Over the next decade, few industries will likely produce more top dividend stocks than pipelines. America now gushes oil. Thanks to a wave of new technologies, U.S. energy production has more than doubled over the past decade. Such a boom has pushed the industry’s infrastructure to the limit. The country needs more of everything, from pipes and processing plants to terminals and storage tanks. Owners with assets already in place have made out like bandits.
One of the biggest winners: Magellan Midstream Partners, L.P. (NYSE:MMP). Units have cranked out double-digit annual returns almost like clockwork. And since going public in 2001, the master limited partnership has boosted its payout on 62 occasions. Will its winning streak continue? Let’s dive into the numbers here. At the moment, Magellan’s profits more than cover its distribution. Last year, the partnership generated $947.5 million in distributable cash flow (DCF). Through this period, management dolled out $739.2 million in distributions. That comes out to a payout ratio of 78%. This represents the upper limit of what I consider a safe distribution. Management has still left themselves plenty of room to deal with a bad year or two.
Source: Income Investors
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- Charlie Munger's 10 Rules for Investment Success
- Early Warning Signs of a Dividend Cut
- The Best Dividend Stocks In The World
- Never Fall In Love With A Stock
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