Natural gas pipeline operator, Energy Transfer Partners LP (ETP) raised its second-quarter 2014 cash distribution to 95.5 cents per unit ($3.82 per unit annualized) on Jul 24. The new distribution represents an increase of 2.14% sequentially and 6.85% year over year.
The distribution is payable on Aug 14, to the unitholders of record as of Aug 4. We believe that the partnership’s diversified asset portfolio and cost effective practices led to this increase.
Energy Transfer Partners has been consistently returning value to its unitholders, making it attractive for investors looking for a steady income source. Until the second quarter of 2013, the partnership showed no growth in paid distribution, keeping it at the 2008 level. However, things seem to be panning out well for Energy Transfer Partners lately as this new distribution represents the fourth consecutive hike for the partnership.
Energy Transfer Partners – which is currently trading at $59.04 per unit − is expected to report its second quarter earnings on Aug 6, after the closing bell. At present, the partnership has an Earnings ESP of -7.35%.
Dallas, TX-based Energy Transfer Partners is a master limited partnership (MLP) engaged primarily in the gathering, processing, storage and transportation of natural gas.
Over the last few years, Energy Transfer Partners has been investing significant capital in improving its midstream, NGL transportation and storage services. We believe that the partnership is now well positioned to compete in the natural gas midstream, and transportation and storage markets with its geographically diverse asset mix.
However, the partnership’s operating expenses have been rising over the last two years, with the first quarter of this year experiencing the maximum increase. This has been a cause of concern lately.
As a result, Energy Transfer Partners currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Magellan Midstream Partners LP (MMP), Valero Energy Partners LP (VLP) and Atlas Pipeline Partner L.P (APL). Magellan Midstream and Valero Energy sport a Zacks Rank #1 (Strong Buy), while Atlas Pipeline carries a Zacks Rank #2 (Buy).
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