Jim Cramer’s Favorite Kind of Oil Stock Pays a Big Yield It Can Actually Afford

Jim Cramer has narrowed down the kind of energy stock he wants to own. On the September 30, 2026 episode of Mad Money, a caller asked about MPLX (NYSE:MPLX | MPLX Price Prediction). Cramer answered: “It’s a stock yielding 7.6%. And they can cover that dividend and then some. That’s the kind of thing I’m looking for. An oil play that gives you a good yield.”

The yield has slipped a little since then because the units kept rising. MPLX traded at $57.87 this morning. Units are up 1.88% over the past month and 14.82% year to date. At an annualized distribution of $4.306, the live yield works out to about 7.4%, a bit below the 7.6% Cramer quoted.

How MLPs Pay Investors and Why You Get a K-1

A master limited partnership trades on an exchange like a stock, but investors own units and collect distributions in place of dividends. The IRS says a partnership “generally pays no tax” and instead passes its results through to its partners. That means unitholders receive a Schedule K-1 (Form 1065) showing their share of income and deductions rather than a Form 1099-DIV. Expect more tax paperwork than an ordinary dividend stock creates.

Putting “Cover That Dividend and Then Some” to the Test

Distributable cash flow (DCF) is the cash left over after maintenance spending and interest that a partnership can actually hand out. MPLX produced $1.45 billion of DCF in the second quarter, according to its second-quarter earnings release filed with the SEC. The quarterly distribution was $1.08 per unit ($1.0765 exactly), a 12.5% increase from a year earlier.

With about 1,014 million units outstanding, our math puts second-quarter coverage at roughly 1.33 times. That lines up with management’s target. CFO Kris Hagedorn said on the call, “We continue to target our 1.3 coverage ratio for both 2026 and 2027 and frankly, beyond.” Leverage was 3.7x, under the 4.0x target. So Cramer’s “and then some” claim checks out.

A Project Pipeline Built to Fund Raises Through 2027

Management expects to raise the distribution by 12.5% in both 2026 and 2027. Second-quarter adjusted EBITDA came in at $1.8 billion, up 5%. MPLX also raised its 2026 capital outlook by $500 million to $2.90 billion, with most of the new money going to Gulf Coast fractionation.

Several projects are now coming online. Harmon Creek III began operating in August 2026. The Blackcomb Pipeline began commissioning in July 2026. The BANGL expansion to 300 mbpd is due in the fourth quarter. CEO Maryann Mannen said that for 2027 coverage, “we’re not looking for inorganic M&A to be able to meet that.”

Risks: Marathon Petroleum’s Control and Rising Interest Costs

Marathon Petroleum (NYSE:MPC) controls MPLX and holds about 647 million of its units. It is also MPLX’s biggest customer. A slowdown at Marathon’s refineries would flow straight through to MPLX. Mannen said, “We do not see any reason to change that relationship.”

MPLX also flags rising net interest costs due to a larger debt balance after its acquisitions. Second-quarter revenue of $3.08 billion narrowly missed the $3.14B consensus. EPS of $1.06 also came in just short of the $1.0636 estimate. Crude pipeline throughput fell 5%.

What to Watch in the Third-Quarter Report

Last year, MPLX declared its 12.5% increase on October 28, 2025, and released third-quarter results on November 4. A similar schedule would put the 2026 distribution decision very close. A 12.5% raise would lift the quarterly payout well above the current level. Investors should also check that coverage remains near 1.3x once Blackcomb and Titan add cash flow. Over five years, the units have returned 190.5% on price alone. For income investors, the key question is whether distribution growth can keep running ahead of the debt taken on to pay for it.

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