3 MLPs With Long-Term Success

By Aryeh Katz | October 22, 2010 AAA

Master limited partnerships (MLPs) offer investors the opportunity to benefit tax-wise from a limited partnership while owning a publicly traded stock. Most MLPs are found in the resource sector, and of those, the majority are energy related.


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But because they pay no corporate income tax, to either federal or state governments, MLPs are less valuable holdings in tax deferred accounts. It's always wise to check with a financial advisor regarding the purchasing of MLPs.

Below we've highlighted three outstanding long-term performers in the MLP cohort, companies that have grown profits at a rate of at least 13% for the last decade.

Propane Country
Amerigas Partners LP (NYSE:APU) is in the retail propane business. The company operates in all 50 states and serves 1.3 million customers. Year-to-date, Amerigas stock is up 18.6%, and for the full 12 months nearly 25%. That beats the Vanguard Energy ETF (NYSE:VDE), a proxy for the broader oil and gas sector, which rose just 4.5% year-to-date. Against the broader MPL market niche, however, Amerigas trailed slightly. The JPMorgan Alerian MLP Index ETN (NYSE:AMJ) rose 22.2% YTD and 32.0% for the full year.

Moody's rating agency just upgraded the company's debt to Ba2 from Ba3. This, said Moody's, was the result of the progress the company has made in reducing its leverage and improving its operating performance.

For the last 10 years, APU has grown earnings at a rate of 20.2% and seen its shares rise by 158%.

City Business
Suburban Propane Partners L.P. (NYSE:SPH) is more than just a propane seller. The company also operates as a distributor of fuel oil and refined fuels, and sells electricity and natural gas in deregulated markets. SPH stock sells with a P/E of 16.6 and offers a healthy 6.2% dividend yield. YTD the shares are up 15.5% and for the full year almost 23%. Best yet, Suburban Propane's EPS numbers for the last decade come in at 19.6%. During that same period the stock appreciated tremendously, rising over 160%.

Make this MLP Your Hobby
Holly Energy Partners L.P. (NYSE:HEP) is up better than 26% year-to-date and offers a nice 6.6% annual dividend. P/E on the shares is 23.6. The company operates a network of pipelines in American.

In the last decade, Holly Energy has grown earnings numbers at a 13.6% rate, and over that same period the shares have risen by 97%.

The Wrap
The MLP market offers companies that perform over the long term while paying a very nice quarterly dividend. And that ain't just for widows and orphans. (These unique investments provide significant tax advantages. To learn more about MLPs, see Discover Master Limited Partnerships.)

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