Oil has been somewhat range-bound as we head into summer in a few weeks, but the good thing for most oil producers is that over $60 a barrel, and closing in on $70, most are able to wring out very solid profits at these levels. The good news for investors is that the top energy master limited partnerships (MLPs) offer a safer way to play the sector and also pay out some sizable distributions.
We screened our 24/7 Wall St. energy research database looking for the highest yielding energy MLPs that also have Buy ratings (more or less) from major Wall Street firms. These four stocks look extremely attractive now, especially for frustrated income investors that have a higher risk tolerance.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Trading just over $10, this very well-run company offers a huge total return package. Antero Midstream Corp. (NYSE: AM) owns, operates and develops midstream energy infrastructure. It operates through two 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 other fluid handling services, such as wastewater transportation, disposal and treatment, as well as high rate transfer services.
Investors receive a giant 8.78% distribution. Wells Fargo has just an Equal Weight rating, but its $9 price target is a bit higher than the Wall Street consensus target of $8.94. Note though that Antero Midstream stock closed on Monday at $10.25 per share.
This is the top holding for the Alerian MLP energy exchange-traded fund. MPLX L.P. (NYSE: MPLX) is primarily engaged in crude oil and refined products transportation and terminaling in the U.S. Midwest and Gulf Coast regions, as well as natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. MPLX was formed by independent U.S. refiner Marathon Petroleum.
The company reported solid first-quarter financial results, with $739 million in net income while adjusted EBITDA was $1.4 billion. The company generated $1.1 billion in net cash from operating activities. Its chief executive officer said at the time that the company is eyeing share buybacks, but those will depend on market conditions.
MPLX stock investors receive a 9.40% distribution. Barclays has an Overweight rating and recently raised the price target $32 from $29. That compares with the lower $31.07 consensus target and a Monday’s closing print of $29.24.