to Western countries’ sanctions on Russia for its invasion of Ukraine. Due to these sanctions, the global natural gas market has become exceptionally tight; hence, Europe is importing a record number of LNG cargos from the U.S. As a result, CQP offered a record distribution per unit of $4.20 in 2022. The stock is currently offering a 5.9% regular distribution yield, but it is also likely to keep offering special distributions for the foreseeable future, thanks to its sustained business momentum.

Click here to download our most recent Sure Analysis report on CQP (preview of page 1 of 3 shown below):


High Yield MLP #13: Sunoco LP (SUN)

Sunoco distributes fuel products through its wholesale and retail business units. The wholesale unit purchases fuel products from refiners and sells them to its own and independently-owned dealers. The retail unit operates stores where fuel products and other products, such as convenience products and food, are sold to customers.

Sunoco is the largest independent distributor of fuels in the United States.

Source: Investor Presentation

It is also fairly resilient to the cycles of the prices of oil products, as it has proved capable of passing its increased costs to its customers and thus maintains almost constant margins.

Sunoco has an attractive yield above 7%, but it has frozen its distribution for six consecutive years, thus indicating that its distribution is not entirely safe. You can see our full list of high-dividend stocks here.

Click here to download our most recent Sure Analysis report on Sunoco (preview of page 1 of 3 shown below):


High Yield MLP #12: Western Midstream Partners LP (WES)

Western Midstream Partners, LP, a midstream energy company, and its subsidiaries, acquires, owns, develops, and operates primarily in the United States.

It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing of produced water. It also buys and sells natural gas, NGLs, and condensate. The company operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania.

Western Midstream Partners has firm contracts with Occidental Petroleum (OXY).

Source: Investor Presentation

Thanks to the promising production prospects in the areas of the presence of Western Midstream Partners, the MLP is likely to continue offering an attractive distribution for many more years.

High Yield MLP #11: Holly Energy Partners LP (HEP)

Holly Energy Partners (HEP) is responsible for transporting and storing crude oil and refined products. The company operates its own crude oil and petroleum pipelines and storage terminals in ten U.S. states, including Texas, Nevada and Washington. HEP also has refinery facilities in Utah and Kansas.

Nearly all the revenues of HEP are fee–based. Thus, these revenues are hardly affected by prevailing commodity prices. Instead, they are proportional to the volumes transported and stored by the MLP.

Source: Investor Presentation

These volumes are reliable because they are determined by long-term contracts, which pose strict minimums to the customers of the MLP.

On March 14th, 2022, HEP completed the acquisition of the pipelines and terminal assets of Sinclair Transportation. The deal included 1,200 miles of crude oil and products pipelines, 8 product terminals, and two crude terminals. HEP paid $325 million and issued 21 million of common units to pay for the deal, which was valued at $758 million.

Click here to download our most recent Sure Analysis report on HEP (preview of page 1 of 3 shown below):


High Yield MLP #10: Enterprise Products Partners LP (EPD)

Enterprise Products Partners was founded in 1968 and operates as an oil and gas storage and transportation company.

Enterprise Products has an excellent asset base which consists of nearly 50,000 miles of natural gas, natural gas liquids, crude oil, and refined products pipelines. It also has a storage capacity of more than 250 million barrels.

These assets collect fees based on materials transported and stored.

Continued growth is likely over the next several years. The company has $5.8 billion of major capital projects under construction.

Source: Investor Presentation

Click here to download our most recent Sure Analysis report on Enterprise Products Partners (preview of page 1 of 3 shown below):


High Yield MLP #9: Magellan Midstream Partners LP (MMP)

Magellan Midstream Partners has the longest pipeline system of refined products in the U.S., which is linked to nearly half of the total U.S. refining capacity.

Its network of assets includes 9,800 miles of pipeline, 54 storage terminals, and 47 million barrels of storage capacity. Refined products generate approximately 65% of its total operating income while crude oil and marine storage represents the remaining 35%.

MMP has a fee-based model; only ~9% of its operating income depends on commodity prices.

Source: Investor Presentation

Magellan has an excellent track record of steadily growing its distribution and strong distribution safety, primarily thanks to its exemplary management, which is focused on investing only in high-return projects.

MMP has grown its distribution for 22 consecutive years. It grew its distribution for 70 consecutive quarters before the freeze in 2020 and has raised its annual distribution at a 10% average annual rate since 2001. This record is a testament to the business model’s strength and management’s great discipline. Moreover, instead of issuing new shares to fund growth projects, like nearly all the MLPs, MMP is now repurchasing its shares at low prices to enhance shareholder value.

Click here to download our most recent Sure Analysis report on MMP (preview of page 1 of 3 shown below):


High Yield MLP #8: Suburban Propane Partners LP (SPH)

Suburban Propane has been in operation since 1928. The partnership services most of the U.S. with propane and other energy sources, with propane making up around 90% of total revenue. It generated $1.5 billion in revenue in 2022. The partnership has over 3,200 full–time employees in 41 states, serving approximately 1 million customers.

Suburban is the third-largest propane gas marketer in the U.S., with a market share of 5%.

Source: Investor Presentation

It has also done its best to mitigate its sensitivity to the prevailing weather conditions, but investors should always keep this sensitivity in mind.

Suburban reported first-quarter earnings on February 2nd, 2023, and the results were strong. Total revenue grew 6% to $398 million, adjusted EBITDA grew 4%, and earnings per share more than doubled, from $0.34 in the prior year’s quarter to $0.71, thus exceeding the analysts’ estimates by $0.18. The strong performance resulted primarily from favorable (cold) weather.

Click here to download our most recent Sure Analysis report on SPH (preview of page 1 of 3 shown below):


High Yield MLP #7: Antero Midstream Corporation (AM)

Antero Midstream Corporation was founded in 2013 and is headquartered in Denver, Colorado. It owns, operates, and develops midstream energy infrastructure. It operates through Gathering and Processing and Water Handling segments.

The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources’ wells in West Virginia and Ohio. The Water Handling segment delivers fresh water; and offers pumping stations, water storage, and blending facilities.

Antero Midstream dramatically benefits from the secular growth of LNG consumption worldwide.

Source: Investor Presentation

Due to the sanctions imposed by western countries on Russia for its invasion of Ukraine, a record number of LNG cargo is being directed from the U.S. to Europe. This is a strong tailwind for the business of Antero Midstream.

High Yield MLP #6: Plains All American Pipeline LP (PAA)

Plains All American Pipeline, L.P. is a midstream energy infrastructure provider. The company owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and natural gas liquids–producing basins at major market hubs in the United States and Canada.

Source: Investor Presentation

On average, it handles more than 7 million barrels per day of crude oil and NGL through 18,370 miles of active pipelines and gathering systems. Plains All American generates around $40 billion in annual revenues and is based in Houston, Texas.

On November 2nd, 2022, Plains All American reported its Q3 results. Revenues came in at $14.3 billion, an increase of 32.4% year-over-year. The significant increase compared to the prior year was driven by a strong global crude oil demand recovery from the pandemic. Higher global oil prices were also a positive contributor. Finally, increased production in the Permian Basin significantly boosted results, as production grew from 4.4 million barrels in the prior year to about 5.7 million barrels daily.

Click here to download our most recent Sure Analysis report on PAA (preview of page 1 of 3 shown below):


High Yield MLP #5: MPLX LP (MPLX)

MPLX, LP was formed by the Marathon Petroleum Corporation (MPC) in 2012.

The business operates in two segments: Logistics and Storage – which relates to crude oil and refined petroleum products – and Gathering and Processing – which relates to natural gas and natural gas liquids (NGLs).

The company’s Logistics and Storage segment have a pipeline capacity of 4.7 million barrels per day.

You can see highlights from the company’s performance in 2022 in the image below:

Source: Investor Presentation

Click here to download our most recent Sure Analysis report on MPLX (preview of page 1 of 3 shown below):


High Yield MLP #4: Energy Transfer LP (ET)

Energy Transfer owns and operates one of the largest and most diversified portfolios of energy assets in the United States. Operations include natural gas transportation and storage along with crude oil, natural gas liquids, refined product transportation, and storage totaling 83,000 miles of pipelines.

Energy Transfer also owns the Lake Charles LNG Company and stakes in Sunoco LP (SUN) and USA Compression Partners (USAC). On December 7th, 2021, Energy Transfer completed the Enable Midstream Partners (ENBL) acquisition in a $7 billion stock–for–stock deal.

Energy Transfer operates with a primarily fee-based model, which somewhat mitigates the sensitivity of the MLP to commodity prices.

Source: Investor Presentation

Given the dramatic cyclicality of the energy sector, the fee-based model of Energy Transfer renders the MLP more resilient to downturns than most energy companies.

In early November, Energy Transfer reported financial results for the third quarter of fiscal 2022. It grew its volumes in all segments, achieved record intrastate transportation volumes, and recorded NGL gathered volumes. It also benefited from high commodity prices and the acquisition of Enable. As a result, distributable cash flow grew 21% over the prior year’s quarter.

Energy Transfer posted a strong distribution coverage ratio of 1.93 and raised its quarterly distribution by 15%, on top of the ~15% distribution hikes in each of the three previous quarters. It thus now offers an annualized distribution of $1.22, corresponding to an annual yield of 9.5%.

Click here to download our most recent Sure Analysis report on ET (preview of page 1 of 3 shown below):


High Yield MLP #3: USA Compression Partners LP (USAC)

USA Compression Partners, LP is one of the largest independent providers of gas compression services to the oil and gas industry.

Source: Investor Presentation

USAC was founded in 1998, completed its initial public offering in January 2013, and has paid a quarterly dividend continuously since the second quarter of 2013.

The partnership is active in several shale plays throughout the U.S., including the Utica, Marcellus, and Permian Basins. They focus primarily on infrastructure applications, including centralized high-volume natural gas gathering systems and processing facilities, requiring large horsepower compression units. They design, operate and maintain the compression units. USAC operates under fixed–fee, take–or–pay contracts and does not have direct exposure to commodity prices.

In April 2018, USAC merged with CDM Compression. The merger provided better geographic diversification and access to areas where USAC was underrepresented. This merger essentially doubled the size of USAC.

Click here to download our most recent Sure Analysis report on USAC (preview of page 1 of 3 shown below):


High Yield MLP #2: Alliance Resource Partners LP (ARLP)

Alliance Resource Partners is the second–largest coal producer in the eastern United States. Apart from its primary operations of producing and marketing coal to major domestic and international utility users, the company also owns mineral and royalty interests in premier oil & gas regions, like the Permian, Anadarko, and Williston Basins.

Source: Investor Presentation

Finally, the company provides terminal services, including transporting and loading coal and technology products and services. The company generates ~$2.4 billion in annual revenues and is based in Tulsa, Oklahoma.

On January 30th, 2023, Alliance Resource Partners reported its Q4–2022 results for the period ending December 31st, 2022. Revenues for the quarter grew by 48% year-over-year to $700.7 million. This resulted from higher coal sales prices and relatively stable volumes of coal sold. With margins expanding considerably, earnings per unit more than quadrupled, from $0.40 to $1.63. This was despite the impact of inflationary pressures on numerous expense items, including labor-related expenses and supply and transportation costs.

Click here to download our most recent Sure Analysis report on ARLP (preview of page 1 of 3 shown below):

High Yield MLP #1: Icahn Enterprises LP (IEP)

Icahn Enterprises L.P. operates in investment, energy, automotive, food packaging, metals, real estate, and home fashion businesses in the United States and Internationally. The company’s Investment segment focuses on finding undervalued companies to allocate capital through its various private investment funds.

Significant positions include Cheniere Energy Inc. (LNG), Occidental Petroleum Corporation (OXY), Xerox Corporation (XRX), Newell Brands, Inc. (NWL), FirstEnergy (FE), and Twitter.

Source: Investor Presentation

Some of its positions ultimately result in control or complete ownership of the target company.

Carl Icahn owns 100% of Icahn Enterprises GP, the general partner of Icahn Enterprises and Icahn Enterprises Holdings, and approximately 95% of Icahn Enterprises’ outstanding shares.

Click here to download our most recent Sure Analysis report on IEP (preview of page 1 of 3 shown below):



Final Thoughts

Income investors will find a lot to like about Master Limited Partnerships. Specifically, MLPs tend to have very high yields.

Of course, investors should always do their own research to understand the unique tax implications and risk factors of MLPs.

But for income investors primarily looking for high yields, these 20 MLPs may be attractive.

If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:

High-Yield Individual Security Research

Other Sure Dividend Resources

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