Why Huge Energy MLP Deal Could Put 5 Big Dividend Payers in Play as Buyout Targets

MPLX’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 a 9.12% distribution. The $41 J.P. Morgan price target compares with a $39.58 consensus target and the $33.91 close for MPLX stock on Monday.


This well-known company could be the best buy for investors who are more conservative. Sunoco L.P. (NYSE: SUN) distributes and retails motor fuels in the United States. The company operates in two segments.

The Fuel Distribution and Marketing segment purchases motor fuel from independent refiners and oil companies and supplies it to independently operated dealer stations, distributors and other consumers of motor fuel, and partnership operated stations, as well as to commission agent locations.

The All Other segment operates retail stores that offer motor fuel, merchandise, foodservice and other services that include credit card processing, car washes, lottery, automated teller machines, money orders, prepaid phone cards and wireless services. It also leases and subleases real estate properties and operates terminal facilities on the Hawaiian Islands. As of December 31, 2020, the company operated 78 retail stores in Hawaii and New Jersey.

The distribution yield here is 7.70%. Sunoco stock has a $53 target price at Raymond James. The consensus target is $50.57, and Monday’s close was at $44.27.

No one knows if there will be a big consolidation in the MLP space. Some cite the fact that green energy production from wind and solar is lessening demand for conventional midstream services. That could perhaps be the case, but note that the number of electric vehicles (EVs) on U.S. roads is projected to reach 26.4 million in 2030, which will be only 10% of the 259 million light-duty vehicles (cars and light trucks) expected to be on U.S. roads by then. The remaining vehicles will still be using gasoline, natural gas or perhaps even hydrogen, so demand should remain intact.

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