NuStar a Brightly Shining MLP

San Antonio, Texas-based NuStar Energy, L.P. (NS - Snapshot Report) is a master limited partnership (MLP) that engages in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, the Netherlands, and the U.K.

The continued downward pressure on MLP units is primarily due to concerns about liquidity, since most of the long-haul pipeline operators have limited, if any, commodity-price exposure. Our preferred MLPs (which includes NS) generate stable cash flows, are investment-grade credits and provide for distribution growth.

NuStar's current quarterly distribution of $1.0575 per unit (annualized run rate of $4.23 per unit) represents an attractive yield of 11.07%. We believe that the partnership can easily maintain distribution growth in the 6%-7% range over the next few years. With an above peer-group average distribution coverage level and a GP IDR cap of 25%, NuStar's distribution growth prospects remain very attractive.

Read the full analyst report on NS