Sunoco Logistics Partners L.P. (SXL), Plains All American Pipeline, L.P. (PAA): Better Metrics for Evaluating MLP Distributions

Adding that metric to the other dividend metrics: 10 years of raising dividends (in fact, Sunoco Logistics Partners L.P. (NYSE:SXL) has actually raised its dividend every quarter for the past 31 quarters) and its 5-year dividend growth rate of 13.9%, I still love this MLP.

Second favorite – Enterprise Products Partners L.P. (NYSE:EPD)

Enterprise Products Partners L.P. (NYSE:EPD) announced 1Q earnings on April 13, with a great report. Net income increased 16% versus the prior year, and earnings per share were up by 14%. DCF for 1Q13 was $897 million, against 911 million units outstanding, for a potential distribution of $0.98 per unit. Management increased the quarterly distribution by 6.8% versus year-ago, to $0.67, for an annualized yield of 4.4%. The coverage ratio is 1.5, meaning that Sunoco Logistics Partners L.P. (NYSE:SXL) can continue to pay its distribution with little trouble.

Including the other important dividend metrics, like the 14-year history of raising dividends and its 5.7% dividend growth rate, this is a terrific MLP.

If I wanted another MLP in my portfolio

I would choose Plains All American Pipeline, L.P. (NYSE:PAA). It’s not in my Perfect Dividend Portfolio, because the other two already are, but it’s definitely at the top of my list of income companies that I like.

Plains All American Pipeline, L.P. (NYSE:PAA) announced blowout 1Q earnings on May 6, with strong increases in net income (130%), diluted income per unit (149%) and EBITDA (96%) versus 1Q 2012 numbers.

Distributable cash flow beat 1Q 2012 by 57%, and against 339 million units outstanding, gives a potential distribution of $1.26. The actual distribution of $0.575 is 10% higher than the 1Q distribution in 2012, and provides a coverage ratio of 2.2, indicating a conservative, sustainable distribution.

Plains All American Pipeline, L.P. (NYSE:PAA) has been raising its dividend for 13 years and has a dividend growth rate of 5.9%. Plains All American Pipeline, L.P. (NYSE:PAA) currently yields 4.1% and would be a fantastic addition to an income portfolio.

Conclusion

All three of these companies are in excellent condition to continue paying out distributions to their partners, and all are up substantially in price over the past twelve months. With 2Q earnings announcements coming up in the next month, I look forward to re-calculating these metrics, and proving once again that they are companies well worth owning.

The article Better Metrics for Evaluating MLP Distributions originally appeared on Fool.com and is written by Karin Hernandez.

Karin Hernandez is long Sunoco Logistics Partners and Enterprise Product Partners. The Motley Fool recommends Enterprise Products Partners L.P. Karin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.