MLP Distribution Recap: 4Q16

How many MLPs grew, maintained, or cut distributions in 4Q 2016?

It’s time for your quarterly dose of distribution news. Today I’m recapping the fourth quarter’s distribution data.

This chart gives a snapshot of the quarter over quarter data.

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As a reminder, when I say 4Q distributions, I mean distributions that will be paid in 1Q17 as a result of what happened in 4Q.

AMZ Q/Q Fun Facts

  1. The only cut in the AMZ came from Terra Nitrogen Company (TNH). This MLP is a variable distributor, meaning fluctuations in distributions are business as usual.
  2. Rice Midstream Partners (RMP) grew its distribution by 5.7% q/q to receive top growth honors in the AMZ.
  3. Of the 18 MLPs that grew distributions, eight increased their payouts by 4% or more.

AMZI Q/Q Fun Facts

  1. The top grower between quarters was Antero Midstream Partners (AM). The company grew its distribution from $0.265 to $0.28, or 5.7% q/q.
  2. Along with AM, Shell Midstream Partners (SHLX) and Phillips 66 Partners (PSXP) both increased distributions over 5%.

Next, we have the year over year data, which compares 4Q 2015 and 4Q 2016. If the name was in the index in both 4Q 2015 and 4Q 2016, I compared the distributions. Please note there is survivorship bias in this method.

distributions_pies-02

AMZ and AMZI Y/Y Fun Facts

  1. The top distribution grower in the AMZ was Tallgrass Energy Partners (TEP). The company grew distributions by 27% going from $0.64 to $0.815 per quarter.
  2. The top distribution grower in the AMZI was SHLX. The business increased its payout by 26% from $0.22 to $0.277 over the year.
  3. Names that grew year over year:

2016.02.27_chart-01_1024

  1. Names that maintained year over year (all names listed are in the AMZ, those with a * represent MLPs that are also in the AMZI):
    1. Boardwalk Pipeline Partners (BWP)
    2. DCP Midstream Partners (DPM)*
    3. Enbridge Energy Partners (EEP)*
    4. Enable Midstream Partners (ENBL)
    5. EnLink Midstream Partners (ENLK)*
    6. Energy Transfer Partners (ETP)*
    7. Golar LNG Partners (GMLP)
    8. NuStar Energy (NS)*
    9. ONEOK Partners (OKS)*
    10. Suburban Propane Partners (SPH)
    11. Summit Midstream Partners (SMLP)
    12. Teekay LNG Partners (TGP)
    13. Teekay Offshore Partners (TOO)
    14. Williams Partners (WPZ)*

More MLPs are still choosing to grow or maintain distributions versus cut distributions; thus, on a full year basis, our distribution growth charts for AMZ and AMZI continue to show y/y growth.

amz_chart-01

amzi_chart-01

As we move forward, we expect to see the market rewarding conservative capital discipline. Already we can see that more companies are choosing to maintain distributions or raise distributions more slowly. Many MLPs have been explicit in their intention to finance growth partially with retained cash flow. Given this shift from a focus on distribution growth, it will be interesting to see how our charts look in the quarters to come. Distribution growth, after all, is only a portion of an investor’s total return.

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