1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Dividend Growth Investor
Dividend Growth Investor
Articles (209) 

MLP’s deliver consistent distribution increases

April 16, 2012 | About:

The list of dividend increases over the past week was dominated by Master Limited Partnerships. Most of the MLPs are pipeline companies, which are engaged in the transportation of oil and natural gas from the source to the final customer. Pipeline MLPs have shown a consistent growth in quarterly distributions as a group, despite the economic turbulence we have lived under over the past five years. This is mostly due to the fact that most pipelines are natural monopolies in a given area, and they typically manage to increase fees each year at least by the rate of inflation. In addition, while prices of the commodities they transport fluctuate on a daily basis, aggregate volumes of oil and gas in the US is pretty stable year over year.

The following dividend growth companies raised distributions over the past week:

Plains All American Pipeline, L.P. (NYSE:PAA), through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquid petroleum gas (LPG) products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. This dividend achiever raised quarterly distributions to $1.045/unit, which was 7.70% above the distribution paid in the same time in 2011. Plains All American Pipeline has increased distributions for 12years in a row. Yield: 5.30%

Genesis Energy, L.P. (NYSE:GEL) operates in the midstream segment of the oil and gas industry in the Gulf Coast region of the United States. It operates through three divisions: Pipeline Transportation, Refinery Services, and Supply and Logistics. This MLP raised quarterly distributions to 45 cents/unit, which was 10.40% above the distribution paid in the same time in 2011. Genesis Energy has increased distributions for 9 years in a row. Yield: 5.80%

Targa Resources Partners LP (NYSE:NGLS) provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Natural Gas Gathering and Processing, and Logistics and Marketing. This MLP raised quarterly distributions to 62.25 cents/unit, which was 11.70% above the distribution paid in the same time in 2011. Targa Resources Partners has increased distributions for 7 years in a row. Yield: 6.10%

Tanger Factory Outlet Centers, Inc. is a REIT, which engages in acquiring, developing, owning, operating, and managing factory outlet shopping centers. The company raised its quarterly dividend by 5% to 21 cents/share. This marked the 19th consecutive annual dividend increase for this dividend achiever. Yield: 2.90%

Healthcare Services Group, Inc. (NASDAQ:HCSG), together with its subsidiaries, provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates in two segments, Housekeeping and Dietary. The company raised its quarterly dividend to 16.25 cents/share, which was 3.20% above the distribution paid in the same period in 2011. Healthcare Services Group has raised dividends for 10 years in row. Yield: 3.20%

While MLPs have been great performers over the past decade, several factors could bring a halt to their distribution growth. Since most MLPs distribute all of their cash flows to unitholders, the only way they could grow is by selling additional debt or units in the markets. If interest rates increase, this will increase the cost of capital for these companies, and will reduce investor appetite for the sector.

Full Disclosure: None

About the author:

Dividend Growth Investor

Rating: 3.7/5 (3 votes)


Please leave your comment:

GuruFocus has detected 4 Warning Signs with Plains All American Pipeline LP $PAA.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Dividend Growth Investor

User Generated Screeners

Roger SteraWalter Schloss Screen2
Roger SteraPeter Lynch Screen
wwygeraGrowth Stocks
pbarker46Financial strength
song.chenghuaNet Net 2
song.chenghuaNet Net
Roger SteraGrowth stock
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)