MPLX (NYSE:MPLX) doesn’t get the credit it deserves. The Master Limited Partnership (MLP) has been a premier passive income producer since its inception over a decade ago. The midstream company increased its payout every year, growing it by more than 380%.
THE MLP currently offers a distribution yield of 8.3%by putting it several times higher than S&P500The dividend yield is 1.4%. This prodigious payment is underway an extremely firm financial foundation. Because of this and pipeline company With visible growth prospects, it should have enough fuel to continue growing its significant passive income stream. This makes it an ideal option for those looking for ever-increasing cash flow and who are comfortable with the potential tax implications of investing in MLP (such as sending a Schedule K-1 each year instead of a Form 1099-DIV).
A financial fortress
MPLX recently released its first quarter results. The midstream giant continues to generate strong and sustainable cash flow. It generated nearly $1.4 billion in distributable cash flow in the period, an increase of 8% compared to the first quarter of last year. This was enough cash to cover the company’s lucrative distribution by 1.6 times. This matches last year’s coverage rate, although the company increased its payouts by 10% at the end of last year.
MLP returned $951 million in cash to investors during the first trimester. This included distributions and $75 million in unit redemptions. The company kept the rest to finance organic expansion projects ($259 million in the quarter) and acquisitions.
MLP enhanced its presence in Utica by acquiring additional ownership in existing joint ventures (JVs) and a dry gas gathering system for $625 million during the quarter. This was the second consecutive quarter it purchased a partner’s interest in a joint venture (MPLX also purchased the remaining 40% interest in a gathering and processing joint venture in the Permian Basin for $270 million in the fourth quarter ). These acquisitions will provide it with additional cash flow this year.
MPLX has maintained a strong financial position even after all these growth investments. He finished the period with a 3.2 times leverage ratio. It is an improvement from 3.5 times last year. It’s also well below the 4.0x level that its stable cash flows could support. The company also has significant liquidity. This ended the first quarter with 385 million dollars of in cash and approximately $3.5 billion of credit available. This gives it enormous financial flexibility to capitalize on future investment opportunities.
Increased growth ahead pipeline
MLP plans to invest approximately $950 million in growth capital projects this year. He has several projects currently under construction. The company and its partners are constructing the Agua Dulce Corpus Christi Pipeline Lateral (ADCC), which is expected to enter service in the third quarter. It is also increasing the capacity of its BANGL JV pipeline, which is expected to be completed in the first half…
