Evaluating Top Energy MLPs: Energy Transfer vs. MPLX

A recent report highlights the strengths of Energy Transfer and MPLX as top income-generating investments in the MLP sector. Investors may find valuable insights into their cash flow stability and dividend potential.

Date: 24-12-2024

AI Rating: 7

This report discusses two prominent master limited partnerships (MLPs), Energy Transfer and MPLX, focusing on their solid cash flows and strong financial profiles that make them appealing for income-focused investors.

**Energy Transfer** is noted for its nearly 7% yield, backed by stable fee-based cash flows accounting for 90% of its earnings. Its distribution coverage ratio stands at 1.9x, indicating strong ability to meet dividend obligations, while its leverage ratio ranges from 4.0 to 4.5x, suggesting manageable debt levels.

**MPLX**, with a higher yield of over 8%, features a 1.5x distribution coverage ratio and a leverage ratio of 3.4x. The report highlights MPLX’s commitment to returning cash to investors through a recent 12.5% distribution increase, marking its third consecutive year of double-digit growth in distributions.

Both partnerships are actively pursuing expansion projects. MPLX is developing several projects expected to contribute to future cash flows, including natural gas pipelines and processing plants. Meanwhile, Energy Transfer is engaging in significant projects like the recently approved $2.7 billion pipeline, aimed to enhance cash generation.

Given the financial metrics and growth strategies, investors might view both entities favorably, particularly MPLX for its higher yield and rapid distribution growth. While Energy Transfer’s commitment to strengthening its balance sheet and enhancing shareholder returns through unit repurchases also positions it as an attractive option.

Stocks: ET MPLX