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2 Crucial Metrics to Know for MLPs

By Aimee Duffy – Feb 3, 2014 at 12:18PM

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These two simple ratios will help you determine how fiscally fit your investments are.

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, 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 (EPD 0.16%), Magellan Midstream Partners (MMP 0.52%), and Kinder Morgan Energy Partners (NYSE: KMP) shape up when it comes to these formulas.

Aimee Duffy has no position in any stocks mentioned. Tyler Crowe owns shares of Enterprise Products Partners L.P. The Motley Fool recommends Enterprise Products Partners L.P. and Magellan Midstream Partners, L.P. 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.

Stocks Mentioned

Enterprise Products Partners Stock Quote
Enterprise Products Partners
$24.85 (0.16%) $0.04
Magellan Midstream Partners Stock Quote
Magellan Midstream Partners
$52.48 (0.52%) $0.27

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

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