In this article, we will be taking a look at 5 tax-advantaged MLPs with high dividend yields. To read our detailed analysis of dividend investing, you can go directly to see the 10 Tax-Advantaged MLPs with High Dividend Yields.
5. Energy Transfer LP (NYSE: ET)
Number of Hedge Fund Holders: 29
Dividend Yield: 6.43%
Energy Transfer LP (NYSE: ET) is a provider of energy-related services through its natural gas transportation pipelines spanning about 9,400 miles, and its three natural gas storage facilities in Texas. The company also owns about 12,340 miles of interstate natural gas pipelines. It ranks 5th on our list of tax-advantaged MLPs with high dividend yields.
This July, Keith Stanley, an analyst at Wolfe Research, upgraded shares of Energy Transfer LP (NYSE: ET) from Peer Perform to Outperform. The analyst also raised the stock’s price target to $13.
In the second quarter of 2021, Energy Transfer LP (NYSE: ET) had an EPS of $0.20, missing estimates by $0.07. The company’s revenue was $15.10 billion, up 105.79% year over year and beating estimates by $178.09 million. Energy Transfer LP (NYSE: ET) has gained 24.08% in the past 6 months and 55.41% year to date.
By the end of the second quarter of 2021, 29 hedge funds out of the 873 tracked by Insider Monkey held stakes in Energy Transfer LP (NYSE: ET) worth roughly $835 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $647 million.
Miller/Howard Investments, an investment management firm, mentioned Energy Transfer LP (NYSE: ET) in its first-quarter 2021 investor letter. Here’s what they said:
“Another upweight was Energy Transfer (ET), which was selling at a discount on EV/ EBITDA compared with the portfolio and had an attractive +20% FCF yield. Further, ET’s ample FCF should exceed the current distribution even if the Dakota Access Pipeline were to be shut down.”
4. Viper Energy Partners LP (NASDAQ: VNOM)
Number of Hedge Fund Holders: 12
Dividend Yield: 7.3%
Viper Energy Partners LP (NASDAQ: VNOM) is an energy company that owns, acquires, and exploits oil and natural gas properties. The company operates mainly in North America and ranks 4th on our list of tax-advantaged MLPs with high dividend yields. As of December 2020, the company had mineral interests in 24,350 net royalty acres in the Permian Basin and Eagle Ford Shale; and estimated proved oil and natural gas reserves of 99,392 thousand barrels of crude oil equivalent.
Citigroup’s Brian Downey raised his price target on shares of Viper Energy Partners LP (NASDAQ: VNOM) from $20 to $22 this July and also reiterated a Buy rating on the stock.
In the second quarter of 2021, Viper Energy Partners LP (NASDAQ: VNOM) had an EPS of $0.09, beating the previous quarter’s EPS of -$0.08. The company’s revenue was $114.15 million, up 249.41% year over year and beating estimates by $25.32 million. Viper Energy Partners LP (NASDAQ: VNOM) has gained 15.24% in the past 6 months and 48.36% year to date.
By the end of the second quarter of 2021, 12 hedge funds out of the 873 tracked by Insider Monkey held stakes in Viper Energy Partners LP (NASDAQ: VNOM) worth roughly $94 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $59 million.
3. Enterprise Products Partners L.P. (NYSE: EPD)
Number of Hedge Fund Holders: 28
Dividend Yield: 8.12%
Enterprise Products Partners L.P. (NYSE: EPD) is another energy company on our list of tax-advantaged MLPs with high dividend yields. The company offers provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products, and ranks 3rd on our list.
This April, TD Securities analyst Linda Ezergailis began covering shares of Enterprise Products Partners L.P. (NYSE: EPD) with a Buy rating alongside a $28 price target.
In the second quarter of 2021, Enterprise Products Partners L.P. (NYSE: EPD) had an EPS of $0.51, beating estimates by $0.01. The company’s revenue was $9.45 billion, up 64.32% year over year and beating estimates by $1.54 billion. Enterprise Products Partners L.P. (NYSE: EPD) has gained 4.03% in the past 6 months and 14.98% year to date.
By the end of the second quarter of 2021, 28 hedge funds out of the 873 tracked by Insider Monkey held stakes in Enterprise Products Partners L.P. (NYSE: EPD) worth roughly $246 million. This is compared to 26 hedge funds in the previous quarter with a total stake value of approximately $299 million.
ClearBridge Investments, an investment management firm, mentioned Enterprise Products Partners L.P. (NYSE: EPD) in its first-quarter 2021 investor letter. Here’s what they said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
2. Magellan Midstream Partners, L.P. (NYSE: MMP)
Number of Hedge Fund Holders: 13
Dividend Yield: 8.5%
Magellan Midstream Partners, L.P. (NYSE: MMP) transports, stores, and distributes refined petroleum products and crude oil in the US. This energy company ranks 2nd on our list of tax-advantaged MLPs with high dividend yields and operates through its Refined Products and Crude Oil segments.
Gabriel Moreen, an analyst at Mizuho, just this July raised the price target on shares of Magellan Midstream Partners, L.P. (NYSE: MMP) from $47 to $50. The analyst also reiterated a Neutral rating on the shares.
In the second quarter of 2021, Magellan Midstream Partners, L.P. (NYSE: MMP) had an EPS of $1.38, beating estimates by $0.31. The company’s revenue was $653.64 million, up 41.79% year over year and beating estimates by $73.71 million. Magellan Midstream Partners, L.P. (NYSE: MMP) has gained 16.01% in the past 6 months and 16.85% year to date.
By the end of the second quarter of 2021, 13 hedge funds out of the 873 tracked by Insider Monkey held stakes in Magellan Midstream Partners, L.P. (NYSE: MMP) worth roughly $89 million. This is compared to 14 hedge funds in the previous quarter with a total stake value of approximately $85 million.
1. Antero Midstream Corporation (NYSE: AM)
Number of Hedge Fund Holders: 16
Dividend Yield: 9.55%
Antero Midstream Corporation (NYSE: AM) owns and operates midstream energy infrastructure and ranks 1st on our list of tax-advantaged MLPs with high dividend yields. The company operates through its Gathering and Processing, and Water Handling segments.
Mark Carlucci, an analyst at Morgan Stanley, upgraded shares of Antero Midstream Corporation (NYSE: AM) from Underweight to Equal Weight this March. The analyst also raised his price target on Antero Midstream Corporation (NYSE: AM) shares from $6 to $11.
In the second quarter of 2021, Antero Midstream Corporation (NYSE: AM) had an EPS of $0.23, beating estimates by $0.01. The company’s revenue was $232.79 million, up 5.94% year over year and beating estimates by $11.90 million. Antero Midstream Corporation (NYSE: AM) has gained 6.8% in the past 6 months and 23.46% year to date.
By the end of the second quarter of 2021, 16 hedge funds out of the 873 tracked by Insider Monkey held stakes in Antero Midstream Corporation (NYSE: AM) worth roughly $106 million. This is compared to 17 hedge funds in the previous quarter with a total stake value of approximately $123 million.
Bonhoeffer Capital Management, a value-oriented investment management firm, mentioned Antero Midstream Corporation (NYSE: AM) in its fourth-quarter 2020 investor letter. Here’s what they said:
“Public LBOs (32% of Portfolio; Quarterly Average Performance +25%)
This includes our broadcast TV franchises, leasing and roll-on/roll-off (RORO) shipping, and our natural gas pipeline firm. One trend in these levered firms is the increasing spread between bond yields and the firms’ free cash flow yield.
An example is Antero Midstream, whose FCF yield was 15% as of December 31, 2020, with a debt yield of 6% with the bond/equity FCF spread of 9%. This is a large spread given that Antero Midstream has completed its backbone infrastructure and gathering investment and capital expenditures should be small going forward. With natural gas prices rebounding, Antero Midstream cash flows become more secured as Antero Resources has more cash flow cushion in making payments to Antero Midstream. The recovery in natural gas prices is expected to continue as the economy opens up and low oil prices have shut down Permian oil wells that were generating almost-free associated natural gas. Antero Midstream’s FCF yield of 15% is also higher than similarly secured Antero subordinated debt with a yield of 7.8%.”
See also 10 Most Profitable Cash-Only Businesses To Avoid Taxes and Billionaire James Dinan’s Top 10 Stock Picks.
