Kinder Morgan Energy Partners LP (KMP), Enbridge Energy Partners, L.P. (EEP) – Juicy MLPs: Know Your Risks, or Risk Your Future

Kinder Morgan Energy Partners LP (NYSE:KMP), on the other hand, is facing opposition to its requests for a pipeline in the Arctic area. The prospects of an Arctic pipeline would face serious challenges from environmentalists as well as possible resistance from the aboriginal communities along the route. There also exists the threat that unpredictable ice conditions in the Beaufort Sea could block ports. On the political forefront, the leader of the opposition party most likely to win next month’s election in British Columbia expressed major doubts about Kinder Morgan Energy Partners LP’s plan to more than double the capacity of its existing Trans Mountain pipeline from Alberta to Vancouver.

Enterprise Products (NYSE:EPD) Partners has a very small window to grow its dividend payout ratio, because their heavy debt seems to be a drag on the company’s earnings. Future earnings growth for Enterprise is expected at 5% per year for the next five years. Another alarming matter is the current level of their P/B ratio (3.94). If the company shows signs of weakness, the P/B indicator is at risk of decompressing, pulling the stock price down.

Key points

Kinder Morgan and Enbridge Energy Partners, L.P. (NYSE:EEP) both are facing fundamental barriers to expansion at a time when the production in Canadian oil sands is booming. While Enbridge struggles with organic growth, Kinder Morgan has managed to become the largest midstream and third largest energy company in North America, which gives it some power to marginalize the threats of opposition. Enbridge Energy Partners, L.P. (NYSE:EEP), on the other hand, suffers when its pipelines are shut down for one reason or another.

For Enterprise Products Partners, the company currently delivers juicy dividends and has a very strong growth history, a solid backlog of new projects and high distribution coverage ratio; however, there is little potential for future growth of the dividend yield. I recommend waiting for a pullback, before investors start their position.

Marina Avilkina has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P.

The article Juicy MLPs: Know Your Risks, or Risk Your Future originally appeared on Fool.com and is written by Marina Avilkina.

Marina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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