The thing to understand about midstream MLPs -- which provide processing, transportation, and storage services for oil and gas -- is that it is a fixed-fee, long-term contract dominated business. For example, 77% of Plains All American's 2015's projected adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, is derived from fixed-fee contracts, and management expects that to increase to over 80% in the next few years. This ensures long-term cash flow predictability, minimizes short-term exposure to falling oil prices, and allows MLPs such as these to sustain or even grow generous distributions in the face of a severe oil crash.
Crashing oil prices have left many oil companies desperate to conserve cash and resulted in some painful dividend cuts. However, not all energy stocks are created equal, and the business models of pipeline operators such as Enterprise Products Partners (NYSE: EPD), Plains All American Pipeline (NYSE: PAA), Genesis Energy (NYSE: GEL), and Plains GP Holdings (NYSE: PAGP) have enabled them not only to weather the oil storm, but continue rewarding investors with growing distributions.
Source: Motley Fool
Related Articles:
- The Most Important Financial Statement When Selecting Dividend Growth Stocks
- 5 Five-Star Dividend Stocks
- 5 Dividend Stocks Delivering The Secret To Successful Investing
- Mid-Year 2014 Top And Bottom Performing Dividend Stocks
- 6 Dividend Stocks With A Low P/B Ratio
________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
There’s nothing more satisfying that getting money for doing nothing. That’s why dividend stocks hold so much appeal for portfolios. Many of...
-
We've broadened our search to the S&P 500, and also found two high-dividend stocks among the dividend yield leaders of that larger i...
-
Dividend stocks can be a great source of passive income. Not only do they deliver cash into your brokerage account on a recurring basis, but...
-
I believe in dividend growth investing and consider holding strong companies will help me going through any stock market storm. I believe di...
-
Generally speaking, the higher the yield, the higher the risk involved. Since yield is a function of share price, a failing business model w...
-
If you are retired, you have likely shifted from building your nest egg to living off your assets. That means you probably gravitate toward ...
-
With bond rates already low and the Fed hinting at rate decreases, dividend stocks are in high demand these days, as alternatives in the fix...
-
Warren Buffett famously quipped that if you aren't willing to own a stock for 10 years, you shouldn't think about owning it for 10 m...
-
What kind of income-generating assets make the most sense? Obviously, those that appear undervalued with respect to the basket/group of stoc...
-
REITs are reporting higher revenue and earnings so far for the quarter. But one of the specific metrics for profitability comes from the rat...
0 comments
Post a Comment
Post a Comment