Pipeline MLPs have powered higher this year following a painful across-the board downturn in 2014 and 2015. Darin Turner, portfolio manager at Invesco IVZ, said the recovery in MLP shares is not complete, especially in names like Rice Midstream Partners , Energy Transfer Partners , Plains All American Pipeline and Williams Partners . Rice Midstream Partners, up 80% year-to-date, sports a healthy 3.9% dividend. This week the company’s parent Rice Energy announced the purchase of Vantage Energy for $2.7 billion, including the assumption of debt. In connection with the acquisition, Rice Midstream will purchase the acquired midstream assets from Rice Energy for $600 million. The E&P assets to be acquired by Rice Energy include approximately 85,000 net core Marcellus acres in Greene County, Pennsylvania, with rights to the deeper Utica Shale on approximately 52,000 net acres and 37,000 net acres in the Barnett Shale. “Rice Midstream is 100% focused on the Marcellus Shales and it will be the fastest growing MLP over the next five years,” said Turner. “The Vantage acquisition should almost double the size of its operating base.” Turner is also bullish on Energy Transfer Partners, which has seen its shares rise 23% thus far in 2016. He said the continued simplification of the company’s structure will drive the stock forward. “This is the cheapest MLP around trading at 16 times next year’s estimated earnings and the 11% dividend yield does not hurt either,” said Turner. Plains All American Pipeline, up 45% year-to-date, is another one of Turner’s top picks. He calls the company the “best way to play production increases in the Permian Basin” and lauds its 9.3% dividend yield. Finally, Turner is a fan of Williams Partners, up 46% year-to-date, saying it owns “the best natural gas pipeline in Transco” and that is the reason why acquirers are interested in the company.
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