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Dividend Hunter

03/10/2017 7:00 am EST

Focus: MLPS

Tim Plaehn

Lead Income Analyst, The Dividend Hunter

Master limited partnerships (MLPs) have been gross underperformers since the fallout in oil prices began in 2014. However, over the last few quarters, oil prices have found a footing and the space could start attracting investors again.

In particular, the Alerian MLP ETF (AMLP) still offers a hefty 8% dividend yield, a yield that far exceeds REITs and utilities. And major MLPs should continue to rebound as producers continue to cut production.

The most underrated opportunity in MLPs right now looks to be Boardwalk Pipeline Partners (BWP). Granted, its dividend yield is on the low-end for MLPs, at 2.2%, Boardwalk Pipeline Partners has one of the strongest pipeline networks around and is focused on growth.

It’s spent a lot of money on new projects that should start paying off next year. With that, Boardwalk Pipeline Partners’ distribution coverage will continue to rise, which is already ridiculously high compared to peers. That means Boardwalk Pipeline Partners can easily boost its distribution in the coming years.

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