Investors who are new to the world of master limited partnerships learn quickly that they shouldn't be evaluated the same as regular C-corporations, especially when it comes to debt levels and distribution payouts. In this video, Fool.com contributor Aimee Duffy talks to Tyler Crowe about two important metrics investors need to know about before buying an MLP: debt-to-adjusted EBITDA and the distribution coverage ratio. Aimee looks at how big-name MLPs like Enterprise Products Partners (NYSE:EPD), Magellan Midstream Partners (NYSE:MMP), and Kinder Morgan Energy Partners (NYSE: KMP) shape up when it comes to these formulas.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.