Energy Business

Goldman Sachs Sees Double-Digit 2022 Upside for Red-Hot Big Dividend Energy MLPs

MPLX

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’s assets include a network of crude oil and refined product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks and associated piping; and crude and light-product marine terminals. It also owns crude oil and natural gas gathering systems and pipelines, as well as natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

Investors receive an 8.95% distribution. Goldman Sachs has set a $37 price target. The consensus target on MPLX stock is $35.00, and Tuesday’s closing price was $30.31.

Plains All American Pipeline

This remains one of the top MLP picks across Wall Street. Plains All American Pipeline L.P. (NYSE: PAA) engages in the pipeline transportation, terminaling, storage and gathering of crude oil and NGLs in the United States and Canada. The company operates through three segments.

The Transportation segment transports crude oil and NGLs through pipelines, gathering systems and trucks. As of December 31, 2020, this segment owned and leased 18,370 miles of active crude oil and NGL pipelines and gathering systems, 35 million barrels of active and above-ground tank capacity and 815 trailers.

The Facilities segment provides storage, terminaling and throughput services for crude oil, NGLs and natural gas. It also provides NGL fractionation and isomerization and natural gas and condensate processing services. As of December 31, 2020, this segment owned and operated approximately 75 million barrels of crude oil storage capacity; 28 million barrels of NGL storage capacity; 68 billion cubic feet (Bcf) of natural gas storage working capacity; 25 Bcf of base gas; five natural gas processing plants; a condensate processing facility; eight fractionation plants; 22 crude oil and NGL rail terminals; five marine facilities; and approximately 330 miles of active pipelines.

The Supply and Logistics segment engages in the purchase, logistics and resale of crude oil and NGLs. As of December 31, 2020, this segment owned 16 million barrels of crude oil and NGL linefill; 4 million barrels of crude oil and NGL linefill; 680 trucks and 840 trailers; and 6,000 crude oil and NGL railcars.

Investors receive a 6.58% distribution. The Goldman Sachs price objective on Plains All American Pipeline stock is $17. The consensus target is $13.60, and shares closed on Tuesday at $11.06.


These companies offer reasonably safe and reliable distributions, plus all are major players in the energy midstream infrastructure arena. Investors looking for solid total return potential can do well owning these MLP leaders. It is important to note that MLP distributions may contain return of principal. Those looking to avoid the pesky K-1s can always purchase shares in the ALPS Alerian MLP ETF (NYSEARCA: AMLP). Investors receive a 1099 instead of a K-1, and it pays a solid 7.70% distribution.

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