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3 Reasons to Shy Away From Buckeye Partners for Now

By Tyler Crowe - Jul 17, 2014 at 12:45PM

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By all accounts, Buckeye Partners is a solid company, but it may not be the best investment today. Here's why.

By most accounts, nobody would fault you for buying shares in Buckeye Partners (BPL). After all, there aren't many master limited partnerships out there with the stability of an investment-grade rating behind it. If you want to get nit-picky, though, there are a few issues that you might want to think twice before going all in on this company today.

One of them is the fact that its distribution coverage ratio has not been at the most comforting levels in recent history. Despite the fact that it has a relatively similar business model to Magellan Midstream Partners (MMP 0.19%), Magellan has a pretty comfortable cushion of cash flow that more than covers its distributions, while Buckeye has seen its coverage slip below its distribution a couple times. 

Find out some other reasons why Buckeye Partners may not be your best investment in the master limited partnership space by tuning into the video below.

Tyler Crowe owns shares of Enterprise Products Partners and Magellan Midstream Partners. You can follow him at Fool.com under the handle TMFDirtyBird, on Google+, or on Twitter @TylerCroweFool.

The Motley Fool recommends Enterprise Products Partners and Magellan Midstream Partners. 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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Stocks Mentioned

Buckeye Partners, L.P. Stock Quote
Buckeye Partners, L.P.
BPL
Enterprise Products Partners L.P. Stock Quote
Enterprise Products Partners L.P.
EPD
$27.30 (0.63%) $0.17
Magellan Midstream Partners, L.P. Stock Quote
Magellan Midstream Partners, L.P.
MMP
$52.42 (0.19%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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