How Safe is Magellan Midstream Partners -- and Its Distribution?
Magellan Midstream Partners (NYSE: MMP) has long operated in a conservative manner, prioritizing its ability to distribute cash to its unitholders. That hasn't changed, but the pandemic's impact on the energy sector has upended the model here, with the shift toward clean energy alternatives increasingly complicating this master limited partnership's (or MLP's) life. Here's why investors shouldn't take Magellan's distribution, which yields 8.5%, for granted.
Magellan last increased its distribution in the fourth quarter of 2019, offering a roughly-3% year-over-year increase. Not huge, but in line with the long-term historical growth rate of inflation. The master limited partnership has a long history of being conservative, so there was no particular reason to worry here. And then the worldwide efforts to slow the spread of the coronavirus pandemic led to a massive drop in demand for oil, natural gas, and the products they get turned into.
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Source Fool.com
