Usually, when a dividend yield is around 10%, it's due to concerns about its sustainability. However, that's not the case with this company. For starters, the company produces very predictable cash flow backed primarily by fee-based contracts. Further, it has generated enough cash to cover its payout by 1.38 times so far this year, which is well above its 1.2 comfort level. The company adds even more support to its payout by having a solid investment-grade balance sheet that it backs with a conservative 3.9 leverage ratio. That's right below its 4.0 target. Because of those solid metrics, it has the financial flexibility to fund its expansion projects.
MPLX (NYSE:MPLX) has lost more than 20% of its value in the last year. That slump is a bit of a head-scratcher, because the master limited partnership's cash flow per unit increased by more than 10% through the first six months of 2019 compared to the year-ago period. As a result, the company's valuation is at a bargain-basement level. Further, with its unit price slumping, its dividend yield has risen to 9.4%, thanks also to a 6.4% increase in its payout over the past year. The combination of all those factors makes MPLX one of the more attractive income investment opportunities available right now.
Source: Motley Fool
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