1 Ultra-High-Yield Energy Stock to Consider Buying Now
Key Points
Total return investors should look into the high and rising stream of passive income offered by MPLX.
At current levels, the pipeline operator would pay about $75 in annual income for each $1,000 invested.
The yield is six times higher than the energy sector average.
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Ohio-based energy logistics and infrastructure company MPLX (NYSE: MPLX) has raised its quarterly distribution by 12.5%, an increase that lifts its current dividend yield to 7.5%.
According to the company's Oct. 28 press release, the new third-quarter payout amount will be $1.0765 per common unit, or $4.31 annually, and will be paid Nov. 14, to shareholders of record as of Nov. 7.
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The increase bumps MPLX's dividend yield to more than triple the 2.1% average yield of the S&P Energy Sector (NYSEMKT: XLE), and over six times the current 1.2% rate paid by the S&P 500 index.
On a one-year total return basis through Oct. 31, a metric that includes share price performance plus dividend income, MPLX has returned 23.4%, outpacing the S&P 500's 21.4% return and dwarfing the Energy Sector's 2.8% tally.
MPLX Total Return Level data by YCharts
Income-oriented investors should note that MPLX is structured as a master limited partnership, or MLP. That means investors -- or unitholders -- receive income that is treated and taxed differently than traditional dividend payouts and is reported on a K-1 form, rather than the 1099 tax forms typically issued to common stockholders.
The high-yielding pipeline operator and fuel distribution service provider was founded and has been trading on the NYSE since 2012. It was formed and is majority-owned by Marathon Petroleum (NYSE: MPC), which currently collects about $2.5 billion annually in cash payments from the arrangement.
MPLX is slated to report Q3 results and hold a conference call on Nov. 4.
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Matthew Nesto has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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