Master limited partnerships (MLPs) have fallen out of favor with investors in recent years, thanks to a combination of continued turbulence in the energy sector and the added complexities of owning these entities. As a result, their valuations have plummeted, which has pushed their yields up to enticing levels.

That's left several of these hated dividend stocks looking like compelling buys right now. Three that stand out are Enterprise Products Partners (NYSE:EPD)Magellan Midstream Partners (NYSE:MMP), and MPLX (NYSE:MPLX).

A person holding a bag with the word dividends on it.

Image source: Getty Images.

A durable dividend

Enterprise Products Partners lost about 35% of its value this year, pushing its yield up to an eye-opening 9.8%. While a payout approaching double digits is usually a sign of concern, that doesn't appear to be the case with this MLP.

That's because its earnings have proved to be reasonably resilient during the downturn in the oil market. As a result, it was able to generate enough cash to comfortably cover its payout by 1.6 times during the first quarter. On top of that, Enterprise Products Partners has a top-tier balance sheet, including boasting one of the highest credit ratings among MLPs. Because of that, Enterprise should have no trouble maintaining its payout in the near-term. Meanwhile, thanks to its strong balance sheet and retained cash, the company has the financial flexibility to expand its operations, which should give it the fuel to keep growing its payout in the future. 

Passing the stress test

Magellan Midstream Partners has shed roughly 30% of its value this year, pushing its payout up to 9.5%. Again, like Enterprise Products Partners, this nearly double-digit yield is on solid ground despite the turbulence in the oil market.

Magellan calculated the anticipated impact of falling demand for refined products on its 2020 financial results. In its estimation, it should still be able to generate between $1 billion and $1.075 billion of cash this year. That's enough money to cover its payout by about 1.1 to 1.15 times. While that's tight, Magellan anticipates that it will generate about $75 million to $150 million in free cash flow after paying its dividend, which gives it a head start on funding its $400 million expansion program. Add in cash from recently completed asset sales and the borrowing capacity of its top-tier balance sheet, and Magellan can easily make ends meet while mainlining one of the lower leverage profiles in the MLP space.

Light at the end of the tunnel

MPLX's unit price has tumbled about 25% this year, driving its yield up to a jaw-dropping 14.4%. While payouts that high usually aren't sustainable, MPLX has no plans to cut its dividend.

One factor driving that view is the overall stability of its cash flow. On top of that, it has a solid coverage ratio of 1.44 and a conservative leverage ratio. The MLP believes it has the financial flexibility to maintain its payout even as it continues expanding its operations. 

MPLX is currently in the middle of a major program to build out integrated crude oil and natural gas logistics systems from the Permian Basin to the Gulf Coast. It's investing in two large-scale pipeline projects as well as some related infrastructure, which should start up next year. Once it hits that inflection point, MPLX's capital spending will decline as cash flow rises. The MLP estimates that it will produce free cash flow after funding its distribution and capital spending next year. That will give it the flexibility to further strengthen its balance sheet or buy back some of its beaten-down units.

Big-time dividends on sale

Investors have bailed on MLPs this year because of all the volatility in the oil sector. However, top MLPs such as Enterprise, Magellan, and MPLX tend to generate lots of income immune to fluctuations in energy prices and volumes. These companies therefore expect to maintain their payouts throughout the industry's rough patch even as they continue expanding their systems to fuel future growth. That makes these hated dividend payers intriguing buys for yield-seeking investors these days.