The first and foremost thing to remember when investing in a refinery MLP is that you're along for the ride. Everything is done for the primary benefit of the refinery operations, not the logistics partners. However, like any good parent, this company, has a lot at stake in seeing its child succeed, including a ~37% ownership, a 2% GP interest and IDRs. What was the point if it owns so much of the company? Firstly, this structure allows ii to still operationally control the assets compared to an outright sale. Second, it allows it to be used as a financing vehicle by the parent, converting undervalued/risky assets into high-value assets by adding greater security to cash flows via contracts. For this arrangement, it is compensated with IDRs (a performance-sharing fee much like a hedge fund charges). In other words, the growing, secure ~7% yield is not without a significant price.
Holly Energy Partners, L.P. (NYSE: HEP) is the logistics MLP spinoff of HollyFrontier Corp. (NYSE: HFC), an independent refiner with operations mostly in the Midwest and Rockies. You may not have heard about HEP, probably because it's a smaller MLP (about a $2B market cap) sponsored by a smaller refiner (although five refineries and a $5B market cap is nothing to sneer at). Since its IPO in 2004, it has increased its distribution every quarter - an impressive feat that puts it in the "Dividend Contender" club and should make heads turn twice.
Source: Seeking Alpha
Related Articles:
- 4 Secrets To Finding The Best Dividend Stocks
- What Determines A Dividend Stock's Yield
- 7 Dividend Stocks Yielding Over 3%, With Tiny Payout Ratios
- Warren Buffett's Secret To 50% Returns
- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
7% Yield And 47 Quarters Of Distribution Growth
Posted by D4L | Friday, October 28, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
The fact is that there are many interesting high-yielding companies that have good long-term prospects. Besides, as the markets get more vol...
-
Dividend stocks are very appealing to investors, for good reason. Growth stocks tend to make the headlines — with the 2020 pandemic, shareho...
-
Part of the joy of investing is seeing your good investments continue to grow, years after your initial purchase. Aside from the financial s...
-
A common measure of dividend sustainability is the payout ratio, the percent of earnings that are paid out to shareholders. Unfortunately, e...
-
Investors looking for the best dividend stocks for 2021 and beyond should take a closer look at the stocks with the longest histories of ann...
-
Some investors — usually referred to as income investors — specifically set out to buy securities that pay them even before stock price appr...
-
Are you looking for a great dividend stock to add to your portfolio? There are many options out there, but the reality is that many just don...
-
A lot changes when you shift from working to retirement, including how you invest. Most investors switch from building a nest egg to living ...
-
Last month we wrote about the top four companies in our model portfolio in the article 4 Dividend Dominators for 2021 - Companies With More ...
-
This stock yields 7.07% and pays monthly. It's selling at a -6.4% discount to NAV - much deeper than its three- and five-year average di...

0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.