If the share price of an MLP plummets after the IPO, investors are still getting that guaranteed dividend. The return is there immediately for MLP investors; it’s not there for Facebook investors. All this means, really, is that there’s no rush to get into, or out of, these specific offerings. Investors want to buy MLPs because of the consistent returns. Volatility is often — though not always — a stranger to these equities.
The other side of this coin is that, especially with MLP spinoffs from established businesses, as is the case with MPLX, there is no guesswork. Marathon Petroleum Corp (NYSE:MPC) simply made public another level of its proven business, compared with Facebook Inc (NASDAQ:FB), a company that’s continuing to figure out exactly how it can monetize data collected from its user base.
Coming soon
Many established companies are considering MLP spinoffs of its existing assets, which could provide enticing opportunities for investors in the near future. Exploration and production company Devon Energy Corp (NYSE:DVN) has announced that the midstream MLP it was considering is officially going to happen. The company plans to IPO its spinoff sometime during the third quarter if the regulatory process goes according to plan.
A pair of refiners will probably join Devon, as Phillips 66 (NYSE:PSX) and PBF Energy Inc (NYSE:PBF) have announced their desire to spin off midstream assets as well. Phillips 66 is further along in the process than PBF Energy, and we could see that company’s MLP IPO by the end of the year. PBF Energy Inc (NYSE:PBF) has mentioned the plan only offhandedly, and it probably won’t come to fruition in 2014, if it does happen.
There will be at least three new MLPs to consider for your portfolio. Just don’t expect the IPO to pop and drop before you buy.
High yields and strong businesses are the backbone of the energy MLP space. One promising MLP is Energy Transfer Partners LP (NYSE:ETP), a company that helps alleviate the gluts in supply with its 23,500 miles of transformational pipelines. To see if ETP and its sizable dividend payment could be a good fit for your portfolio, you’re invited to check out The Motley Fool’s premium research report on the company. Simply click here now for a thorough expert analysis of this midstream company.
The article A Closer Look at MLPs and IPOs originally appeared on Fool.com and is written by Aimee Duffy.
Fool contributor Aimee Duffy has no position in any stocks mentioned. If you have the energy, follow her on Twitter @TMFDuffy.The Motley Fool recommends Facebook Inc (NASDAQ:FB) and owns shares of Devon Energy Corp (NYSE:DVN) and Facebook.
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