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Top 3 Dividend MLPs - High Dividend Master Limited Partnerships - High Dividend Stocks for 2020 - YouTube
Channel: Learn to Invest - Investors Grow
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Hi I'm Jimmy in this video
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we're looking at the top three
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dividend paying MLP its
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MLP is short for master limited
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partnership.
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So these three different paying
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stocks have strong coverage ratios
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and plenty of free cash flow coming
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in to continue to pay their
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dividends in the future.
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And then at the end of the video I
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actually got two bonus MLP
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dividend paying stocks that
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are quite good.
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I expect their dividends to be
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fairly consistent.
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They just weren't quite solid enough
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to make the top three list.
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Now I plan on doing a series of
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videos just like this where I try to
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find the top dividend paying stocks
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for each sector although
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MLPs aren't technically their own
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sector they tend to be very
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good dividend payers.
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So I thought it made sense to start
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with these. This whole group.
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So if you have a preference for
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for which sector we might do next
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please let me know in the comments
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below. And if you're curious to
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learn more about MLPs please.
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Again in the comments because I've
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put together a few primers on
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closed end funds or REITs I've
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been considering doing an MLP primer
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if that's something you'd be
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interested in knowing about.
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Let me know.
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Basically what we need to know for
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this video is master limited
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partnerships tend to focus on the
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oil and gas market.
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They're usually involved in the
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shipping and delivery of both oil
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and gas and generally they have
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great dividends because
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they don't have to pay corporate
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income tax as long as they pass
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through their profits to the
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shareholders.
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Okay let's kick off our top three
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MLP list with the smallest
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company on our list and that's
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Magellan Midstream Partners
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ticker symbol MMP.
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So MMP has a dividend yield
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of about 6 percent with
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the current price of about sixty six
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dollars per share and they have a
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dividend of almost four dollars.
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When we look at their dividends over
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the past four quarters this
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is a chart of Magellan dividend
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history and as we could see
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they have steadily increased their
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dividend every year an
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analyst estimates those that are
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running the green bars while they're
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ex that they're expecting for these
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dividends to continue an increase in
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the coming years.
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Okay. So what does Magellan do.
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Well they own a lot of pipelines
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and they're in the early stages of
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building another pipeline down in
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Texas and they
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expect for this to be a good cash
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flow generator for them over the
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long run.
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Now one of the reasons I picked
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each of these three MLPs on our list
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is that they have fairly low
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exposure to oil and gas prices.
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Instead the majority of their
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revenue is generated from fees
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for shipping.
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Not all of it but compared to the
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rest of the industry.
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Most of it is now Magellan
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is well positioned to bring in
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good amounts of cash flow with
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their current pipelines and
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this should ultimately lead to them
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being able to continue to increase
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their dividends at the end of the
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day free cash flow for these
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companies are the most important
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things. And since they're getting
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paid to ship it in a very
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active market down near Texas.
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Well I would expect for their
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profits to stay fairly consistent.
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Okay. Onto our next dividend paying
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stock. This is enterprise product
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partners ticker symbol EPD.
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So EPD is one of
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the largest MLPs out there
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and I like them.
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They're one of my favorite a
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mouthpiece because they control a
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ton of key assets so
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their assets what they control
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are crucial for their customers
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businesses.
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This allows for them to consistently
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bring in free cash flow
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and ultimately support their
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impressive dividend yield.
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This their dividend history and
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based on their dividends over the
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past 12 months which totaled to be
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about a dollar seventy five in their
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current price which is about twenty
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eight dollars and fifty cents.
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Well once again their dividend yield
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ends up being about 6 percent.
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So clearly a lot of these companies
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have impressive dividend yields.
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Now one thing I like about EPD is
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that they recently signed a long
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term contract with Chevron
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and this is allowing for EPD
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to develop their seaport oil
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terminal which is on the Texas
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Gulf Coast.
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And this is likely to take a few
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years to build.
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But knowing that they have a long
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term contract with Chevron makes
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it a lot easier to commit the one
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or two billion dollars it's going to
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cost them to build it.
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It's much easy to do that when you
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know you have waiting customers.
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I would expect for this 6 percent
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dividend yield to remain reliable
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and likely continue to increase
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going into 2020 and
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beyond.
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Okay now we jump over to our final
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MLP and then we're going to look
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quickly at the 2 bonus MLP
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that we have after them.
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Next up we have the TC Energy
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Corp ticker symbol TRP
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and as is true with the other two
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MLPs, the dividends for TRP
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have been very consistent
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and projections have the moving
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even higher over the next couple of
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years.
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So as you can imagine these are
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one of the main reasons that I
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wanted these three companies on this
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list. I believe these are
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three of the most reliable dividend
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payers out there.
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Now yes TC Energy
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has done a good job of increasing
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their dividends.
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And based on their dividends over
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the past year well their dividend
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yield is currently more than five
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and a half percent.
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So another great dividend stock
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but they're in a slightly different
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position than the first two MLP.
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So TC energy has recently
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come off some they've sold
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some of their assets to try to
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reduce deleverage on their balance
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sheet. Now I'm not terribly
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concerned about this reduction
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in assets because they still got
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on as strong our natural
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gas pipeline that's growing fairly
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strongly. This should help keep
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their free cash flow strong enough
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to maintain their dividend.
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Now TC energy has been tied
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to the Keystone pipeline and I'm
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sure we've all heard the regulatory
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issues or the regulatory struggles
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tied to the Keystone pipeline.
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And this was hurting to see energy
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for a while but
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they've had a great 2019 since
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it seems that Keystone is moving
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in their favor from a regulatory
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standpoint.
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Okay. So those are the top three MLP
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that we have for very secure
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divisions.
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Now we have two bonus companies that
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I also suspect will have fairly
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secure dividends for the next couple
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of years. But for some reason
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we thought that they fell behind
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these top three.
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So the first company is Kinder
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Morgan ticker symbol KMI
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now just like the other MLPs I
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expect for Kinder Morgan to do quite
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well since they're well positioned
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in the midstream market.
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So I did keep them off the top three
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list. Well this is a chart of their
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dividend history going back the past
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few years.
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And as we can see they're not nearly
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as stable as the companies we
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ultimately went with.
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Now I do believe that they will
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continue to grow their dividends.
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Analyst expectations seem to believe
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the same thing but they
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weren't quite good enough to make
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the top three list.
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Kinder Morgan currently has a
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dividend yield of about four and a
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half percent.
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Okay. Onto our next company that's
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Plains All American ticker symbol
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PAA.
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So PAA recently went
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through a restructuring over the
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past few years and they cut their
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distributions quite a few times
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now.
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They're expected to continue to grow
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from here.
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And ultimately I think that they're
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6 percent or so dividend yield
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is fairly stable.
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I think that they're in a fairly
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good position.
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I just wouldn't classify them quite
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as steady as the top
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three companies that we ultimately
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chose.
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So what do you like
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do you like the top three
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MLP is that we ultimately decided to
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go with do you like the bonus
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companies who have a different MLP
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that you would prefer to hold for
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the long haul let me know what you
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think in the comments below.
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If you haven't done so yet please
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hit the subscribe button.
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Thank you so much for stick with me.
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Although it into the video and I'll
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see in the next video.
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Thanks.
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