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MPLX's 26th Consecutive Distribution Hike Cheers Investors

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MPLX LP (MPLX - Free Report) recently announced that the board of directors has approved to hike quarterly distribution payout.

The distribution of 66.75 cents per common unit ($2.67 on an annualized basis) reflects a sequential increase of 1.5% and a year-over-year hike of 6.4%. The increased distribution is likely to be paid on Aug 14 to unitholders of record as of Aug 5. Investors should know that with the latest increase in distribution, the partnership has managed to hike distribution for 26 quarters in a row.

Following the latest increase in distribution payment, the partnership’s distribution yield stands at 8.5%, much higher than the industry’s 6.1%. The hike is in line with the partnership’s intention of increasing distribution by a penny in each of the quarters of 2019. This is supported by strong and stable operations that back the partnership to persistently grow its distributable cash flow (DCF). Notably, in 2018, the partnership generated $2.8 billion in DCF, 70.8% higher than the year-ago level. On top of that, the partnership expects to generate respective DCFs of $3.1 billion and $3.5 billion in 2019 and 2020.

Markedly, the partnership expects to close the Andeavor Logistics LP acquisition on Jul 30. As such, unitholders of Andeavor Logistics will receive second-quarter 2019 distribution from MPLX through common units that will be issued with the acquisition. In addition to synergies and increased backlog, the acquisition is expected to expand MPLX’s footprint in the Permian Basin.

MPLX is slated to report second-quarter 2019 results on Aug 1, before the opening bell. The Zacks Consensus Estimate for the partnership’s earnings per unit for the to-be-reported quarter is pegged at 60 cents, indicating a 9.1% rise from the year-ago level.

Zacks Rank and Other Stocks to Consider

Currently, MPLX sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include Plains Group Holdings, L.P. (PAGP - Free Report) and Enbridge Inc (ENB - Free Report) . While Plains Group has a Zacks Rank #1, Enbridge holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Plains Group’s earnings growth is projected at 7.6% through 2019.

Enbridge surpassed earnings estimates in all the trailing four quarters, with the average being 18.5%.

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