Better Buy: Magellan Midstream Partners vs. MPLX

Both Magellan Midstream Partners (NYSE: MMP) and MPLX (NYSE: MPLX) are top Master Limited Partnerships that have tumbled lately. Both the stocks are trading at monumental distribution yields. Crude oil production in the US is being affected by demand destruction due to coronavirus in an oversupplied market. Midstream operators, including Magellan and MPLX, are sure to face some heat in such a scenario. While neither can be said to be 100% safe from a distribution cut, one of the two certainly has much better odds.

The importance of a conservative leverage profile cannot be overemphasized today. With an outstanding debt of just $4.8 billion at the end of 2019, Magellan has a conservative debt-to-EBITDA ratio of slightly above 3 times. In comparison, MPLX has an outstanding debt of roughly $20 billion and a debt-to-EBITDA ratio of more than 5 times.