The 25 Highest-Yielding MLPs

Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.

One particular area has garnered interest over the years are Master Limited Partnerships. Investors are drawn to MLPs for their high yields and tax deferment. MLPs don't pay taxes at the corporate level, so the tax burden then gets passed to the investor. Without getting into too much detail, because of structure of the partnerships and the distributions, investors are entitled to a serious tax deferral. Investors should fully understand what they are in for before buying MLPs, but for those willing to do the research it can be very profitable.

The highest yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price.

However, certain types of companies such as MLPs have to pay out most of their cash flow as distributions, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.

I ran a screen for the highest-yielding MLPs. The only limitation I've set is that the MLPs must have a market cap greater than $1 billion.

Here are the top 25 highest-yielding MLPs the screen produced:

 

Company

Market Cap (in millions)

Yield

1

Encore Energy Partners LP (NYSE: ENP  )

$1,038

8.7%

2

Cheniere Energy Partners LP (NYSE: CQP  )

$3,641

7.6%

3

Breitburn Energy Partners LP (Nasdaq: BBEP  )

$1,301

7.4%

4

Ferrellgas Partners LP (NYSE: FGP  )

$1,988

7.1%

5

Niska Gas Storage Partners LLC

$1,366

6.9%

6

Inergy LP

$4,508

6.9%

7

Legacy Reserves LP (Nasdaq: LGCY  )

$1,328

6.8%

8

EV Energy Partners LP (Nasdaq: EVEP  )

$1,375

6.7%

9

Linn Energy, LLC (Nasdaq: LINE  )

$6,252

6.6%

10

Energy Transfer Partners LP (NYSE: ETP  )

$10,418

6.6%

11

Penn Virginia Resource Partners LP

$1,491

6.6%

12

Regency Energy Partners LP (Nasdaq: RGNC  )

$3,789

6.5%

13

Targa Resources Partners LP (Nasdaq: NGLS  )

$2,894

6.4%

14

Copano Energy LLC (Nasdaq: CPNO  )

$2,372

6.4%

15

Boardwalk Pipeline Partners LP (NYSE: BWP  )

$6,353

6.3%

16

Kinder Morgan Energy Partners LP (NYSE: KMP  )

$23,163

6.3%

17

NuStar Energy LP (NYSE: NS  )

$4,475

6.2%

18

Enbridge Energy Partners LP (NYSE: EEP  )

$8,402

6.2%

19

Buckeye Partners LP (NYSE: BPL  )

$5,501

6.1%

20

Natural Resource Partners LP (NYSE: NLP  )

$3,784

6.1%

21

Pioneer Southwest Energy Partners LP (NYSE: PSE  )

$1,116

5.9%

22

Suburban Propane Partners LP (NYSE: SPH  )

$2,046

5.9%

23

Penn Virginia GP Holdings LP (NYSE: PVG  )

$1,034

5.9%

24

Plains All American Pipeline LP (NYSE: PAA  )

$9,203

5.9%

25

DCP Midstream Partners LP (NYSE: DPM  )

$1,713

5.8%

Source: NAPTP; Capital IQ, a division of Standard & Poor's.

These MLPs are a good place to start your research, but they're not formal recommendations. Remember, their seemingly irresistible yields could be ticking time bombs, so do your own due diligence. Also, make sure you diversify your picks across various sectors. As investors relearn every decade or so, you never want to put all your eggs in one basket -- no matter how tempting the yields are.

For a basket of some high-yield dividend opportunities, click here to get The Motley Fool's five-page free report: "13 High-Yielding Stocks to Buy Today."

Dan Dzombak's musings and articles he finds interesting can be found on his Twitter account: @DanDzombak.

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Read/Post Comments (8) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 01, 2011, at 12:08 PM, Dividendpartisan wrote:

    Good consolidated list of MLPs. Of the companies mentioned, I like KMP best.

    DivPartisan

    www.dividendpartisan.com

  • Report this Comment On March 01, 2011, at 2:40 PM, divnut wrote:

    Dan,

    Great article on MLP's. My favorite on your list

    is Linn Energy ( LINE ). After much research,

    this one stood out over most. They are well hedged, have a great management team, and are continuing to purchase new drilling sites.

  • Report this Comment On March 01, 2011, at 3:46 PM, mschmalf wrote:

    You forgot to include StoneMor Partners (STON) in your list. It is also an MLP, and one of the vrey few not in the energy sector.

  • Report this Comment On March 01, 2011, at 7:46 PM, TMFDanDzombak wrote:

    @DividendPartisan Thanks, I couldn't find one so I published it myself.

  • Report this Comment On March 01, 2011, at 7:47 PM, TMFDanDzombak wrote:

    @mschmalf I only included MLP's with assets greater than $1 billion.

  • Report this Comment On March 02, 2011, at 9:29 AM, 007wiseFool007 wrote:

    @divnut LINE's payout ratio is 568% (Yahoo Finance). When looking at MLPs, should one consider the payout ratios?

  • Report this Comment On April 15, 2011, at 3:15 PM, MichaelWWood wrote:

    Good article. Slight mistake though: The ticker symbol for #20: Natural Resource Partners is NRP, not NLP.

  • Report this Comment On January 31, 2013, at 10:17 AM, cmgeorge4 wrote:

    This list is a great start. I would like it even more with three small changes: add columns for MLP subsector and payout ratio, lower the market cap filter to 0.5B and show all with a current yield of 5.5% or more.

    Subsector helps me choose a diversified set, and payout ratio helps me avoid ones likely to soon cut their dividend.

    Thank you.

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