5 MLP Distributions Dead in the Water

It's third-quarter distribution time, and investors' news feeds are clogged with press releases from master limited partnerships spreading the word on their payouts. Not every partnership is full of good news, however, and a few of them, quite frankly, haven't had anything good to report in some time. Today we're looking at five MLPs that held their distributions flat this quarter.

The 5 floaters
The following five MLPs have let their distributions stagnate recently, third-quarter payouts proving no exception. These MLPs show no increase on a sequential or annual basis this quarter:

Source: company releases .

The first thing that stands out about this list is that there are no midstream MLPs here. These are exploration-and-production and shipping MLPs, and their income generation, generally speaking, is not as reliable as their pipeline peers, which can make handing out regular distribution increases more difficult.

Teekay LNG Partners has a nice-looking distribution at $0.675, but it's been stuck there for seven straight quarters now, taking a bit of the shine off its 6.4% yield.

Similarly, Rhino Resource Partners, Navios Maritime Partners, and QR Energy have both held their distributions flat for six quarters. But it's Natural Resource Partners that takes the crown here, keeping its distribution steady for nine straight quarters.

But what difference does this make, if any? Does it really matter if an MLP keeps its distribution flat, as long as it isn't going against the cardinal rule for MLPs and cutting it?

Yes and no. It's been well documented that the driver for MLP unit appreciation is distribution growth. While flat distributions aren't the worst thing in the world, you're likely to see some correlation with unit-price underperformance, compared with the rest of the MLP field.

Here's how our five MLPs have performed year to date:

TGP data by YCharts.

Despite its lackluster distribution history, Navios Maritime Partners is the only MLP that bucks the notion that price appreciation won't happen without distribution growth. It's outperforming the Alerian Index this year, which has returned 20.3% at the time of this writing. Outside of Rhino Resources, the rest of the field's performance results are not terrible, especially given their distribution duds, but they aren't that great, either.

Bottom line
There are more MLPs to choose from than ever before, and investors can afford to be pretty picky. An MLP with reliable distribution growth may ultimately be a better place for your dollars.