There's no shortage of companies that have gotten off track. When this happens, some get themselves back in the groove and others fall apart. It looks like NuStar Energy LP (NYSE:NS) is about to prove that it has what it takes to fix its business and start growing its distribution again. Grab this nearly-9% yielder while you still can.

Dark days
NuStar Energy LP and its general partner NuStar GP Holdings (NYSE:NSH) have been deeply out of favor since NuStar Energy stopped increasing its distribution in early 2011. The big problem has been the partnership's foray into businesses like asphalt and refining. These operations are margin based, not fee based.

So, when business was good, NuStar and NuStar GP had the opportunity to make lots of money. But when business is bad, well... The company's pipeline and storage operations, on the other hand, are largely toll-taker businesses. That removes the issue of big performance swings, and it makes paying a steady and increasing dividend a lot easier.

However, switching gears is hard and fraught with risk. So when the company started to shift more toward a fee-based model and stopped increasing its distribution, investors were rightly scared.

What can happen
A good example of what can happen to a company trying to work through a rough patch is Cedar Fair (NYSE:FUN). This limited partnership, which owns amusement parks, went through a transformational transaction that basically doubled its size. It took on a huge amount of debt to get the acquisition done.

That was in 2006, just before the deep recession. Having lots of debt in a consumer-based business during an economic downturn isn't good for the top or bottom lines. As a result, the partnership cut its distribution in 2009. After getting its house in order, however, the distribution is on the growth path again, and the shares have rebounded to new highs.

It's tough to ask income investors to take on this kind of risk because it doesn't always work out so well. For example, Star Gas Partners (NYSE:SGU) was consolidating local and regional home heating oil retailers when it ran into trouble. While it's acquired its way to a dominant position in that market, a heavy debt load required a big distribution cut before the company could get itself back on track.

Unlike Cedar Fair, investors who have held through Star Gas' distribution cut are still sitting on huge capital losses. And while the distribution is growing again, it remains just a fraction of what it was before the cut.

An example from the midstream
Based on those two examples, it's easy to understand why income investors would choose to run for the hills at NuStar. However, Buckeye Partners (NYSE:BPL) successfully working through its own issues to start growing its distribution again shows there's an opportunity for aggressive investors at NuStar that doesn't require the pain of a dividend cut.

Buckeye paused its distribution growth in 2012. That sent the shares lower as the big concern was that a cut was coming next, like at Star Gas and Cedar Fair. However, the company kept saying it simply needed new projects to come on line. And, in mid-2013 distribution growth resumed. The shares fell sharply after distribution growth stopped, but now that it has resumed, they are trading near all time highs.

That's the opportunity now presenting itself at NuStar. Although the company isn't calling for distribution growth yet, it is working its way back to covering what it's paying now. That's included selling the asphalt business, a refinery, and reworking difficult contracts. With most of the big changes behind it, management can now focus its efforts on growing its fee-based business.

With distribution coverage heading in the right direction, it looks like it's only a matter of time before distribution growth resumes. The shares are already off their recent lows, which means now could be a good time to buy this high yielder before the market gets wise to the recovery that's under way.

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Reuben Brewer has a position in NuStar Energy LP. The Motley Fool recommends NuStar GP Holdings, LLC. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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