Keeping track of the distributions from every single master limited partnership grows more challenging by the quarter. Today we're focusing solely on those MLPs that increased third-quarter distributions on an annual basis, with notes on Calumet Specialty Products (NASDAQ:CLMT), Kinder Morgan Energy Partners (NYSE: KMP), Enterprise Products Partners (NYSE:EPD), Energy Transfer Partners (NYSE: ETP), and Suburban Propane Partners (NYSE:SPH). Let's get started.
There are 55 MLPs on this list, which means that roughly half of all existing MLPs either kept their distribution flat or cut it on a year-over-year basis. Take a gander. There may be some great ideas buried in here:
Notes on the list
Before we run out haphazardly buying units of every MLP on this list, let's be careful to keep things in context. This list is set up to show annual distribution growth, which means an MLP like Calumet Specialty Products makes the list despite somehow posting negative distributable cash flow for two consecutive quarters.
The same goes for Suburban Propane, to a lesser extent. The partnership is up on an annual basis but flat sequentially. It provides an interesting foil to PetroLogistics in the top spot on this list. Someone made money on propane last quarter -- it just wasn't Suburban.
For some MLPs, making this list is a small victory in itself. Energy Transfer Partners increased its distribution for the first time in more than five years. To be sure, the growth was meager at 1%, but it is growth nonetheless. Time will tell if ETP is able to turn this into a string of positive quarters, but for now unitholders get some relief.
Kinder Morgan Energy Partners has some investors scratching their heads. Is this the solid-as-a-rock partnership it's always been? Or does missing distribution coverage for two straight quarters -- yet increasing payouts anyway -- signal something ominous? Seven consecutive quarterly increases really isn't that impressive, but it does imply that if management doesn't think there is enough cash around to bump up payouts, it won't do it. In the meantime, investors will have to quell their uncertainty with KMP's annualized distribution. At $5.40 per unit, it is the highest on our list.
The real gems on this list are the MLPs that combine solid distribution growth with a commitment to that growth, measured in consecutive increases. That rules out, say, an EV Energy Partners, which has one and not the other, or a PetroLogistics, which is in the same boat. You're left with MLPs like Enterprise Products Partners, Holly Energy Partners, and Sunoco Logistics Partners; they are the partnerships that generate stable growth year after year.