This is a master limited partnership (MLP) that investors looking for income may want to consider. NuStar Energy L.P. (NYSE: NS) is one of the largest independent liquids terminal and pipeline operators in the nation. It currently has approximately 8,700 miles of pipeline and 79 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids.
The partnership’s combined system has approximately 93 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands (including St. Eustatius in the Caribbean) and the United Kingdom.
The company reported solid first-quarter 2016 earnings on the back of lower operating expenses and bigger contribution from the storage segment. The bottom line beat the Wall Street consensus estimate but was down from the year-ago quarter.
Quarterly revenues came in lower than expectations and also decreased from the year-ago print. The decline in revenues was mainly attributable to lower throughput volumes from the pipeline segment and decreased revenues from product sales.
NuStar investors receive an 8.76% distribution. Merrill Lynch has a $51 price objective, and the consensus target is $49.56. Shares closed Friday at $51.27.
Starwood Property Trust
This top real estate company makes good sense for income investors now. Starwood Property Trust Inc. (NYSE: STWD) is an affiliate of global private investment firm Starwood Capital Group and is the largest commercial mortgage real estate investment trust (REIT) in the United States.
Its core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. Through its subsidiaries LNR Property and Hatfield Philips International, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States and one of the largest primary and special servicers in Europe.
The company reported solid first-quarter numbers, and Merrill Lynch has noted previously that the company is taking a more cautious approach to capital deployment in response to the increased volatility in the capital markets. The analysts felt that numbers were good considering the volatility, and they feel the earnings momentum should continue as the company accelerates deployment of capital the rest of the year.
Starwood Property investors receive an outstanding 9.88% distribution. The Merrill Lynch price target is $21.50, and the consensus target is $22.06. Shares closed Friday at $20.98.
While these are all rated Buy at Merrill Lynch, they are aggressive income ideas, and really only suited for accounts with a solid risk tolerance. It is also important to remember that MLP distributions may contain return of capital.