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3 Underfollowed Dividend-Paying Stocks for Your Watchlist

There are a lot of solid dividend-paying stocks to choose from these days. If you are on the lookout for names not on everyone else's radars, here are three companies that should be on your list. All three are midstream MLPs that offer income-seeking investors more than just income. 

PVR Partners (UNKNOWN: PVR.DL  )
The natural resource sector is one of the best places to find dividend-paying stocks these days. One company that's caught my eye is master limited partnership PVR Partners and its 8% distribution. PVR Partners is a bit unique in that it not only owns traditional MLP-type midstream assets like pipelines and processing plants, but it also owns and manages coal and other natural resource properties, which you can see in the map below. The company doesn't actually mine the coal; instead, it leases its reserves to others and collects a royalty. Add that model to its midstream business and the result is a company that generates great cash flow to fund its distribution. That's why this businesses is one that you should get on your watchlist.

Source: PVR Partners investor presentation (link opens a PDF)

Inergy (NYSE: CEQP  )
With operations that include a natural gas storage business as well as natural gas liquids assets, Inergy is another MLP to consider if you are on the lookout for a dividend-paying stock. There are a lot of moving parts with this company, which makes it an interesting stock to watch. The company, along with its affiliate Inergy Midstream (UNKNOWN: NRGM.DL  ) , is in the process of merging with Crestwood Midstream Partners (UNKNOWN: CMLP.DL  ) to create a company boasting increased size, scale, and diversity, as you can see below. Once the transformational transaction is complete, the company can pursue its opportunity-rich organic growth projects which should drive both returns and income growth for investors.

Source: Intergy investor presentation

  • Add Inergy to My Watchlist.

Genesis Energy (NYSE: GEL  )
The final stock to get on your dividend watchlist is Genesis Energy. The company's business is split between pipeline transportation, refinery services, and supply and logistics, as you can see on the slide below. In addition to the assets it already has on the books, Genesis has a number of projects in the pipeline to drive future growth. Genesis estimates that these projects will enable it to provide distribution growth to investors in the low double digits well into the future. Genesis has quite the history to back those estimates up as the company has 31 consecutive quarters of distribution increases, including 26 which were more than 10%. That's what makes this dividend-paying stock one to watch.

Source: Genesis Investor Presentation (link opens a PDF)

Foolish bottom line
There's a lot more to each story but the main theme here is that each company has a unique position as a smaller player in the growing midstream industry. All three provide a valuable link in the chain and, as you can see especially with Inergy, merging with other operators could be in the future for any company on this list. Best of all, each company pays a generous distribution to investors. If you're looking for income that others might be missing, these three stocks are worth a closer look. 

If, on the other hand, you'd rather get your income from the same fountain as many other investors, Enterprise Products Partners is a name to know. The company can profit no matter the price of natural gas because it has a very diversified set of assets spread across the country. To learn more about Enterprise Products Partners and its opportunities, click here now to check out The Motley Fool's brand-new premium research report on the company.

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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 June 23, 2013, at 11:13 AM, HectorSector wrote:

    I'm disappointed that the author breezed over the CMLP/NRGM merger without at least mentioning the opposition among CMLP shareholders. At this point, they have no reason to welcome it, inasmuch as they will be getting roughly equal value for their shares and a smaller distribution rate. There are several legal challenges in the works.

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9/27/2016 4:02 PM
CEQP $20.29 Down -0.38 -1.84%
Inergy CAPS Rating: **
GEL $35.90 Up +0.41 +1.16%
Genesis Energy CAPS Rating: ****
PVR.DL $0.00 Down +0.00 +0.00%
Penn Virginia Reso… CAPS Rating: ***
CMLP.DL $0.00 Down +0.00 +0.00%
Crestwood Midstrea… CAPS Rating: *****
NRGM.DL $0.00 Down +0.00 +0.00%