Investors Very Interested in These 3 Quality MLPs as Oil Prices Push Higher

Print Email

It’s funny how the same company that was one of the most bearish on oil last year and back in the early part of 2016 was the same one that pushed the prices for benchmark West Texas Intermediate and Brent higher Monday. In fact, last fall Goldman Sachs said oil could trade below $20 a barrel, and to its credit oil did trade down to around $26. In February the firm reiterated the $20 level possibility, and other big firms chimed in agreement, citing strength of the U.S. dollar. Since that time oil has rallied over 75% off the lows, and Monday the black gold pushed close to the $50 level.

In a new research report, Deutsche Bank had some commentary on the firm’s inaugural MLP, Midstream and Natural Gas Conference, which wrapped up in New York City last week. One of the interesting tidbits we found in the report was the most requested company models that attendees requested. We noted three that were top energy master limited partnerships (MLPs). All three of the companies are well liked on Wall Street and some have some outstanding upside potential.

Enterprise Products Partners

This company is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Despite the energy slump, Enterprise Products Partners L.P. (NYSE: EPD) recently raised the distribution 1%. Enterprise Products 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 against some of the wilder swings of the commodities that it trades in.

One reason why many analysts may like the stock is 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 Enterprise’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 Partners pays its investors a very solid 5.91% distribution. The Thomson/First Call consensus price target is set at $31.96. Shares closed most recently at $26.72 apiece.