One of the Five Safest MLP Distributions

Marc Lichtenfeld By Marc Lichtenfeld
Chief Income Strategist

Oil & Gas

Editor’s Note: Today’s article comes from Marc Lichtenfeld, Chief Income Strategist.

Marc is an expert on dividend stocks and income investing. He’s the best-selling author of Get Rich with Dividends, and he heads our sister publication Wealthy Retirement, as well as The Oxford Income Letter.

Today, he’s been gracious enough to offer his insight on a pipeline company whose stock price has gotten kicked around a bit in 2017… more specifically, on the safety of this company’s quarterly distribution payout.

Every Wednesday in Wealthy Retirement, Marc assesses the dividend safety of a given stock based on a system he calls SafetyNet Pro.

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You can also follow Marc on Twitter under @stocksnboxing.

– Patrick Little, Managing Editor


Despite a strong economy and stock market and a rebound in oil prices, master limited partnerships (MLPs) are struggling to keep up.

Magellan Midstream Partners (NYSE: MMP) has had a rough year from a stock price performance standpoint.

However, in terms of income, the partnership is performing well.

The company has raised its distribution in each of the past 31 quarters. Based on the last distribution, the stock yields 5.6%. If the company continues its quarterly increases, the yield will go higher.

Can Magellan continue its distribution-raising streak?

Last year, the company’s distributable cash flow (DCF) was $947.5 million. During that time, it paid out $739.2 million, so it more than covered what it paid to shareholders.

This year’s, DCF is forecast to come in at $1.02 billion, while distributions paid is estimated to be $814.3 million. Again, cash flow comfortably covers the distribution.

DCF is expected to grow again in 2018 to $1.07 billion, so the distribution should be able to be raised again…

The stock price is likely down because most MLPs have not rebounded, even as the price of oil has stabilized this year.

But with cash flow that’s growing and more than covering the distribution, Magellan unitholders can feel confident that their distribution is safe and very likely to increase in the near future.

In fact, out of 35 MLPs that are graded by SafetyNet Pro, Magellan is in the top five for distribution safety.

What Is SafetyNet Pro?

SafetyNet Pro is a groundbreaking tool that predicts dividend cuts and raises with stunning accuracy. With it, you can determine the dividend safety rating of nearly 1,000 stocks. Access to SafetyNet Pro is reserved exclusively for subscribers of Marc’s newsletter, The Oxford Income Letter. To learn more about SafetyNet Pro and The Oxford Income Letter, click here now.

Dividend Safety Rating: A

I assess the safety of a different company’s dividend every week. To make sure you stay on top of the dividends in your income portfolio, sign up for Wealthy Retirement.

Happy New Year,

Marc