When a dividend yield gets close to the double digits, it's often a sign that the market sees a payout cut coming. While this company's financial metrics suggest otherwise, there is one area of uncertainty that has the market spooked. That dynamic makes this stock a compelling opportunity for investors who aren't afraid of accepting more risk for a potentially richer reward.
Last year was both the best of times and the worst of times for Tallgrass Energy Partners (NYSE:TEP). On the one hand, the midstream MLP delivered outstanding financial results in 2017, with earnings, cash flow, and distribution coverage all coming in at the high end of its guidance range. Because of that, the company was able to boost its payout by an impressive 18%, which fueled 32% distribution growth at its parent Tallgrass Energy GP (NYSE:TEGP). However, despite all that progress, Tallgrass Energy Partners' stock has lost a quarter of its value in the past year, which when combined with that big-time distribution increase, has pushed its yield up to 9.9%.
Source: Motley Fool
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