Energy Business

4 Top Energy MLPs That Recently Raised Their Payout Distributions

One reason that investors who look for income have long cherished energy master limited partnerships (MLPs) is that not only do they pay solid and sometimes large quarterly distributions, but the top companies also consistently raise those distributions. With the price of oil up solidly since the lows posted earlier this year, the sector has turned up nicely for investors, and the darkest days appear to be over.

In a recent research note from Kristina Kazarian and her outstanding team at Deutsche Bank, four top MLPs that recently raised the distributions paid to shareholders are highlighted. The positives behind companies that do increase payouts are numerous, but clearly it shows consistent and perhaps improving cash flow.

Antero Midstream

This top company posted a serious increase for its shareholders. Antero Midstream Partners L.P. (NYSE: AM) owns, operates and develops midstream energy assets. Its assets include 8-inch, 12-inch, 16-inch and 20-inch high and low pressure gathering pipelines and compressor stations that collect natural gas and oil and condensate from wells in the Marcellus Shale in West Virginia and the Utica Shale in Ohio, as well as water handling and treatment assets.

As of December 31, 2015, the company’s Marcellus and Utica Shale gathering systems comprised 182 miles and 110 miles of pipelines, and the water handling systems include 184 miles and 75 miles of pipelines.

The company increased the distribution to shareholders to $0.235 per share, payable quarterly. That is a 31% increase compared to 2015 and a 7% increase sequentially. Based on current pricing, Antero Midstream investors are now paid a 3.98% distribution.

The Thomson/First Call consensus price target for the stock is $28.65. The shares closed Tuesday at $23.61, up over 6% on the day.


Enterprise Products Partners

This is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) once again, despite the energy slump, recently raised the distribution by 1%. The company maintains a very good long-term position in the market. It provides many of its services on the basis of long-term, fixed-fee contracts, insulating it against some of the wilder swings of the commodities that it trades in.

One reason many analysts may have a liking for the stock might be its distribution coverage ratio. That ratio is well above one times, making it relatively less risky among the MLPs. The company’s distributions have grown for several quarters, and recently Enterprise Products increased the quarterly cash distribution paid to partners to $0.395 per common unit, or $1.58 per unit on an annualized basis.

This is the 56th distribution hike since the company’s initial public offering in 1998. Also, this is the 47th time that the company has increased its quarterly payout. The distribution signifies a 5.3% increase over the distribution in the first quarter of 2015.

Enterprise Products investors are now paid very solid 6.03% distribution. The consensus price target is set at $31.42. Shares closed Tuesday at $26.19, up 5.25% for the day.