The old adage of "sell in May and walk away" has proved rather appropriate this year. Since May 1, investors in MLPs such as Phillips 66 Partners (NYSE: PSXP) have had a rough go of it, with units plunging almost 20% because of cratering oil prices and the first market correction in almost four years. 

PSXP Chart
PSXP data by YCharts

Yet despite the price decline, Phillips 66 Partners still isn't anywhere close to cheap, especially compared with some other major pipeline operators. However, I think it's still worth long-term income investors' time to add it to their watchlists or even consider buying this MLP today. 

Just how expensive is Phillips 66 Partners?

CompanyPrice/Operating Cash FlowEV/EBITDAForward Yield
Phillips 66 Partners  24.1  38.1  2.6%
Spectra Energy Partners  10.9  14.1  4.8%
Williams Partners  6.9  14.5  8.6%
Energy Transfer Partners  5.5  13.8  8.4%
MPLX LP  14.5  19.2  3.5%

Sources: Yahoo! Finance, Fastgraphs.

As the table shows, whether it be on a price-to-operating cash flow, enterprise value-to-EBITDA, or forward-yield basis, Phillips 66 Partners is richly priced, even compared with a fast-growing MLP such as MPLX.

Why would Wall Street grant Phillips 66 Partners such a premium? What can possible justify a valuation that, at first glance, seems absurdly generous given the state of the oil industry today?

Well, as it turns out, Phillips 66 Partners has a few key factors working in its favor that make it one of America's best income growth investments. 

Massive growth ahead
Phillips 66
(NYSE: PSX) is the general partner and owner of its MLP's incentive distribution rights, as well as 69% of the limited units.

The refining giant is in the process of diversifying its business and is increasingly focused on expanding its midstream assets. In fact, most of its 2015 capital budget prioritizes these kinds of projects. That's because, thanks to their fixed-fee, long-term contracts of between five and 23 years in duration, they provide steady and predictable cash flow with which to reward Phillips 66 investors with ongoing buybacks and dividend growth.

Source: Phillips 66 investor presentation.

Currently, Phillips 66 owns $8.5 billion in midstream assets. However, according to Greg Garland, its chairman and CEO, the company has an organic growth backlog of over $20 billion, much of which will focus on midstream projects.

Most of these midstream assets -- whether the product of organic growth investment or acquisitions -- will end up being dropped down to Phillips 66 Partners, fueling some of the fastest growth in the MLP industry. For instance, through 2018 Phillips 66 expects to drop down about $4 billion to $5 billion of midstream projects to Phillips 66 Partners, boosting the MLP's operating assets by as much as eightfold, and almost quadrupling its annual EBITDA.

That enormous growth means much higher distributable cash flow, or DCF, and some of the most impressive long-term distribution growth guidance in the business. 

Stupendous payout growth potential
Since its IPO, Phillips 66 Partners has managed some impressive distribution growth. More importantly, this growth has been well covered by strong increases in DCF, making the current payout, with its distribution coverage ratio of 1.15 in the last quarter sustainable for the long term. 

Source: Phillips 66 investor presentation.

Thanks to the enormous amount of dropdowns Phillips 66 is planning, as well as organic growth investments the MLP is currently working on, management believes it can grow the distribution by a 30% compound annual growth rate while still maintaining a sustainable 1.1 distribution coverage ratio.

What's more, because Phillips 66 Partners has an investment-grade credit rating and management is targeting a conservative long-term debt-to-EBITDA ratio of 3.5, the MLP is likely to continue to be able to borrow money at attractive interest rates. That means it should be able to continue growing strongly even after 2018. 

Takeaway: Phillips 66 isn't cheap, but it's still a great long-term income investment 
Sometimes you have to pay for quality and fast growth, and I believe this is the case with Phillips 66 Partners. While its valuation may be rich for an MLP, its billions of dollars' worth of midstream investments and future dropdowns from its general partner, and some of the best long-term distribution growth potential in its industry, Phillips 66 Partners is worth putting it in your watchlist or even adding a position to your diversified income portfolio today.