MLPs generally generate cash flow by transporting, storing, and producing energy commodities such as petroleum and natural gas products throughout the United States. However, these institutions are not as vulnerable to the ups and downs in oil and other commodity prices that many usually suspect. Rather, these companies generate their revenues through fee-based operations that are generally not affected by the fluctuation of commodity prices.
Shares of MLPs are liquid assets that trade on a stock exchange just like other publicly owned companies. A benefit to owning shares of a MLP is that the entity is contractually required to pay out dividends to its partners, otherwise known as shareholders. However, owning shares of a MLP can result in complicated tax implications if an investor is not thoroughly knowledgeable in the area.
Because MLPs are obligated to distribute dividends to shareholders, they typically have attractive dividend yields. In a low-rate and uncertain economic climate, these high dividend yields from MLPs can result in stable income that makes MLP investing an alluring alternative from other assets and securities.
Outlined below are ten high dividend yielding MLPs. All statistics are as of November 26, 2012.
Martin Midstream Partners L.P. (NASDAQ:MMLP)
- DARS Rating: 3.4 stars
- Dividend Yield: 9.85%
- Annualized Dividend: $3.08
- Market Capitalization: $722.86 million
MMLP is headquartered in Kilgore, Texas and is focused on the storage and distribution of petroleum products and by-products in the United States Gulf Coast region. The company has historically increased dividend payout each year by a very small percentage, most recently boosting dividend payment from 76.25 cents per share to 77 cents per share. The dividend yield for MMLP is currently 9.85% and the stock is down -9.22% year-to-date.
Legacy Reserves LP (NASDAQ:LGCY)
- DARS Rating: 3.4 stars
- Dividend Yield: 9.32%
- Annualized Dividend: $2.26
- Market Capitalization: $1.17 billion
LGCY is headquartered in Midland, Texas and is focused on the the acquisition and development of natural gas and oil properties in the Mid-West. The company’s dividend payout history has not seen significant increases since 2008, only increasing 4.5 cents over that period. The dividend yield for LGCY is currently 9.32% and the stock is down -14.09% year-to-date.
PVR Partners LP (NYSE:PVR)
- DARS Rating: 3.4 stars
- Dividend Yield: 9.20%
- Annualized Dividend: $2.16
- Market Capitalization: $2.08 billion
PVR is headquartered in Radnor, Pennsylvania and is mainly focused on the management of coal, natural resource, and natural gas properties in the United States. The company has had a relatively good history with increasing dividend payments each year, sometimes even increasing dividend payouts every quarter. The only exception to this was a two year period after the financial crisis in 2009 and 2010 when dividend payout did not increase. The dividend yield for PVR is currently 9.20% and the stock is down -8.07% year-to-date.
Vanguard Natural Resources, LLC (NYSE:VNR)
- DARS Rating: 3.4 stars
- Dividend Yield: 8.54%
- Annualized Dividend: $2.43
- Market Capitalization: $1.68 billion
VNR is headquartered in Houston, Texas and is focused on the acquisition and development of oil and natural gas properties in the Mid-West and Southwestern United States. The company pays a dividend on a monthly basis, recently cutting dividend payout from 60 cents per share per month to 20 cents per share per month. The dividend yield for VNR is currently 8.54% and the stock is up +2.93% year-to-date.
Regency Energy Partners LP (NYSE:RGP)
- DARS Rating: 3.4 stars
- Dividend Yield: 8.21%
- Annualized Dividend: $1.84
- Market Capitalization: $3.99 billion
RGP is headquartered in Dallas, Texas and is focused on the gathering, processing, transportation, and marketing of natural gas and natural gas liquids throughout the United States. Historically, dividend payouts have been relatively flat since 2008, only increasing 1.5 cents per share over that time. The dividend yield for RGP is currently 8.21% and the stock is -9.81% year-to-date.
Calumet Specialty Products Partners, L.P (NASDAQ:CLMT)
- DARS Rating: 3.4 stars
- Dividend Yield: 8.01%
- Annualized Dividend: $2.48
- Market Capitalization: $1.78 billion
CLMT is headquartered in Indianapolis, Indiana and is focused in producing high quality, speciality hydrocarbon products. It produces speciality products like lubricating oils, mineral oils, and waxes, and fuel products like gasoline diesel, and jet fuel. The company’s dividend payout history has been relatively flat since 2008, only seeing substantial increases over the past year. The dividend yield for CLMT is currently 8.01% and the stock is up +53.52% year-to-date.
CVR Partners LP (NYSE:UAN)
- DARS rating: 3.4 stars
- Dividend Yield: 7.73%
- Annualized Dividend: $1.98
- Market Capitalization: $1.87 billion
UAN is headquartered in Sugar Land, Texas and is focused on the production, distribution, and marketing of nitrogen fertilizers including ammonia and urea ammonium nitrate. The company has had a short, but fluctuating dividend payout history recently cutting payment from 60 cents per share to 49.6 cents per share. The dividend yield for UAN is 7.73% and the stock is up +3.26% year-to-date.
Terra Nitrogen Company, L.P. (NYSE:TNH)
- DARS Rating: 3.4 stars
- Dividend Yield: 7.63%
- Annualized Dividend: $16.48
- Market Capitalization: $4.04 billion
TNH is headquartered in Deerfield, Illinois and is focused on the production of nitrogen fertilizers including anhydrous ammonia and urea ammonium nitrate solutions. The company has had a long dividend history, paying a dividend almost every quarter every year since 1992. The dividend payment amount has fluctuated greatly over that time, however. The dividend yield for TNH is currently 7.63% and the stock is up +28.65% year-to-date.
Linn Energy LLC (NASDAQ:LINE)
- DARS Rating: 3.4 stars
- Dividend Yield: 7.46%
- Annualized Dividend: $2.90
- Market Capitalization: $7.76 billion
LINE is headquartered in Houston, Texas and is focused on the acquisition and development of oil and natural gas properties in various areas of the United States. The company has had a relatively flat dividend payouts throughout the years, only recently increasing quarterly dividend payout from 69 cents per share to 72.5 cents per share. The dividend yield for LINE is currently 7.46% and the stock is up +2.53% year-to-date.
TransMontaigne Partners L.P. (NYSE:TLP)
- DARS Rating: 3.4 stars
- Dividend Yield: 7.36%
- Annualized Dividend: $2.56
- Market Capitalization: $503.11 million
TLP is headquartered in Denver, Colorado and is focused on the storage and transportation of a number of energy products including petroleum, crude oil, fertilizers, chemicals, and natural gas liquids. The company has paid a dividend every quarter since 2005 and has increased dividend payments by small percentages almost every year in that period, most recently boosting payment from 63 cents per share to 64 cents per share. The dividend yield for TLP is currently 7.36% and the stock is up +3.57% year-to-date.
The Bottom Line
While these MLPs have attractive dividend yields, it is not the only factor to consider when evaluating potential investments. It’s also important to look at other metrics and analyze the relative strength, earnings potential, and dividend payout ratio of all potential investment opportunities.
This article was originally written by Michael Flannelly, and posted on CommodityHQ.