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Magellan Midstream to Sell 3 Marine Terminals, Hikes Payout

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Magellan Midstream Partners L.P. raised its fourth-quarter 2019 cash distribution by 1% sequentially and 3% year over year to $1.0275 per unit ($4.11 annualized).

The cash distribution has skyrocketed 683% since the firm’s initial public offering (IPO) way back in the beginning of 2001. Magellan Midstream’s new distribution is payable Feb 14 to its unitholders of record as of Feb 7, 2020.

The proposed hike in distribution of profits at this pipeline operator represents its 71sh distribution raise since the firm went public.

Magellan Midstream, which is slated to report fourth-quarter 2019 results on Jan 30, bolstered its cash flows recently on the back of benefits from its acquired assets and growth projects, strong throughput volumes as well as improved tariff rates.

On the same day, in a separate press release, Magellan Midstream is reported to have inked a deal to offload its three marine terminalslocated in New Haven, CT, Wilmington, DE and Marrero, LA. This Tulsa, OK-based firm will divest these properties for $250 million to Buckeye Partners, L.P., which is headquartered in Houston.

Subject to satisfactory closing conditions, the transaction is set to culminate in early second-quarter 2020. Further, in a bid to boost its shareholder value, Magellan Midstream’s board of directors authorized a new repurchase program worth up to $750 million of common units until 2022.

We appreciate Magellan Midstream’s efforts to consistently enhance its long-term shareholder value. The company’s healthy cash flow generating capability and efficient capital management policy provides it with ample cash in hand to return excess funds to its shareholders. The share repurchase program and payout announcements are likely to instill investor confidence.

Magellan Midstream is a master limited partnership, which owns and operates a diversified portfolio of energy infrastructure assets. The firm primarily transports, stores and distributes refined petroleum products. This oil major conducts business under three segments, namely Refined Products, Crude Oil and Marine Storage.

Zacks Rank & Key Picks

Magellan Midstream currently carries a Zacks Rank #3 (Hold). Investors interested in the energy space may consider some better-ranked stocks like Suncor Energy Inc. (SU - Free Report) , Cenovus Energy Inc. (CVE - Free Report) and Imperial Oil Limited (IMO - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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