MLPs with the Highest Distribution and Cash Flow Growth Prospects.
MLPs which are the fastest growing and should see the greatest growth in their distribution yields.
The High Growth MLPs are those which have the highest distribution growth prospects. These MLPs may be new issues MLPs benefitting from midstream assets being dropped down by their sponsor or General Partner. High Growth MLPs also have high distributable cash flow growth and they may be located in the shales with the best economics.
We typically have 8 MLP holdings in a profile. To augment our security selection process, we developed quantitative models to identify the most attractive MLPs from those which would qualify as high growth.
Below is a back-tested return profile based on our proprietary quantitative rules and inputs since March 2016 when oil and the sector and bottomed. We use quantitative methods to identify factors that explain performance but are careful not to use those characteristics which historically fit, but are not forward looking. The High Growth model below reflects a 29.49% annualized return which outpaces the XLE energy index which annualized 14.52%. This model has an alpha of 19.38%, a sharp ratio of 1.57 and lower maximum draw-down than the XLE benchmark.
Representative High Growth Holdings
Enterprise Products Partners, LP (EPD) is one of the largest most diversified master limited partnerships in the United States. Its market cap is $53.9 billion and it yields 6.87% and has paid 77 consecutive quarterly distributions. EPD has grown significantly since its IPO in July 1998, increasing its asset base from $715 million to $52 billion at December 31, 2016. Their tremendous growth is a result of expansions from organic growth opportunities, as well as acquisitions. EPD provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals in the United States and internationally. EPD has 71,000 miles of natural gas, crude oil, natural gas liquids and refined products pipelines traversing 36 states. It also operates approximately 4,250 miles of refined products pipelines; and terminals, as well as provides refined products marketing and marine transportation services. The company was founded in 1968 and is based in Houston, Texas.
Energy Transfer Partners, LP is (ETP) is one of the largest Master Limited Partnerships in the United States with one of the most diversified portfolios of energy assets totaling more than 71,000 miles of natural gas, crude oil, natural gas liquids and refined products pipelines traversing 36 states. ETP’s market capitalization is $19.1 billion, yields 14.9% and has an enterprise value of $51.8 Billion. The company’s assets are strategically positioned in all of the major U.S. production basins. ETP owns and operates natural gas midstream, transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ETP’s CEO and chairman of the board is Kelcy L. Warren. ETP’s general partner is owned by Energy Transfer Equity, L.P. (ETE)
Noble Midstream Partners LP (NBLX) is a growth-oriented Delaware master limited partnership which owns, operates, develops and acquires midstream infrastructure assets in the United States. The company provides crude oil, natural gas, and water-related midstream services. NBLX currently provides crude oil, natural gas and water-related midstream services for Noble Energy, Inc. (NBL) through long-term, fixed-fee contracts. NBLX’s operating assets are currently focused in the Denver-Julesburg “DJ” Basin, in Colorado, one of the premier liquid hydrocarbon basins in the United States. NBL intends for NBLX to become its primary vehicle for domestic midstream operations. NBLX believes that its diverse midstream infrastructure assets and relationship with NBL position it as a leading midstream service provider. NBLX have entered into multiple fee-based commercial agreements with NBL, each with an initial term of 15 years, utilizing its infrastructure assets to provide an array of services critical to NBL’s upstream operations in the DJ Basin. NBLX’s agreements include substantial acreage dedications and operates in the DJ Basin in Colorado and the Delaware Basin in Texas. The company was founded in 2014, has 1.77 billion market capitalization, yields 3.87% and is based in Houston, Texas. Noble Midstream Partners LP is a subsidiary of Noble Energy, Inc.
Price and Yield data as of 12/1/2017
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