For many investors, publicly traded master limited partnerships (MLPs) can be valuable tools for income. As partnerships, MLPs are subject to a special tax code and avoid federal and state corporate income taxes. Their distributions to investors are partially or entirely tax-deferred.
Most MLPs are high yield investments and increase their distributions to investors each quarter, achieving a consistent dividend growth for years. However, investing in MLPs can be tricky due to the disadvantages of holding them in tax-deferred accounts. Investors should consult with their tax advisors before adding MLPs to their portfolios.
The market data for stocks listed below are sourced from Fidelity and data is as of Aug. 26, 2011. All companies on the list have a 12-month dividend yield of at least five percent. The stocks also have market capitalizations above $3 billion and positive average dividend growth over the past five years. The average dividend yield of these 11 stocks is 7.00 percent, while their five-year average dividend growth is 6.29 percent on average.
Boardwalk Pipeline Partners (NYSE: BWP) is a U.S. energy partnership that provides natural gas transportation and storage services in the United States. BWP lost -17.68 percent since the beginning of this year and the stock now has an 8.59 percent dividend yield. In the past five years, BWP increased its dividend payments by 6.68 percent annually. The stock recently traded at $24.56 and has a market cap of $4.84 billion. Jim Simons and Chuck Royce are prominent BWP investors.
Energy Transfer Partners (NYSE: ETP) is a limited partnership that operates in the natural gas transportation business in the United States. ETP lost -8.24 percent year-to-date and the stock now has a 8.24 percent dividend yield. In the past five years, ETP increased its dividend payments by 6.99 percent annually. The stock recently traded at $43.36 and has a market cap of $9.06 billion. Jim Simons holds the largest ETP position.
Enbridge Energy Partners (NYSE: EEP) is a U.S. energy partnership providing crude oil, liquid petroleum and natural gas transportation and storage services in the United States. EEP lost -7.85 percent since the beginning of this year and it has a 7.59 percent dividend yield. In the past five years, EEP increased its dividend payments by 2.86 percent annually. The stock recently traded at $27.34 and has a market cap of $7.17 billion.
NuStar Energy (NYSE: NS) is a U.S. partnership that operates petroleum terminals and provides petroleum transportation services. NS lost -13.11 percent in 2011 and the stock now has a high dividend yield of 7.53 percent. In the past five years, NS increased its dividend payments by 4.35 percent annually. The stock recently traded at $57.40 and has a market cap of $3.62 billion.
Kinder Morgan Energy Partners (NYSE: KMP) is a U.S. energy partnership providing energy products transportation and storage services. KMP has a 6.68 percent dividend yield and returned 1.13 percent since the beginning of this year. In the past five years, KMP increased its dividend payments by 7.26 percent annually. The stock recently traded at $67.82 and has a market cap of $22.38 billion.
Buckeye Partners (NYSE: BPL) is a U.S. energy partnership that distributes petroleum in the United States. BPL lost -5.12 percent since the beginning of this year and it now has a 6.58 percent dividend. In the past five years, BPL increased its dividend payments by 5.84 percent annually. The stock recently traded at $60.45 and has a market cap of $5.55 billion. John Phelan's MSD Capital and Michael Messner’s Seminole Capital are the most prominent BPL investors.
Plains All American Pipeline (NYSE: PAA) is a limited partnership that provides energy products transportation, storage and marketing services in the United States and Canada. PAA has a 6.50 percent dividend yield but lost -1.08 percent since the beginning of this year. In the past five years, PAA increased its dividend payments by 6.27 percent annually. The stock recently traded at $59.36 and has a market cap of $8.78 billion.
Markwest Energy Partners (NYSE: MWE) is a U.S. partnership that provides natural gas transportation and processing services in the United States. MWE has a 6.03 percent dividend yield and gained 6.32 percent since the beginning of this year. In the past five years, MWE increased its dividend payments by 8.76 percent annually. The stock recently traded at $44.10 and has a market cap of $3.45 billion.
Enterprise Product Partners (NYSE: EPD) is a U.S. partnership that distributes natural gas and crude oil in the United States, Canada and the Gulf of Mexico. EPD has a 5.89 percent dividend yield and returned 1.05 percent year-to-date. In the past five years, EPD increased its dividend payments by 5.98 percent annually. The stock recently traded at $40.34 and has a market cap of $33.78 billion.
Williams Partners (NYSE: WPZ) is an American energy partnership that engages in natural gas exploration, processing, storage and transportation. WPZ has a 5.46 percent dividend yield and gained 16.15 percent since the beginning of this year. In the past five years, WPZ raised its dividend payments by 11.50 percent annually. The stock recently traded at $52.00 and has a market cap of $15.03 billion.
Magellan Midstream Partners (NYSE: MMP) is a U.S. partnership that provides transportation and storage services for refined petroleum products. MMP has a 5.29 percent dividend yield and returned 6.50 percent since the beginning of this year. In the past five years, MMP increased its dividend payments by 6.33 percent annually. The stock recently traded at $57.81 and has a market cap of $6.45 billion.
