Exploring the Sustainability and Growth of MPLX LP's Dividends
MPLX LP (MPLX, Financial) recently announced a dividend of $0.85 per share, payable on May 13, 2024, with the ex-dividend date set for May 2, 2024. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into MPLX LP's dividend performance and assess its sustainability.
What Does MPLX LP Do?
MPLX LP is a partnership that owns both pipelines and gathering and processing assets with extensive holdings in the Appalachian region. The asset base is made up of pipeline assets dropped down from Marathon Petroleum, its sponsor, and gathering and processing assets from MarkWest, which it acquired in 2015. MPLX also acquired Andeavor Logistics in July 2019.
A Glimpse at MPLX LP's Dividend History
MPLX LP has maintained a consistent dividend payment record since 2013, distributing dividends on a quarterly basis. MPLX LP has increased its dividend each year since 2013, earning it the status of a dividend achiever. This title is reserved for companies that have increased their dividend each year for at least the past 11 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down MPLX LP's Dividend Yield and Growth
Currently, MPLX LP has a 12-month trailing dividend yield of 7.78% and a forward dividend yield of 8.14%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, MPLX LP's annual dividend growth rate was 4.90%, which decreased to 4.30% per year over a five-year horizon. Over the past decade, MPLX LP's annual dividends per share growth rate stands at an impressive 10.50%. Based on MPLX LP's dividend yield and five-year growth rate, the 5-year yield on cost of MPLX LP stock as of today is approximately 9.60%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of December 31, 2023, MPLX LP's dividend payout ratio is 0.83, suggesting that the company's dividend may not be sustainable. MPLX LP's profitability rank of 7 out of 10, suggests good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
MPLX LP's growth rank of 7 suggests a good growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average annual increase of 9.20%, although this underperforms approximately 62.83% of global competitors. MPLX LP's 3-year EPS growth rate showcases its capability to grow earnings by approximately 73.40% per year on average, which underperforms only about 10.97% of global competitors. The company's 5-year EBITDA growth rate of 16.50% also underperforms about 39.08% of global competitors.
Conclusion: Assessing MPLX LP's Dividend Outlook
The analysis of MPLX LP's dividend payments, growth rates, payout ratio, profitability, and growth metrics presents a mixed picture. While the company shows strong dividend growth and a solid profitability rank, concerns about the sustainability of its payout ratio and mixed performance in growth metrics warrant careful consideration. Investors should weigh these factors when assessing MPLX LP as a potential investment for steady dividend income. For further exploration of high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
