It’s tough out there for income investors. The Dow Jones Industrial Average recently broke its record high and continues to climb. Making matters more difficult, interest rates are at historic lows. This combination of the Federal Reserve’s monetary policy and rising equity markets means that suitable yields are hard to come by for dividend hunters. Thankfully, Master Limited Partnerships provide hefty dividend yields during both bull and bear markets. One MLP in the oil and gas space that has a commanding yield significantly higher than its peers is Buckeye Partners, L.P. (NYSE:BPL), and you’d do yourself a service by getting to know this stock.
Buckeye Partners, L.P. (NYSE:BPL) is a publicly traded Master Limited Partnership that owns and operates one of the largest independent liquid petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 6,000 miles of pipeline. Buckeye Partners, L.P. (NYSE:BPL) also owns approximately 100 liquid petroleum products terminals with aggregate storage capacity of over 70 million barrels.
The company’s fourth quarter diluted net income per unit came in at $.96, up from $.64 during the fourth quarter of 2011. Full-year results were also good, with net income per unit clocking in at $2.32, an increase from $1.20 the year prior. Buckeye Partners, L.P. (NYSE:BPL) generated a company record adjusted earnings before interest, taxes, depreciation, and amortization (EBIDTA) for the fourth quarter and full year, and Chief Executive Officer Clark Smith boasted that the company saw year-over-year improvements in each of its business segments.
Fellow oil and gas Master Limited Partnerships Plains All American Pipeline (NYSE:PAA) also reported strong fourth-quarter and full-year net income per diluted unit of $0.69 and $2.40, respectively. During 2012, the company invested $3.5 billion of total capital, including $1.2 billion in organic growth projects and $2.3 billion in acquisitions. Plains All American Pipeline, L.P. (NYSE:PAA) has a high dividend yield of 4%; the company’s first-quarter distribution was 10% higher than it was one year ago.
An interesting alternative to Buckeye Partners and Plains All American Pipeline, L.P. (NYSE:PAA) is Energy Transfer Partners LP (NYSE:ETP). Like its Master Limited Partnership peers, Energy Transfer Partners LP (NYSE:ETP) engages in the storage and transportation of energy. However, unlike Buckeye Partners, L.P. (NYSE:BPL) and Plains All American Pipeline, L.P. (NYSE:PAA), Energy Transfer operates in the natural gas industry. The company gathers, processes, and markets natural gas in Texas, New Mexico, West Virginia, and Louisiana.
Between its Midstream, Interstate, and Intrastate operations, the company has more than 27,000 miles of natural gas transportation pipelines. Energy Transfer Partners LP (NYSE:ETP) provides investors a hefty dividend of more than 7.5%, although it’s worth noting that the partnership hasn’t increased its distribution since 2008.
Buckeye Partners, L.P.: a bright present, a brighter tomorrow
Going forward, Buckeye Partners, L.P. (NYSE:BPL)’s management has confidence in the company’s direction. Future growth will be fueled by Buckeye’s flagship marine terminal in the Bahamas. This facility, known as BORCO, is one of the largest crude oil and petroleum products storage facilities in the world that serves the international markets. During the fourth quarter of 2012, Buckeye expanded its BORCO operation by placing into service 775,000 barrels of refined product storage capacity, with another 1.6 million barrels of fully leased capacity to be placed into service in the first quarter of 2013, increasing BORCO’s storage capacity to 25 million barrels.
Perhaps my favorite aspect of Buckeye is its extremely attractive dividend, which currently stands at more than 7% annually. Buckeye has paid cash distributions in each quarter since its formation in 1986. In fact, investors could have secured Buckeye’s distribution at an even better level just a couple of months ago, when the company’s units traded for a much lower price. But as the saying goes, a good deal doesn’t last long, and Buckeye Partners, L.P. (NYSE:BPL)’s shares are on the rise. It’s not too late to snag this solidly operated, high-yielding Master Limited Partnership to provide your portfolio with a hefty dividend.
The article Get to Know This High-Yield MLP originally appeared on Fool.com and is written by Robert Ciura.
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