Calumet Specialty Products Partners, L.P (CLMT), Ferrellgas Partners, L.P. (FGP), NGL Energy Partners LP (NGL): Place These Dividend Champs on Your Watchlist!

Dividend champion or a value trap?

Kansas-based gas distributor Ferrellgas Partners, L.P. (NYSE:FGP) is another player with an exceptional dividend yield of 10.8%. The yield has gone up recently, as the stock has corrected from $21 to $18.5 now. Probably, the only question mark over this stock (and that’s a big one) is the mounting pile of debt.

At the end of January, its debt stood at $1.08 billion, while shareholders’ equity remained in the red. Recent quarterly performance has not been really encouraging with the company reporting lower revenue. To combat lower propane prices, the company seems to be focusing on acquiring small companies to support profits.

This is a materially different strategy than the one used by NGL Energy Partners LP (NYSE:NGL). Earlier this week, the company said it is buying New York-based barbecue accessories company Mr. Bar-B-Q. While financial terms of the deal were not disclosed, it is said to be accretive with immediate effect. This strategy may work in the short-term, but Ferrellgas Partners, L.P. (NYSE:FGP) runs the risk of being saddled with businesses unrelated to its core operations in the long-term.

In conclusion, income investors may want to take a closer look at core operations of Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) and NGL Energy Partners LP (NYSE:NGL) to benefit from not just dividends, but capital gains too. Ferrellgas Partners, L.P. (NYSE:FGP) remains a dark horse which cannot be ruled out, but it requires extra scrutiny for the cautious investor.

The article Place These Dividend Champs on Your Watchlist! originally appeared on Fool.com and is written by Jacob Wolinsky.

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