Both Brent and West Texas Intermediate crude traded sideways to down for months before the summer move higher. While they are consolidating some now, many feel a move to $90 a barrel and higher is a distinct possibility. While it is unlikely oil will get back to the $120 mark, as it did in the summer of 2022, it is a good bet that both benchmarks could trade higher this fall.
Income investors looking to the energy sector, which was the only sector to outperform in 2022, are often drawn to the energy master limited partnerships (MLPs), and with good reason. While they do tend to trade higher when the crude benchmarks do, their services to transport and store oil and gas are contract-based regardless of commodity pricing. With many contracts already set in place, fluctuations in benchmark pricing are not as significant as they are for exploration and production companies.
We screened our 24/7 Wall St. MLP research universe and found seven Buy-rated stocks paying huge distributions that look like great buys now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Antero Midstream
With shares trading at just over $10 apiece, this well-run company offers a huge total return package. Antero Midstream Corp. (NYSE: AM) owns, operates and develops midstream energy infrastructure. It operates through two segments.
The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources’ wells in West Virginia and Ohio.
The Water Handling segment delivers fresh water and offers other fluid handling services, such as wastewater transportation, disposal and treatment, as well as high-rate transfer services.
Investors receive a 7.54% distribution. UBS has a $14 target price on Antero Midstream stock. Wall Street has a consensus target of $13.20, and Tuesday’s closing price was $12.28 per unit.
Energy Transfer
This top MLP is a safer play for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.
The company is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquid (NGL) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.
After the purchase of Enable Partners in December of 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
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