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QQQ   438.27
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JPMorgan Chase Falls 5% as Consumer Cracking Begins to Show
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
5 Semiconductor Giants: Navigating the Recent Pullback
2 Stocks to Buy on The Dip: One a Value, the Other High-Yielding
Breakout Alert: Coinbase's Consolidation Is About To End
3 Key Stocks Helping to Drive the EV Race
Closing prices for crude oil, gold and other commodities
You Can Follow BlackRock’s Market View for Your Money
JPMorgan Chase Falls 5% as Consumer Cracking Begins to Show
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
5 Semiconductor Giants: Navigating the Recent Pullback
2 Stocks to Buy on The Dip: One a Value, the Other High-Yielding
Breakout Alert: Coinbase's Consolidation Is About To End
3 Key Stocks Helping to Drive the EV Race
Closing prices for crude oil, gold and other commodities
You Can Follow BlackRock’s Market View for Your Money
JPMorgan Chase Falls 5% as Consumer Cracking Begins to Show
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
5 Semiconductor Giants: Navigating the Recent Pullback
2 Stocks to Buy on The Dip: One a Value, the Other High-Yielding
Breakout Alert: Coinbase's Consolidation Is About To End
3 Key Stocks Helping to Drive the EV Race
Closing prices for crude oil, gold and other commodities
You Can Follow BlackRock’s Market View for Your Money
JPMorgan Chase Falls 5% as Consumer Cracking Begins to Show

3 Top-Performing Energy MLPs Deliver Price Gains, High Yield

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Key Points

  • Pipeline operators Enterprise Product Partners, Energy Transfer, and MPLX are among master limited partnerships outperforming the broader market while also throwing off high dividend yields. 
  • Because of their business structure, MLPs don't pay corporate income taxes, and are able to pay investors higher-than-average dividends.
  • Because they operate under a fee-for-service model, energy MLPs aren't as sensitive to underlying commodity prices as other oil-and-gas industries.
  • 5 stocks we like better than Mplx

That makes some of these companies worthy of adding to a watch list, even as analysts see the broader energy sector’s earnings decreasing this year, according to researcher FactSet

These MLPs, as a group, are outpacing other energy sub-industries, such as explorers and producers. Why is this group showing such strength right now? 

These pipeline operators, also dubbed midstream MLPs, typically perform well during bouts of high inflation. Rather than having their revenue pegged to commodity prices, such as explorers and producers, these energy infrastructure companies offer fees for their services. Oilfield services companies, such as Schlumberger Ltd. NYSE: SLB and Halliburton Co. NYSE: HAL use a similar product-and-service model not linked to oil-and-gas prices. Oilfield services stocks are also outperforming.  

Midstream MLPs generally operate under long-term contracts, which include adjustments for inflation. That explains the revenue growth most of those companies enjoyed in 2021 and 2022. 

The dividend yield is also a big attraction of MLPs. They typically pay high yields to investors because they do not pay corporate income taxes, due to their business structure. 

For a glimpse at broad industry performance, check the chart of the Global X MLP ETF (NYSEARCA: MLPA), which tracks the Solactive MLP Infrastructure Index. That index is composed of midstream MLPs engaged in the transportation, storage, and processing of energy resources.

Enterprise Product Partners, Energy Transfer, and  MPLX are the index’s three largest components, coming in at 12.62%, 12.38%, and 10.87% of index weighting, respectively. 

That ETF is up 6.57% so far this year, versus the 1.15% return of the broad energy sector, represented by the Energy Sector Select SPDR Fund NYSEARCA: XLE. The S&P 500 energy sector includes stocks from various sub-industries within the broad sector, most of which are underperforming MLPs. 


Enterprise Product Partners

With a market cap of $58.26 billion, Enterprise is the largest MLP. Its size and asset base give it the ability to grow through various market cycles, and into various industry segments. It has the scope and scale to gather hydrocarbons from a number of sources, then sell them to its customers in the refining, exporting, and petrochemical verticals. It also has pricing power. 

Revenue grew at double-digit rates in the past eight quarters. The current dividend yield is 7.3%. Enterprise has increased its dividend for the past 26 years, MarketBeat data show.

Shares are up 4.61% in February, following the company’s fourth-quarter report. 

Energy Transfer 

Energy Transfer clocks in with a market cap of $40.30 billion. It’s grown revenue at triple- and double-digit rates in each of the past eight quarters. Its primary focus is natural gas and propane pipeline transport. 

MarketBeat data show a “buy” rating on the stock, with a price target of $16, representing a 22.61% upside. The company reported fourth-quarter results on February 15, with earnings rising by 17% and revenue up by 10%. Shares ended the session 0.68% lower. 

Energy Transfer’s dividend yield is 9.35%. The dividend has increased in each of the past two years. 

MPLX

MPLX went public in 2012, after being formed by Marathon Petroleum Corporation NYSE: MPC. It owns and operates midstream energy infrastructure and logistics systems, including a network of pipelines for crude and refined oil, terminals, storage facilities, refinery tanks, and other assets.

Although revenue decreased by 3% in the fourth quarter, it still topped analysts’ estimates, as MarketBeat earnings data show. 

Shares are trading within pennies of their close on January 31, when the company reported. It’s repeatedly hit resistance between $35 and $36. Watch for the stock to rally above a potential buy point above $35.49, reached in April 2022. 

MPLX’s dividend yield is 8.83%. The dividend increased for nine years in a row. 

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Should you invest $1,000 in Mplx right now?

Before you consider Mplx, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Enterprise Products Partners (EPD)
4.0486 of 5 stars
$29.06-0.5%7.09%11.53Moderate Buy$32.58
Energy Transfer (ET)
2.5884 of 5 stars
$15.42-1.7%8.17%14.15Moderate Buy$17.57
Mplx (MPLX)
1.8162 of 5 stars
$40.64-1.1%8.37%10.67Moderate Buy$43.86
Schlumberger (SLB)
4.996 of 5 stars
$52.00-3.7%1.92%17.81Buy$70.80
Halliburton (HAL)
4.8904 of 5 stars
$39.67-3.1%1.71%13.54Buy$48.53
Global X MLP ETF (MLPA)N/A$47.18-1.0%6.38%10.69N/AN/A
Energy Select Sector SPDR Fund (XLE)N/A$96.13-1.6%3.35%6.92N/AN/A
Marathon Petroleum (MPC)
4.1055 of 5 stars
$208.77-1.6%1.58%8.87Moderate Buy$193.77
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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