There are more master limited partnerships on the market now than ever before, making it easy to lose sight of some powerful distribution growth. Today, we're looking at three MLPs that don't spend as much time in the spotlight as some of their peers, but they grew their first quarter distributions by more than 20% on an annual basis: SunCoke Energy Partners (SXCP +0.00%), EQT Midstream Partners (EQM +0.00%), and Oiltanking Partners (NYSE: OILT).
SunCoke Energy Partners
SunCoke may be a bit different than the MLPs you're used to reading about. The partnership is a coking MLP focused on coke making and coal logistics. Essentially, it produces metallurgical coke for steel and utility customers. Its main assets right now are majority stakes in two coking facilities, both located in Ohio. Its future growth is predicated on dropdowns from its parent company, SunCoke Energy, the first of which was completed just last month.
SunCoke Energy Partners is a relatively new MLP -- it only went public last year -- but so far, it's performing well. It grew its distribution 15% in 2013, and it continues to climb in 2014. The partnership's first-quarter distribution grew 21% year over year, and 5% on a sequential basis. Management expects to continue to increase distributions 3% to 5% quarter over quarter for the remainder of this year. You can read more on the SunCoke Energy Partners story here.
EQT Midstream Partners
This MLP won't be under the radar for long. After the market closes on Friday, it will be added to the Alerian MLP Infrastructure Index (^ AMZI).
The partnership's units have performed admirably since its IPO in June of 2012, up more than 290% in that time. On top of that, its distributions have climbed 40% over the same period. In April, management announced it would increase EQT Midstream's distribution to $0.49 per unit, a 32% year-over-year jump.
Its core assets gather gas from Marcellus shale producers and feed them into five different interstate pipelines. The future success of EQT Midstream will depend on the success of dropdowns from its parent, EQT Corporation, and the partnership's ability to capitalize on organic opportunities. Interested investors can read more here.
Oiltanking Partners
This is the oldest MLP on this list, hitting the market way back in 2011. After the first quarter of this year, the partnership increased its distribution 22.2% year over year to $0.495.
The storage MLP has two facilities on the Gulf Coast, one in Houston, and one in Beaumont, with a total storage capacity of 28.7 million barrels. Contracts at these facilities are 100% fee-based, which means stable revenue and reliable distributions. Despite its name, that stable revenue is relatively diverse and includes commodities other than crude oil, like liquefied petroleum gas, refined products, etc. Interested investors can learn more about Oiltanking Partners here.
Bottom line
MLP investors want to find distribution dynamos to power their portfolios, but by no means should it be the only factor in your decision. Use the distribution growth as an initial screen, and dig deeper from there to find your best opportunity.
