"Location, location, location" - you've heard that phrase in relation to retail. Well, it's also important in many other industries, such as the US energy industry, where certain shale plays have cost advantages. This stock yields over 7%, with 1.10x coverage. Management has raised the distribution every quarter since the company's IPO - 49 straight quarters - and is targeting 8% annual distribution growth in 2017. The company has a competitive advantage, due to where its assets are located. Q4 '16 revenue grew 15%, EBITDA grew 14%, and DCF grew 9%.
This cost advantage plays to the strengths of midstream firm Holly Energy Partners L.P. (NYSE:HEP), and its parent/general partner, HollyFrontier Corp. (NYSE:HFC). As you can see from the map, HEP and HFC have a strong presence in the West Texas Permian Basin area, with a refinery, several terminals, pipelines and other assets concentrated in this high growth area. HEP derives 80% of its revenues from long-term contacts with minimum volume or revenue commitments. 100% of its revenues are fee based, with limited commodity risk. Its earliest contract, 17% of its total business, is up for renewal in 2019.
Source: Seeking Alpha
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