Published Tue, 03 Mar 2020 09:15:45 -0500 on Seeking Alpha
The Alerian MLP benchmark declined by around 14% over the past week, pushing its dividend yield to the 10% level not seen since early 2016.
In this article, I take a quick look at the numbers and long-term fundamental histories of the 5 top MLPs in the Alerian benchmark.
Seeing this week's sell-off as far greater than the likely impact to cash flows, I am buying more MLPs on this dip.
Master Limited Partnerships (MLPs) tend to be a favored source of very high dividend yields for many investors. There are many articles here on SeekingAlpha covering MLPs and their tax advantages / challenges, so in this article, I will only focus on:
This week's ~14% drop in the major MLP benchmark index, and A longer term view on that benchmark's top 5 components. In doing so, I hope to make clear why I have decided to buy more MLP exposure on this week's dip.
The most tracked benchmark of MLPs is the Alerian MLP Index. I first heard of MLPs when my team at Bear Stearns starting working on the first exchange-traded note (NYSE: ETN) to track the Alerian MLP index tax-efficiently, and after JP Morgan's 2008 takeover of Bear Stearns in 2008, this ETN became the JP Morgan Alerian MLP Index ETN (AMJ). Two years later, in 2010, an ETF launched as a C-corporation also tracking the Alerian MLP index that has since become the largest exchange-traded product (ETP) covering this sector, simply called the Alerian MLP ETF (AMLP).
The past 10 years' performance of MLPs can be summarized as a dramatic run up until the end of 2014, when oil prices collapse, followed by a crash and stagnation in MLP returns. On a total return basis, $10,000 invested in either AMLP or AMJ in 2010 would still be worth less than $10,000 today, even with all dividends reinvested:
Data by YCharts
A significant part of that drop of course occurred in just the past five business days, when both AMLP and AMJ fell by about 14%:
Data by YCharts
This drop brings the dividend yield of AMJ back... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|PLAINS ALL AM. PIPELINE||21.20||5.3||3.99||1.44||6.75|
|MAGELLAN MIDSTREAM PARTNERS||65.61||11.0||5.99||4.05||6.20|
|JPMORGAN ALERIAN MLP INDEX ETN|
Older articles featuring Mplx Lp (MPLX):Antero Midstream Corp: Oil & Gas Stock With 13.2% Dividend Up 121% YoY
Analyzing iShares Core High Dividend ETF For My Dividend Growth Portfolio
Dividend Challenger Highlights: Week Of November 8
Midstream/MLP Earnings So Far: M&A, Dividends, Buyback And ESG
Dividend Challenger Highlights: Week Of November 1
Rattler Midstream: An Unfairly Beaten Up MLP With A 17% Yield
My Dividend Growth Portfolio - Q3 2020 Summary
September 2020 Dividend Portfolio Update
AMZA: The Surprising Verdict On The 20% Plus Yield
August 2020 Dividend Portfolio Update