Dividend Expert Drills into MPLX LP

03/03/2017 7:00 am EST


Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

I've upped our exposure to domestic energy infrastructure where there are more favorable tailwinds, both politically and structurally, suggests income expert Bryan Perry, editor of The Cash Machine.

MPLX LP (MPLX) is a Master Limited Partnership formed out of Marathon Petroleum (MPC). This partnership has all the markings of a strong performer for the year ahead.

Like many oil and gas companies, there are many tax advantages to carving out the most capital intensive infrastructure assets of total operations that provide a home for future acquisitions and properties of the same structure.

MPLX LP owns, operates, develops and acquires midstream energy infrastructure assets. Marathon Petroleum Corp., announced the significant acceleration of dropdowns to MPLX in January.

MPLX now expects to acquire assets with approximately $1.4 billion of annual EBITDA from MPC in 2017, including $250 million by the end of the first quarter.

On Feb. 1, MPLX reported fourth-quarter net income of $133 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $391 million.

The company also reported full-year net income of $233 million and adjusted EBITDA of $1.4 billion, as well as fourth-quarter net cash from operating activities of $356 million and distributable cash flow of $318 million.

The partnership is in the midst of a period of strong distribution growth that should fuel increased income and capital gains.

MPLX declared distribution of $0.52 per common unit, a 4% increase over fourth-quarter 2015. MPLX also delivered 13 percent distribution growth in 2016 with a full-year coverage ratio of 1.23.

The partnership affirmed 2017 distribution growth guidance of 12-15% and forecast a double-digit distribution growth rate for 2018.

At MPLX’s current price of $38.20, the current distribution yield of 5.39% makes for a solid addition to the Safe Haven Portfolio.

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