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Adding 10% Yielding MLPs On This Week's 10% Dip

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
MPLX LP 28.61   12.4 2.30 2.67 9.28
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
ENTERPRISE PRODUCTS 28.68   12.4 2.31 1.76 6.13
JPMORGAN ALERIAN MLP INDEX ETN  

MPLX LP - MPLX
MPLX LP - MPLX  


Older articles featuring Mplx Lp (MPLX):
Dividend Challenger Highlights: Week Of May 10
Midstream Dividend Update: More Maintaining Than Cutting
March 2020 Dividend Portfolio Update: A Month To Remember
February 2020 Dividend Portfolio Update
The Oil Price Slump Is The Gift That Keeps On Giving: 5 More Great High-Yield Stocks To Buy
My 19 Best Dividend Ideas For 2020
7 High-Yield Stocks I'm Buying For My Retirement Portfolio In This Red-Hot Market
January 2020 Dividend Portfolio Update
Dividend Challenger Highlights: Week Of February 9
90 Dividend Boosts Declared February 3, 2020

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