MPLX

MPLX

Market cap $55.9B

KMI, MPLX and WMB may offer steadier, fee-based midstream cash flows as Iran-war turmoil whipsaws WTI, backed by long-term shipper contracts.

MPLX LP offers a near 8% yield with a multi-year plan for 12.5% distribution growth, but units now trade just above fair value. I downgrade MPLX to a "Hold," as major growth projects are on schedule but back-weighted to late 2026, with leverage expected to normalize to 3.5x by 2027. Distribution coverage remains robust at 1.3x, with management reiterating double-digit distribution growth through 2027 and a stable investment-grade balance sheet.

I detail the two places where I am putting my biggest bets right now. These 7%+ yielding dividend investments are backed by major macro tailwinds. I also discuss the risks to keep in mind.

MPLX LP offers a 7.5% yield, with management targeting 12.5% distribution growth in 2026 and 2027. Strong cash flow visibility, disciplined capital allocation, and a robust balance sheet support the distribution growth thesis. I estimate MPLX's fair value at $64.5/unit, implying 14% upside if leverage moderates and growth materializes as planned.

Investors are still chasing artificial intelligence winners, but the market mood is not as simple as the trend suggests. Growth stocks remain in demand, while inflation concerns, volatile oil prices and uncertainty over Federal Reserve rate cuts continue to keep investors cautious.

MPLX stands out as a leading midstream MLP, driven by steady natural gas and NGL expansion and robust distribution growth. With a 1.3X distribution coverage and a 12.5% Y/Y distribution increase, MPLX offers compelling yield and growth for income-focused investors. MPLX trades at an attractive 11.2X forward EV/EBITDA, comparable to peers like EPD, and is well-positioned for accretive pipeline acquisitions.

At the 24% federal bracket, a portfolio throwing off $42,000 in dividend income hands roughly $10,080 to the IRS every year.

MPLX LP stands out as my top MLP pick, offering a compelling combination of high yield, robust distribution growth, and lower risk relative to peers. MPLX units yield nearly 8%, trade at ~12x earnings, and management guides to 12.5% annual distribution growth through 2027, outpacing Enterprise Products Partners. The company's fee-based, long-term contracts and strategic ties to Marathon Petroleum Corporation provide stable, predictable cash flows and strong downside protection.

MLPs remain highly attractive for income investors due to defensive cash flows, CPI-linked contracts, and yields averaging ~7.5%. Recent MLP price surges do not signal overvaluation; current valuations are not detached given sector fundamentals and macro risks. MLPs have deleveraged, consolidated, and now benefit from higher inflation expectations and a flight-to-quality dynamic.

As Wall Street pours billions into artificial intelligence (AI) infrastructure, Oxbow Advisors founder Ted Oakley says investors are ignoring the massive energy and commodity demand needed to power the AI boom — creating an opportunity in beaten-down energy stocks.