Credit Suisse Defends Quality High-Yield MLPs to Buy

This week will be interesting for the world of master limited partnerships (MLPs) as Credit Suisse is hosting its first MLP Conference. The firm remains positive on the sector in light of the recent sell-off seen in the underlying units. The firm said that the distribution capture is coming up and they expect a bounce from the MLPs as a result.

Seventeen MLPs are scheduled to present and hold one-on-one meetings with investors. Another five MLPs will be involved in one-on-one meetings only with investors. With the further pull-back in the sector, there are yet more opportunities to re-load on high quality MLPs at better entry points.

We would point out the MLP exchange-traded product of JPMorgan Alerian MLP Index ETN (NYSEMKT: AMJ) is bouncing over 2% to $45.80 against a 52-week range of $36.11 to $49.31. Its implied dividend (distribution) yield according to Yahoo! Finance is about 4.6%.

Credit Suisse’s top high-quality Outperform-rated names include the following and we have included the distribution rate as a yield equivalent on each:

  • Magellan Midstream Partners, L.P. (NYSE: MMP) at 3.9%
  • Kinder Morgan Inc. (NYSE: KMI) as 4.2%
  • Tallgrass Energy Partners L.P. (NYSE: TEP) but no yield yet indicated
  • Genesis Energy L.P. (NYSE: GEL) at 4.1%
  • Cheniere Energy Partners L.P. (NYSEMKT: CQP) at 6.5%
  • MarkWest Energy Partners L.P. (NYSE: MWE) at 5.1%
  • Sunoco Logistics Partners L.P. (NYSE: SXL) at 3.7%
  • Targa Resources Corp. (NYSE: TRGP) at 3.2%
  • Crosstex Energy L.P. (NASDAQ: XTEX) at 6.6%

As far as defending MLPs, Deutsche Bank also just defended many MLPs even under the scenario of rising interest rates and falling oil prices. We would also point out that Credit Suisse said back on June 12 that the MLP sell-off was creating attractive entry points for investors who may have missed the MLP gains before.

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