Boosting Returns Through MLP's

I wrote in an earlier post about my plan to boost dividend income in 2010 by increasing my investments in MLP's. I did some research and discovered 3 great prospects for investing:

1. Suburban Propane Partners (SPH) Principally engaged, through its operating partnership and subsidiaries, in the retail and wholesale marketing of propane and related appliances, parts and services. This company pays a dividend of $3.32, which represents a 7.7% yield on their recent price of $43.99 per share. The P/E is 8.7, return on equity is 57.4%, earnings per share are $5.93 (so their dividend should be sustainable) and they have over $4 per share in cash. This will be my first targeted investment.

2. Alliance Resource Partners (ARLP) Master limited partnership engaged in coal mining, principally in the Illinois Basin, with the balance split between Northern Appalachia and Central Appalachia. The company is managed by its general partner, Alliance Holdings G.P., who holds the incentive distribution rights to the partnership, as well as 42.5% of the partnership's limited partner interests. They have a dividend of $3.04 which represents a 7.8% return on their recent price of $38.80. Their return on equity is 67%, P/E of 12.10 and they have $2.50 per share in cash. Earnings per share is $3.23. This will be my second investment for the upcoming year.

3. Amerigas Partners (APU) A publicly traded limited partnership formed under Delaware law on November 2, 1994. The Company is a retail propane distributor in the United States. As of September 30, 2003, they served approximately 1.3 million residential, commercial, industrial, agricultural and motor fuel customers from approximately 650 district locations in 46 states. The Company also sells, installs and services propane appliances, including heating systems. In certain markets, the Company also installs and services propane fuel systems for motor vehicles. Their District locations consist of an office, appliance showroom, warehouse and service facilities, with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall transportation and distribution infrastructure, the Company operates as an interstate carrier in 48 states throughout the United States. The Company is also licensed as a carrier in Canada. The Company sells propane to five markets: residential, commercial/industrial, motor fuel, agricultural and wholesale. Their Propane Xchange program enables consumers to exchange their empty 20-pound propane grill cylinders for filled cylinders at retail locations such as home centers, mass merchandisers and grocery and convenience stores. During fiscal year 2002, they introduced PPX Plus cylinders that are equipped with a special overfill protection device required by the National Fire Protection Association. They conduct their business through their subsidiary, AmeriGas Propane, L.P. and its subsidiary, AmeriGas Eagle Propane, L.P., both Delaware limited partnerships. The executive offices of the Company are located at Pennsylvania. As of October 1, 2003, AmeriGas OLP acquired all of the retail propane distribution assets and business of Horizon Propane LLC. AmeriGas Propane, Inc. is their general partner. The General Partner provides these services. Dividend of $2.68 which represents a 7.2% yield on their recent price of $3748 per share. Their P/E is 10.40 with a return on equity of 49% and $1.04 per share in cash.

I don't always agree with Jim Cramer over at CNBC, but he happens to like these companies as well. While I plan on investing in all 3 partnerships, I would suggest readers do their own research before making investments for themselves. However, if you're looking to invest in master limited partnerships, this might give you a good start.