In this article, we discuss 10 best MLP dividend stocks to buy.
A master limited partnership (MLP) is a type of business enterprise that enjoys the tax concessions of a private partnership and the liquidity benefits of a publicly traded company. General partners of MLPs actively manage the companies and oversee operations, whereas shareholders are the limited partners of these entities.
MLPs are often found in the energy sector, such as oil and gas storage, pipeline transportation, and energy infrastructure companies. These businesses offer high yields to shareholders, which makes them attractive investments, especially during the current inflationary environment where dividends are an effective hedge.
With Brent crude oil prices hitting a 13-year high and crossing $130 per barrel amid Western sanctions on Russian energy, the demand for American oil and gas companies has exorbitantly increased, as well as their pricing power.
MLPs are tax-advantaged securities, which is why retail investors, retirees, and institutional investors alike gravitate towards them. In the booming oil market, where Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL) are in focus, attention is shifting to master limited partnerships for their attractive dividends, which are supported by the favorable market.
Our Methodology
After a careful assessment of the energy MLP universe, we picked stocks with high yields, growth prospects, and positive analyst ratings. Data from the exclusive group of 900+ elite hedge funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period was used to gauge the hedge fund sentiment around the stocks.
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Best MLP Dividend Stocks To Buy
10. USD Partners LP (NYSE:USDP)
Number of Hedge Fund Holders: 1
Dividend Yield as of March 15: 8.90%
USD Partners LP (NYSE:USDP) is a Texas-based company that develops and manages midstream energy infrastructure assets. The company is also a provider of transportation for energy-related products like crude oil and biofuels, operating across the United States and Canada.
On January 26, USD Partners LP (NYSE:USDP) announced a per share quarterly dividend of $0.121, a 2.1% increase from its prior dividend of $0.118. The dividend was distributed on February 18, for shareholders of record on February 9. USD Partners LP (NYSE:USDP)’s dividend yield came in at 8.90% on March 15.
Although USD Partners LP (NYSE:USDP) is a relatively small company, given the market cap barely exceeds $150 million, it is a smart play given upcoming growth catalysts. On January 18, the company announced its five-year contract with a key ethanol producer, which will increase incremental net cash by roughly $1 million and adjusted EBITDA by $1.5 million on an annual basis. USD Partners LP (NYSE:USDP) is also involved in renewable diesel operations through this contract, which could result in gains as the industry shifts to renewable energy given the Russia-Ukraine war and resultant oil crisis.
According to the fourth quarter database of Insider Monkey, Arrowstreet Capital owns 15,307 shares of USD Partners LP (NYSE:USDP), worth $81,000.
In addition to Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL), USD Partners LP (NYSE:USDP) is a notable income stock from the energy sector.
9. Crestwood Equity Partners LP (NYSE:CEQP)
Number of Hedge Fund Holders: 3
Dividend Yield as of March 15: 8.59%
Crestwood Equity Partners LP (NYSE:CEQP) operates in the energy midstream sector in the United States, supplying natural gas and crude oil, as well as energy-related services to producers in the Williston Basin and Powder River Basin.
On February 22, Crestwood Equity Partners LP (NYSE:CEQP) announced its fourth quarter earnings in a company press release, reporting a Q4 GAAP EPS of $0.79, above consensus by $0.48. Revenue over the period jumped almost 111% year-over-year, reaching $1.38 billion, outperforming market predictions by $190 million. Crestwood Equity Partners LP (NYSE:CEQP) expects the net income for 2022 to fall between $200 million to $260 million.
Crestwood Equity Partners LP (NYSE:CEQP) declared on January 21 a $0.625 per share quarterly dividend, which was paid on February 14, to shareholders of the company as of February 7. The stock yielded 8.59% on March 15, and remains a top MLP dividend pick.
JPMorgan analyst Dan Walk upgraded Crestwood Equity Partners LP (NYSE:CEQP) to Overweight from Neutral on February 28, lifting the price target from $32 to $34. The analyst noted that Crestwood Equity Partners LP (NYSE:CEQP) gained scale after it acquired Oasis Midstream, and new opportunities were offered to the company as a result of this acquisition. He also told investors that Crestwood Equity Partners LP (NYSE:CEQP)’s valuation is attractive at current levels.
Of the hedge funds that were bullish on Crestwood Equity Partners LP (NYSE:CEQP) at the end of December 2021, Springbok Capital held a significant stake in the company, with 425,014 shares worth $4.18 million.
8. Sunoco LP (NYSE:SUN)
Number of Hedge Fund Holders: 3
Dividend Yield as of March 15: 8.22%
Headquartered in Dallas, Texas, Sunoco LP (NYSE:SUN) is a motor fuel distribution company. The master limited partnership is controlled and managed by Energy Transfer Partners, a Texas-based company engaged in pipeline transport for natural gas and propane.
On February 16, Sunoco LP (NYSE:SUN) traded higher in pre-market after its Q4 earnings topped Street consensus, and revenues gained 94% as compared to the prior-year quarter, reaching $4.95 billion. The guidance for 2022 suggests a full-year adjusted EBITDA ranging from $770 million to $810 million and growth capital spending of at least $150 million.
Sunoco LP (NYSE:SUN) declared a $0.8255 per share quarterly dividend on February 4, in line with previous. The dividend was distributed to shareholders on February 18. The dividend yield stood at 8.22% as of March 15.
Citi analyst Timm Schneider upgraded Sunoco LP (NYSE:SUN) to Buy from Neutral with an unchanged price target of $49. The analyst cited the company’s “incrementally positive” Q4 earnings release for the upgrade, and he sees “solid underlying fundamentals” for the stock.
Ken Griffin’s Citadel Investment Group is the leading shareholder of Sunoco LP (NYSE:SUN), elevating its stake by 39% in Q4 2021. Ken Griffin’s fund owns 98,742 shares of the company, worth more than $4 million. Overall, 3 hedge funds were long Sunoco LP (NYSE:SUN) at the end of December 2021.
7. Dorchester Minerals, L.P. (NASDAQ:DMLP)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 15: 8.40%
Dorchester Minerals, L.P. (NASDAQ:DMLP) is a Texas-based limited partnership with royalty, leasehold, and net profit interests across natural gas and crude oil properties in the United States. The company delivers a dividend yield of 8.40% as of March 15.
On January 21, Dorchester Minerals, L.P. (NASDAQ:DMLP) declared a $0.639 per share quarterly dividend, a 26% increase from its earlier dividend of $0.507. The dividend was paid on February 10, to shareholders of record on January 31.
Dorchester Minerals, L.P. (NASDAQ:DMLP) reported on March 2 that it has agreed to a non-taxable contribution and exchange deal with multiple third parties to access mineral and royalty interests of about 3,600 acres situated in counties across Colorado, Louisiana, Ohio, Oklahoma, Pennsylvania, West Virginia, and Wyoming. The agreement will close on March 31, in exchange for 570,000 common limited partnership units of Dorchester Minerals, L.P. (NASDAQ:DMLP).
According to the fourth quarter database of Insider Monkey, 4 hedge funds were bullish on Dorchester Minerals, L.P. (NASDAQ:DMLP), with collective stakes of $35.7 million. Horizon Asset Management is the largest shareholder of the company, with more than 1 million shares worth close to $21 million.
6. Suburban Propane Partners, L.P. (NYSE:SPH)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 15: 8.63%
Based in Whippany, New Jersey, Suburban Propane Partners, L.P. (NYSE:SPH) is a distributor of propane, fuel oil, and refined fuels. The company also supplies natural gas and electricity to residential and commercial customers in New York and Pennsylvania.
On March 10, Suburban Propane Partners, L.P. (NYSE:SPH) announced that it will purchase a 25% equity stake in Independence Hydrogen, a private supplier of gaseous hydrogen for material handling and backup power applications. This acquisition will be valued at $30 million, and is a step towards Suburban Propane Partners, L.P. (NYSE:SPH)’s long-time ambition of branching out into the renewable energy sector.
Suburban Propane Partners, L.P. (NYSE:SPH) on January 20 declared a $0.325 per share quarterly dividend, which was distributed to shareholders on February 8. The stock yields 8.63% as of March 15.
According to the fourth quarter database of elite funds maintained by Insider Monkey, 4 funds held long positions in Suburban Propane Partners, L.P. (NYSE:SPH), compared to 3 funds in the prior quarter. The total stakes held in Q4 exceeded $9 million. Levin Capital Strategies held a prominent position in the company, with 222,803 shares worth $3.2 million.
Elite funds are steadily pouring into Suburban Propane Partners, L.P. (NYSE:SPH), in addition to Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL).
5. Blueknight Energy Partners, L.P. (NASDAQ:BKEP)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 15: 5.18%
Blueknight Energy Partners, L.P. (NASDAQ:BKEP) is a master limited partnership that offers integrated terminalling services for companies dealing in the production and supply of liquid asphalt in the United States. The stock yields 5.18% as of March 15.
On January 25, Blueknight Energy Partners, L.P. (NASDAQ:BKEP) declared a $0.0425 per share quarterly dividend, a 6.3% increase from its prior dividend of $0.04. The dividend was paid on February 14, to shareholders of record as of February 7.
As per the 2022 guidance, published on March 8, Blueknight Energy Partners, L.P. (NASDAQ:BKEP) expects adjusted EBITDA to be almost 2% higher on a year-over-year basis. This will not include any input from the company’s recently undertaken growth projects. The revenue of $30.24 million in Q4 2021 also gained 1.4% as compared to the prior-year quarter.
According to the fourth quarter database of Insider Monkey, 4 hedge funds were bullish on Blueknight Energy Partners, L.P. (NASDAQ:BKEP), compared to 5 funds in the prior quarter. The total stakes held in Blueknight Energy Partners, L.P. (NASDAQ:BKEP) were $17.5 million in Q4. DG Capital Management is the leading shareholder of the company, with roughly 4 million shares worth $13 million.
4. DCP Midstream, LP (NYSE:DCP)
Number of Hedge Fund Holders: 5
Dividend Yield as of March 15: 5.33%
DCP Midstream, LP (NYSE:DCP) is a Colorado-based midstream energy infrastructure company that transports and stores natural gas and natural gas liquids.
On January 25, DCP Midstream (NYSE:DCP) declared a quarterly dividend of $0.39 per share. The dividend was paid on February 14, for shareholders of record on February 4. DCP Midstream, LP (NYSE:DCP)’s dividend yield on March 15 was 5.33%.
Mizuho analyst Gabriel Moreen on February 11 raised the price target on DCP Midstream, LP (NYSE:DCP) to $37 from $35 and kept a Buy rating on the shares. The analyst noted that while DCP Midstream, LP (NYSE:DCP)’s guidance was initially disappointing, commodity upside is “low-hanging”.
A total of 5 hedge funds were bullish on DCP Midstream, LP (NYSE:DCP) in the fourth quarter of 2021, with combined stakes of $16.8 million. Matthew Hulsizer’s PEAK6 Capital Management is the leading shareholder of the company, with 186,023 shares worth $5.1 million.
3. Plains All American Pipeline, L.P. (NASDAQ:PAA)
Number of Hedge Fund Holders: 6
Dividend Yield as of March 15: 6.81%
Plains All American Pipeline, L.P. (NASDAQ:PAA) is a Texas-based company that provides pipeline transportation and storage of crude oil and natural gas liquids in the United States and Canada.
On January 27, Plains All American Pipeline, L.P. (NASDAQ:PAA) declared a $0.18 per share quarterly dividend. The dividend was paid on February 14, to shareholders of record on January 31.
Bernstein analyst Jean Ann Salisbury upgraded Plains All American Pipeline, L.P. (NASDAQ:PAA) on January 25 to Outperform from Market Perform with a $14.50 price target, suggesting 33% upside. The analyst observed that at the end of 2021, the Permian growth was quicker than anticipated and there is a “reasonably high likelihood” that one or two crude pipelines will convert to gas “or something else”. He cited these developments for the upgrade.
A total of 6 hedge funds were bullish on Plains All American Pipeline, L.P. (NASDAQ:PAA) in Q4 2021, compared to 7 funds in the previous quarter. Arrowstreet Capital is the largest shareholder, with 2.1 million shares worth $19.76 million.
2. MPLX LP (NYSE:MPLX)
Number of Hedge Fund Holders: 8
Dividend Yield as of March 15: 8.98%
MPLX LP (NYSE:MPLX) is a midstream energy infrastructure company that operates as a subsidiary of Marathon Petroleum Corporation in the United States. The company transports heavy oils, crude oil, natural gas liquids, renewable fuels, chemicals, and feedstock.
On January 25, MPLX LP (NYSE:MPLX) declared a quarterly dividend of $0.705 per share, in line with previous. The dividend was paid on February 14, for shareholders of record on February 4. MPLX LP (NYSE:MPLX) yields 8.98% as of March 15.
In its Q4 earnings report, published on February 2, MPLX LP (NYSE:MPLX) posted earnings per share of $0.78, topping market consensus by $0.04. The company’s revenue came in at $2.73 billion, outperforming estimates by $283.32 million.
Barclays analyst Theresa Chen raised the price target on MPLX LP (NYSE:MPLX) on January 20 to $35 from $34 and kept an Overweight rating on the shares. The analyst has a “generally positive outlook for the group in 2022” and expects “more variability” across refining results in Q4.
Among the hedge funds tracked by Insider Monkey, 8 funds were bullish on MPLX LP (NYSE:MPLX) at the end of December 2021, with collective stakes amounting to $50.3 million. Chiron Investment Management is the leading shareholder of MPLX LP (NYSE:MPLX), with 539,782 shares worth approximately $16 million.
Here is what Miller/Howard Investments has to say about MPLX LP (NYSE:MPLX) in its Q1 2021 investor letter:
“Lastly, we added MPLX LP (MPLX) in the with-MLP version. MLPX pays a high dividend and is cheap relative to similar pipeline companies… We increased our weight in MPLX LP (MPLX) which provides exposure to Permian volumes and northeast natural gas volumes. In addition, the company’s FCF yield was above the portfolio’s FCF yield.”
1. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 36
Dividend Yield as of March 15: 7.18%
Energy Transfer LP (NYSE:ET) was founded in 1996 and is headquartered in Dallas, Texas, operating as a master limited partnership engaged in natural gas and propane pipeline transport. Energy Transfer LP (NYSE:ET)’s dividend yield on March 15 came in at 7.18%.
On January 25, Energy Transfer LP (NYSE:ET) declared a $0.175 per share quarterly dividend, a 14.8% increase from its prior dividend of $0.1525. The dividend was paid on February 18, for shareholders of record on February 8.
Mizuho analyst Gabriel Moreen raised the price target on Energy Transfer LP (NYSE:ET) on February 18 to $14 from $13 and kept a Buy rating on the shares. The analyst noted that Energy Transfer LP (NYSE:ET) announced strong commercial updates that display growth potential, which is even more significant than its “strong” 2022 EBITDA guidance.
According to the Q4 database of Insider Monkey, 36 hedge funds were bullish on Energy Transfer LP (NYSE:ET), up from 29 funds in the earlier quarter. Abrams Capital Management is the biggest shareholder of the company, with more than 22 million shares worth $182 million.
Miller Value Partners, an investment firm, talked about Energy Transfer L.P. (NYSE:ET) in its Q2 2021 investor letter. Here is what the fund said:
“Energy Transfer LP (ET) rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
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Disclosure: None. 10 Best MLP Dividend Stocks To Buy is originally published on Insider Monkey.
