Seeking Alpha • Sep 23

Magellan Holders Now Own ONEOK; There Are Better Values In The Space

Summary Magellan Midstream holders have approved the acquisition deal by ONEOK, despite concerns over tax consequences. The deal will create a more diversified company, with ONEOK bringing natural gas and natural gas liquids to the table. The combined company is expected to generate about $6.1 billion in adjusted EBITDA in 2024, valuing it at roughly 10x 2024 EBITDA. While a the combined company is solid, there are better values in the midstream space. Read the full article on Seeking Alpha

Seeking Alpha • Aug 08

Magellan Midstream: Overvalued, But Hold For Solid Dividend Yield

Summary The company can maintain its quarterly dividend of $1.0475 in the last quarter as well, representing a high dividend yield of 6.53%. The company reported revenue of $877.2 million, which is an increase of 11.23% from $788.6 million in Q2FY22. After comparing the forward P/E ratio of 12.64x with the sector median of 11.50x, we can say that the company is overvalued. Read the full article on Seeking Alpha

Seeking Alpha • Jun 23

ONEOK Is A Buy With Or Without Magellan Midstream

Summary ONEOK, Inc. is facing opposition in its bid to acquire Magellan Midstream Partners, L.P. from the latter's equity owners. Magellan Midstream Partners units are a Sell or Hold, depending on the tax impact for its investors. ONEOK, Inc. shares are a Buy regardless of whether a deal closes or not. Read the full article on Seeking Alpha

Seeking Alpha • Jun 17

Magellan Midstream: Long-Term Investors Should Reject The ONEOK Deal

Summary Magellan Midstream unitholders should vote against the proposed acquisition by ONEOK due to unfavorable tax consequences. The deal, valued at $18.8 billion, offers a modest premium for MMP unitholders but may not be worth the tax burden, especially for long-term investors. The fit between OKE and MMP is not ideal, and the tax consequences outweigh the potential benefits of the merger. Read the full article on Seeking Alpha

Seeking Alpha • Feb 02

8% Yielding Magellan Midstream Is A Dream Recession Retirement Strong Buy

Summary The 2023 recession is likely to be mild, but future recessions might not be. High-yield blue-chips like Magellan are a great way to generate excellent yield while riding out market storms. MMP's 21-year dividend growth streak, the highest credit rating in the industry, and the industry-leading profitability makes it the highest quality midstream on Wall Street. MMP's focus on disciplined spending makes it a free-cash flow self funding midstream, the gold standard of safety in the industry. MMP yields a very safe 8%, is growing 5.5%, and offers 13.3% long-term returns. It could deliver 20% annual returns over the next two years, and 130% returns over the next five. It's a potentially strong buy for anyone comfortable with the risk profile. A version of this article was originally published on Dividend Kings on Tuesday, January 31st, 2023. --------------------------------------------------------------------------------------- The 2023 recession, it's on everyone's mind. Will we get a recession or a soft landing? Will earnings grow or contract? Was October 13th the bear market bottom, or is there still worse pain to come? Can the Fed pull off a soft landing with starting inflation above 5%? Something that's never happened before in history? These kinds of questions are popular on Bloomberg, CNBC, and Seeking Alpha. They move markets and make for something exciting and interesting to talk about, at least for market nerds like me. But do you know what most people care about? Family, health, sending their kids to college, going on vacation, and being able to afford a new car when the time comes. Most people care about retiring in comfort and dignity, in achieving financial freedom; precisely so they never have to watch the stock market again. Whether or not we get a recession in 2023 and how bad it will be is interesting to many of us here, but it's not at all an important question for the average real American's long-term portfolio. Interest rates, inflation, the Fed, and even the Russian invasion of Ukraine all kept investors glued to their seats in 2022. Short-term stock prices are vanity, cash flow is sanity, and dividends are reality. Last year we saw 9.1% inflation in June and 8% for the full year. The worst inflation in 42 years. We saw the worst bond bear market in US history, 3X worse than the previous record in fact. It was the first time in US history that bonds and stocks fell double digits. Oh, how the media loved the sensational headlines. In a year when almost nothing worked, and almost all news was terrible, here is what smart long-term investors focused on. Dividends! S&P dividends grew 11% in 2022, 3% faster than inflation dividend blue-chip dividends (as represented by VIG) grew 14%. high-yield dividend blue-chips (as represented by SCHD) grew 18% the dividend aristocrat ETF (NOBL) saw its dividends rise 45% (though some of that was rebalancing effects) my personal family hedge fund saw its income soar 34% (thanks to a banner year for managed futures) For 21 consecutive months inflation has been higher than wage growth. For nearly two years working Americans have been getting steadily poorer every month. Did you get an 11% raise last year? Stock investors did. Did you get a 14% raise last year? Dividend growth investors did. Did you get an 18% raise last year? High-yield dividend growth investors did. This is what actually matters to your financial future. If you don't find a way to make money while you sleep, you will work until you die." - Warren Buffett Are we going to get a recession in 2023? Probably, but even if we don't we're sure to get one in the next 30 years. That's the typical retirement time frame, even if you're 70 years old. 10% of retired couples will have one person live to 100 And this is where high-yield blue-chips like Magellan Midstream (MMP), which uses a K1 tax form, are such wonderful dream retirement stocks. Let me show you why anyone owning MMP has nothing to fear from the 2023 recession, even if it turns out to be far worse than economists currently expect. Reason One: Magellan Is The Highest Quality Midstream On Wall Street Bottom line up front. Magellan is an MLP and uses a K-1 tax form 5 Things All MLP Investors Need To Know typical foreign investors have a 37% withholding (whether they can recoup it depends on their country's tax code) This article goes through the specifics of MMP's business model. 8.5% Yielding Magellan Is The Christmas Gift That Keeps On Giving Basically, MMP is a wide-moat, brilliantly managed midstream MLP whose only negative is a relatively modest green energy transition plan (more on this in the risk section). mostly focused on biofuels But there are many things to love about MMP, especially in the 2023 recession. Why Magellan Is A Very Safe 8% Yielding 2023 Recession Buy Back during the shale oil boom, when crude was $100 for years, midstreams used a lot of equity growth funding. Kinder Morgan, for example, had a 1.07 coverage ratio (93% payout ratio) Debt and stock issuance were what the industry used, or most of it. After the 2014 oil crash (started by OPEC), lots of midstreams found themselves over their skies with debt. Debt/EBITDA ratios were as high as 8 for midstreams like KMI, compared to 5.0X or less, which rating agencies considered safe today. Investor Presentation MMP has a policy of never exceeding 4X leverage, and even in the Great Recession, it kept a safe amount of leverage. Magellan is famous as the midstream that pioneered the equity self-funding business model in midstream. it bought out its general partner's incentive distribution rights in 2010 the last time it issued stock That lowered its cost of capital, and let it keep the 50% of its cash flow it was sending to its GP (who managed it). MMP set the industry's safety standard for a safe payout ratio (83% according to rating agencies) and was self-funding, with zero equity issuance need, for its growth long before the entire industry adopted the model. Full Free Cash Flow Self Funding Year Distributable Cash Flow Free Cash Flow Distribution DCF Payout Ratio FCF Payout Ratio Distribution/Unit 2022 $1,104.0 $1,117.25 $852.80 77.2% 76.3% $4.16 2023 $1,155.0 $1,066.00 $865.10 74.9% 81.2% $4.22 2024 $1,173.0 $1,162.35 $873.30 74.5% 75.1% $4.26 2025 $1,199.0 $1,123.40 $879.45 73.3% 78.3% $4.29 2026 $1,221.0 $1,174.65 $887.65 72.7% 75.6% $4.33 2027 $1,260.0 $1,248.45 $895.85 71.1% 71.8% $4.37 Annual Growth 2.7% 2.2% 1.0% -1.6% -1.2% 1.0% (Source: FactSet Research Terminal) After the Pandemic lockdowns sent oil to -$38, demand for new oil pipeline projects disappeared. Magellan's current growth capital program essentially wound down in 2021. 2022 growth spending is expected to be $90 million, and Magellan's backlog is minimal, with $140 million in growth spending in 2023 and 2024." - Morningstar By cutting back on growth spending that was no longer necessary, MMP's free cash flow soared. Today its DCF payout ratio (the REIT AFFO payout ratio equivalent) is 75% and falling steadily. That's thanks to management maintain the 21-year dividend growth streak but at a token rate. The emphasis is on bringing down the free cash flow payout ratio so that MMP can retain about $300 million per year to put towards things like acquisitions or buybacks. 9% free cash flow yield means that buybacks are a guaranteed way to earn a good return on investment with retained free cash flow Every unit MMP buys back reduces its payout costs and reduces its payout ratio further, boosting next year's retained free cash flow. With a newly expanded $1.5 billion unit buyback in place, the partnership has already bought back over $1 billion in units since 2020. With $447 million in completed asset sales as of June 2022, we expect more buybacks in the year's second half. We estimate debt/EBITDA will remain below 3.5 times, suggesting sizable capital return capacity while maintaining leverage at reasonable levels." - Morningstar While a $1.5 billion buyback authorization might not seem big compared to Chevron's $75 billion program, MMP is an $11 billion market cap stock. $1.5 billion is enough to buy back 14% of its stock at current valuations FactSet Research Terminal After a $1 billion buyback bonanza in 2021 and 2022, analysts expect MMP's buybacks to run $250 million based on management statements during conference calls. About 2.4% annual unit reduction per year at current valuations So in the medium-term, we have 2.7% growth in distributable cash flow (mostly from inflation-linked price increases on its pipelines), combined with about 2.4% annual stock reduction, generating around 5.1% cash flow/share growth. Or, to put it another way, MMP is expected to repurchase about $1.25 billion more of stock, funded entirely by post-distribution free cash flow. Of course, this growth plan only works for income investors if MMP's business is slow growth but stable (the playbook of big tobacco for decades). FactSet Investor Presentation MMP's base-case forecast is that demand for its core business, refined product pipelines in the midwest, will peak around 2027 and begin to decline gradually. MMP's base-case is that the decline rate from 2030 to 2050 should be around 1.5% per year, though backloaded. The decline rate accelerates gradually over time after 2027 Its worst-case scenario will be discussed in the risk section. If MMP is correct, then around 2.3% annual price hikes (the bond market's long-term inflation expectation) -1.5% volume declines = about 0.8% annual revenue growth from its core business (72% of its sales today) through 2050. A business that is growing sales at 1% and buying back about 2.5% worth of stock will still experience about 3.5% cash flow/share growth. But MMP isn't planning on just sitting on its laurels forever and let its business slowly die. by 2055 the base-case decline rate in refined product demand would offset price hikes = zero revenue growth and negative after that by 2060 to 2065, the decline rate would offset price hikes + buybacks resulting in negative growth Magellan is planning for the green energy transition. investor presentation Right now, MMP is focused on biofuels like biodiesel and ethanol. In the future, it plans to get into hydrogen and carbon sequestration. So what does the bond market think of MMP's plans for the next few decades? What do bond investors, the most conservative, analytical "smart money," expect? FactSet Investor Presentation Bond investors are willing to lend millions to Magellan out to March of 2050 at reasonable interest rates. So the smart money expects that MMP will survive and likely keep growing for about 30 more years...at least. FactSet Investor Presentation MMP recently doubled the size of its $1 billion revolving credit line, meaning big banks have little concern about its financial health. How much is $2 billion in liquidity for a midstream Magellan's size? it's enough to fund about 30 years of growth projects at current levels MMP's leverage ratio is expected to fall from a very safe 3.6X to 3.4X in 2023 (a recession year). FactSet Research Terminal MMP's debt is expected to remain stable at just over $5 billion through 2027. Its cash flows are expected to grow at a modest rate of 2% to 3% per year. By 2027 its debt/EBITDA (leverage) ratio is expected to hit 3.2X. At the current rate of 0.05 turns per year, MMP could get an upgrade to A- stable in 18 years. We could raise our ratings on Magellan if its financial risk profile improved. Specifically, the partnership would have to maintain adjusted debt to EBITDA at less than 2.5x on a sustained basis." - S&P After analyzing its risk profile and business model, S&P estimates that a 2.5X leverage ratio is worthy of an A- stable credit rating. BBB+ right now = 5% 30-year bankruptcy risk A- would mean a 2.5% 30-year bankruptcy risk Bottom Line: MMP's 8% yield is very safe in the 2023 recession and getting safer over time. Magellan Payout Safety Rating Dividend Kings Safety Score (250 Point Safety Model) Approximate Dividend Cut Risk (Average Recession) Approximate Dividend Cut Risk In Pandemic Level Recession 1 - unsafe 0% to 20% over 4% 16+% 2- below average 21% to 40% over 2% 8% to 16% 3 - average 41% to 60% 2% 4% to 8% 4 - safe 61% to 80% 1% 2% to 4% 5- very safe 81% to 100% 0.5% 1% to 2% MMP 100% 0.5% 1.00% Risk Rating High Risk (13th S&P Global percentile risk-management) BBB+ stable Outlook credit rating = 5% 30-year bankruptcy risk 15% or less max risk cap Long-Term Dependability Company DK Long-Term Dependability Score Interpretation Points Non-Dependable Companies 20% or below Poor Dependability 1 Low Dependability Companies 21% to 39% Below-Average Dependability 2 S&P 500/Industry Average 40% to 59% Average Dependability 3 Above-Average 60% to 79% Dependable 4 Very Good 80% or higher Very Dependable 5 MMP 100% Very Dependable 5 Overall Quality MMP Final Score Rating Safety 100% 5/5 very safe Business Model 80% 3/3 wide moat Dependability 100% 5/5 very dependable Total 98% 13/13 Blue-Chip Risk Rating 2/5 High Risk 15% OR LESS Max Risk Cap Rec 10% Margin of Safety For A Potentially Good Buy This is one of the highest-quality midstream blue-chips on earth. In fact, it's quality score is slightly higher than ENB's. 98% MMP vs. 97% ENB Why is MMP higher quality than ENB? It all comes down to profitability, Wall Street's favorite quality proxy. Investor presentation MMP has the highest returns on capital of any large midstream and has maintained that for the last 15 years. Management's devotion to a strong balance sheet, sustainable self-funding business model, steady payout growth, and highly predictable cash flow due to its core business makes it an excellent 8% yielding blue-chip buy for 2023's recession. Magellan Midstream 2024 Consensus Total Return Potential FAST Graphs, FactSet A return to mid-range historical fair value by 2024 could result in 21% annular returns. 2X that of the S&P 500 and Buffett-like return potential Magellan Midstream 2028 Consensus Total Return Potential FAST Graphs, FactSet MMP offers about 130% total return potential over the next five years or 15% annually.

Seeking Alpha • Jan 24

Magellan Midstream Partners declares $1.0475 dividend

Magellan Midstream Partners (NYSE:MMP) declares $1.0475/share quarterly dividend, in line with previous. Forward yield 7.75% Payable Feb. 14; for shareholders of record Feb. 7; ex-div Feb. 6. See MMP Dividend Scorecard, Yield Chart, & Dividend Growth.

Seeking Alpha • Jan 04

Magellan Midstream: A Worthy Portfolio Diversifier But Coverage Is Tight

Summary Magellan Midstream Partners, L.P. is one of the largest and most well-known refined products-focused midstream partnerships in the United States. The company's cash flows vary a bit more than other midstream companies because it is more subject to product demand. Magellan has generally underperformed its peers over the past year and lacks the growth opportunities of some of its peers. The company has one of the strongest balance sheets in the industry and appears able to maintain its distribution at the current 8.35% level. Magellan Midstream Partners could provide some diversification to a portfolio that contains other midstream companies. Magellan Midstream Partners, L.P. (MMP) is one of the largest and most well-known midstream partnerships in the energy industry. We have long liked midstream partnerships for our energy income portfolios due to their general stability and high yields. Magellan Midstream Partners certainly has a high yield, which sits at 8.35% as of the time of writing. However, it does not enjoy the same cash flow stability as some of its peers for reasons that we will discuss in this article. The company could still earn a place in your portfolio, though, due to its enormous size and balance sheet strength providing it with a number of advantages over smaller and weaker midstream partnerships. The company certainly has earned some of the respect that many investors give it, as its common units were among the few equities that actually delivered a positive return over the past year. The company's growth prospects are unfortunately somewhat limited, but its 8.35% current yield can mostly make up for that. Therefore, let us investigate and see if Magellan Midstream Partners could be a good addition to your portfolio today. About Magellan Midstream Partners As stated in the introduction, Magellan Midstream Partners is one of the largest and most well-known midstream master limited partnerships in the United States. The company is primarily known for its extensive network of refined product pipelines, which stretch across most of the central part of the country: Magellan Midstream Partners Magellan Midstream Partners owns approximately 9,800 miles of refined products pipelines, 47 million barrels of refined products storage, and 54 refined product terminals. This gives the company the largest refined products midstream infrastructure network in the United States. There may be some readers that point out that it does not extend to the East Coast or out to California, which is somewhat disappointing because the heavily-populated coasts are major consumers of refined products. However, many of the nation's refineries are actually located in the central part of the country, and Magellan Midstream's network connects to about 50% of the nation's entire refining capacity. This provides the company with a very solid supply of refined products to transport. The fact that the company has access to a large supply of refined products is important because of the business model that the company uses. As is the case with most midstream companies, Magellan Midstream Partners enters into long-term contracts with its customers for the transportation of refined products. In exchange for the company's transportation and storage services, the company's customers compensate it based on the volume of resources that they send through the company's infrastructure and not on the value of these resources. In fact, about 85% of the company's operating margin (a proxy for operating profit before accounting for depreciation and amortization) comes from these volume-based fees: Magellan Midstream Partners This is nice because it means that Magellan Midstream Partners is somewhat insulated from commodity price fluctuations. Refined products typically trade somewhat in line with crude oil prices and as we saw over the past two years, crude oil prices can sometimes vary significantly. The fact that Magellan Midstream charges its customers based on volumes provides a certain amount of stability to the company's cash flow that would not exist if it billed based on refined product prices. With that said, Magellan Midstream Partners' cash flows are not as stable as those of some other midstream companies. The biggest reason for this is that the demand for refined products can decline during economic slowdowns. We saw this in a very big way during 2022 as the lockdowns encouraged most people to stay at home and avoid driving, which drastically reduced the demand for refined products. The volume of refined products that is transported by the company's pipelines depends directly on the demand for such products. Thus, its volume will decline when the demand for these products goes down, which has a direct effect on the company's cash flows. There are a growing number of predictions that the United States will enter into a recession during 2023, which could be a concern as recessions usually cause the demand for refined products to decline. Thus, Magellan Midstream Partners could see a cash flow decline over the next few months, although it will likely not be as severe as the 19.50% decline that the company experienced back in 2020: FY 2021 FY 2020 FY 2019 Distributable Cash Flow $1,118.0 $1,044.5 $1,297.5 (All figures in millions of U.S. dollars.) We can clearly see that the company's 2020 decline was a one-time event but unfortunately it did not fully recover to its full-year 2019 levels in 2021. This is partly because of the lingering effects of the pandemic. Although we did see many economies, both in the United States and abroad, begin to reopen following the disastrous effect of the lockdowns, there were many people that still remained in fear and so spent more time at home than they would have prior to the pandemic. In addition, we have seen an enormous surge in remote work that persists to this day. A person that works at home will naturally not need to travel to work every day, as they would in the absence of the ability to perform their job functions remotely. That reduces the demand for refined products, such as gasoline and diesel fuel. As we can see here, the demand for these products still remains below pre-pandemic levels: NuStar Energy/Data from U.S. Energy Information Administration Unfortunately, the company's cash flows in 2022 have been quite disappointing: Q3 2022 Q2 2022 Q1 2022 Distributable Cash Flow $290.1 $228.0 $265.4 (All figures in millions of U.S. dollars.) The company's distributable cash flow in all but the third quarter was still lower than in the comparable quarter of 2021 but it is still generally performing better than what it saw in 2020. The company has yet to release its fourth quarter 2022 results but it has guided for a distributable cash flow of $1.1 billion, which would be a decline over 2021 levels but still represents a recovery from what we saw in 2020. As we can see above, the demand for gasoline and diesel fuel is expected to be pretty similar to 2022 levels in 2023 and below that of the best quarters of 2021. Thus, we can assume that Magellan Midstream Partners' 2023 distributable cash flow will be right about the same level that we are seeing so far this year. Thus, we will probably not see a significant appreciation in the company's unit price and investors should expect the distribution to make up nearly all of the return that we will see over the next twelve months. This is far from unprecedented as the company's unit price was only up a moderate 7.45% over the trailing twelve months: Seeking Alpha This is nowhere close to the return that a few of the company's peers have delivered over the same period: Company TTM Return Magellan Midstream Partners 7.45% MPLX (MPLX) 8.85% Kinder Morgan (KMI) 10.15% The Williams Companies (WMB) 21.32% DCP Midstream (DCP) 36.52% This is certainly discouraging from an investment perspective, but it is important to keep in mind that none of these peers have the refined products infrastructure that Magellan Midstream Partners owns. As such, including Magellan Midstream Partners in a portfolio that also contains some of these other companies can help achieve diversification across the various types of midstream companies. Magellan Midstream Partners is more than just a refined products midstream company, although that is by far its biggest unit. The company also owns and operates a fairly sizable amount of crude oil midstream infrastructure. Magellan Midstream Partners In total, Magellan Midstream Partners owns 2,200 miles of crude oil pipelines and 39 million barrels of crude oil storage capacity. This infrastructure uses a very similar overall business model to the company's refined products network but it does have a bit more stability. This is because the contracts that Magellan Midstream Partners has with its customers include minimum volume commitments. These contractual clauses specify a certain number of resources that the customer must send through Magellan Midstream Partners' infrastructure or pay for anyway. This adds a certain amount of cash flow stability because it protects the company's cash flow against a decline in oil production that frequently accompanies lower crude oil prices. Thus, this unit is somewhat more protected against issues in the broader economy than the refined products business and provides the company with a certain baseline level of cash flow that can help to support the distribution. This adds somewhat to Magellan Midstream Partners' appeal as an income investment, despite the fact that this business unit is substantially smaller than the firm's refined products segment. Financial Considerations It is always important to analyze the way that a company is financing itself before we make an investment in it. This is because debt is a riskier way to finance a company than equity because debt must be repaid. As this is usually accomplished by issuing new debt to repay the existing debt, a company may see its interest expenses increase following the rollover depending on the conditions in the market. In addition, a company must make regular payments on its debt if it is to remain solvent. Thus, an event that causes a decline in cash flows could push a company into financial distress. Midstream companies usually have remarkably stable cash flows but as we have already seen, Magellan Midstream's cash flows are not as stable as some of its peers so this is a risk that we should be aware of as part of our investment analysis. One metric that we can use to analyze a midstream company's debt load is its leverage ratio. This ratio, which is also known as the net debt-to-adjusted EBITDA ratio, essentially tells us how many years it would take a company to completely pay off its debt if it were to devote all of its pre-tax cash flow to that task. As of September 30, 2022, Magellan Midstream Partners had a leverage ratio of 3.7x based on its trailing twelve-month adjusted EBITDA. This is quite a bit higher than the sub-3.0x ratio that it had back in early 2020: Magellan Midstream Partners

Seeking Alpha • Dec 22

8.5% Yielding Magellan Is The Gift That Keeps On Giving

Summary This Christmas, Santa is bringing blue-chip bargains that could change your life. Magellan Midstream offers one of the possibly safest 8.5% yields on earth, backed by the strongest credit rating in the industry, a 21-year payout growth streak, and just 10% commodity sensitivity. MMP is pursuing the most aggressive buybacks in the industry, repurchasing stock at a rate of 5% per year. Long-term, 2.5% annual buybacks are expected to drive 4.3% growth. MMP is trading at an anti-bubble 8.4X cash flow, priced for just -0.2% growth. It could deliver 75% returns within two years and 140% returns within five years. Long-term, the bond market is confident that MMP will be around for at least 30 years, and it could deliver almost 13% long-term returns. That's better than the S&P, aristocrats, and even the Nasdaq. This article was published on Dividend Kings on Monday, December 19th. ---------------------------------------------------------- Christmas is a wonderful time to forget about work and focus on what matters, friends, family, and all the things that make life worth living. But it can be a stressful time in terms of gift-giving. How many hours have you spent each year agonizing over what gifts to get your family? How often have you been disappointed by what you received yourself? The 6 Best Gifts You Can Give This Christmas Holiday gift-giving is not that hard if you think through things logically, focusing on what matters and how to give your loved ones things that can make them happy. Not just for a few years, but potentially for a lifetime. Today I want to highlight why Magellan Midstream (MMP) is one of the best gifts you can give, even if it's only to yourself. Let me show you why this 8.5% yielding MLP (uses a K1 tax form) can help you lock in a potentially very safe 8.5% yield today while earning around 13% long-term Nasdaq-beating returns for decades to come. In other words, I'll show you why this is an 8.5% yielding gift that could keep giving for decades and ultimately provide you a rich retirement. Magellan: An 8.5% Yield You Can Trust Bottom line upfront. Magellan is an MLP and uses a K-1 tax form 5 Things All MLP Investors Need To Know typical foreign investors have a 37% withholding (whether they can recoup it depends on their country's tax code) Investor presentation Magellan was one of the first MLPs to buy out its general partner and simplify its business model. In fact, it pioneered the self-funding business model for its industry and literally set the standard for rating agencies about a safe payout ratio for midstream. 1.2X coverage ratio = 82% DCF payout ratio Investor presentation MMP's core, wide moat business is its 11,000 miles of gasoline, diesel, and jet fuel pipelines that provide 15 states with 50% of their fuel. Is this a growth industry? Nope. In fact, fuel demand hasn't grown in the midwest for many years. But that's what makes its wide moat. It would cost tens of billions to recreate MMP's pipeline network, and since there is no demand growth, no one wants to do that. The MLP gets 2% to 3% annual rate increases approved by regulators, and none of its refiner customers ever complain since the rate hikes are tied to inflation. In the high inflation, 2022, MMP was approved for a 6% pipeline price hike, and none of its customers have filed a complaint with regulators ((FERC)) in decades. Investor presentation About 13 years ago, MMP began diversifying its business into crude pipelines because that's where the growth opportunities were. Today, with reduced demand for new pipelines, MMP is focusing on oil exports, a thriving industry thanks to the Russian invasion. It's also cut back on growth spending overall and is pursuing one of the most aggressive buyback programs in the industry. With a newly expanded $1.5 billion unit buyback in place, the partnership has already bought back over $1 billion in units since 2020. With $447 million in completed asset sales as of June 2022, we expect more buybacks in the year's second half. We estimate debt/EBITDA will remain below 3.5 times, suggesting sizable capital return capacity while maintaining leverage at reasonable levels." - Morningstar $1.5 billion in buybacks might not sound impressive in a world where Apple can buy back $20 billion in a single quarter. Ycharts But remember that buybacks are new for midstream, and MMP has a $10 billion market cap. $1.5 billion goes a long way, and MMP has cut its unit found by 10% in the last two years. And it's done that while maintaining one of the safest balance sheets in the industry. In fact, at BBB+ stable, it's tied with EPD, ENB, and TRP for the best credit rating in midstream. By the end of 2023, analysts expect MMP's debt/EBITDA or leverage ratio to be 2.9, down from a very safe 3.5 today. For context, rating agencies consider 5.0X or less leverage safe for midstream, though rating agencies want to see 4.0X or less for MMP. Why? Because it tends to use short-term (1 to 3-year) contracts for its core business, while peers can have contracts that run for 15 to 25 years (up to 50 years in the case of ENB). But shorter contracts aren't necessarily unsafe since MMP has a virtual monopoly on refinery pipelines in many of its markets. Investor presentation With just 10% of cash flow sensitive to commodity prices, and management using hedging to stabilize cash flow, even more, MMP is an energy utility for its customers. Investor presentation One that has enjoyed the highest returns on invested capital in the industry for over 15 years. What does that actually mean for income investors? a 38% free cash flow margin in the top 5% of all companies on earth Almost 40 cents of every dollar in revenue drops straight to the bottom line for MMP. That's what pays the 8.5% distribution, which is tax-deferred until you sell it. Investor presentation MMP has a 21-year payout growth streak ever since it went public in 2001. Wells Fargo Wells Fargo considers MMP one of its midstream aristocrats, the safest of the safe in this industry. That's not just thanks to MMP's impeccable track record of raising its payout every year but also due to its industry-leading low leverage. Investor presentation In the past, many MLPs went crazy with leverage, using scary amounts of debt to try to grow like a weed and also fund a lot of growth with stock. For example, Kinder Morgan (KMI) hit a peak leverage of 8.5 in 2014, just before the bottom fell out of oil prices. MMP has never gone above four since that's what rating agencies want to see to maintain the strongest credit rating in the industry. In fact, it's company policy that MMP's leverage ratio must never rise above 4. MMP has no bonds maturing until 2025, long after the mild recession is expected to end. It has $1.94 billion in liquidity today, which might not sound like much. But remember, MMP is small, and it barely spends anything on growth. FactSet Research Terminal MMP spends about $250 million annually on maintaining and growing its pipeline assets and generates over $1 billion in free cash flow. It spends $860 million on distributions Management targets an 82% DCF payout ratio, and next year analysts expect the payout ratio to be 73%. More impressively, it's not just self-funding; it's free cash-flow self-funding. self-funding = no reliance on the stock market to fund growth FCF self-funding = no reliance on equity or debt market to fund growth MMP is generating $250 million more in annual free cash flow than it costs to run the business, grow it, and pay its steadily growing 8.5% yielding distribution. Analysts expect that to go to funding an annual buyback rate of approximately 2.5% per year at current valuations. Investor presentation MMP's energy transition plans are based around biofuels since its core business is refined product pipelines. MMP's core business is diesel fuel for big trucks, which the EV transition is expected to take a long time to impact. In fact, according to the Energy Information Administration, demand for MMP's pipelines isn't expected to decline through even 2050. Investor Presentation Mind you, that's an outlier estimate, which is why S&P considers its long-term risk management to be 13th percentile. S&P estimates demand for refined products will decline by close to 50% by 2050 That forecast is consistent with other analysts first, such as Wood Mackenzie. How worried are rating agencies or the bond market about MMP's business stability? Moody's and S&P rate it BBB+ stable both consider its long-term risk management to be negative (Moody's "moderately negative."

Seeking Alpha • Dec 07

Better High Yield Buy: Magellan Midstream Or Plains?

Summary Plains All American Pipeline and Magellan Midstream Partners are two investment grade midstream MLPs that sport high yields. Which one is a better buy at the moment? We compare them side by side and offer our take. Both Plains All American (PAA)(PAGP) and Magellan Midstream Partners (MMP) are investment grade midstream master limited partnerships that sport sky-high distribution yields. In this article, we will compare them side by side and offer our take on which one is a better buy. Magellan Vs. Plains: Business Model Both businesses are mostly focused on oil-oriented midstream infrastructure. Plains operates primarily in the Permian Basin, where its crude and refined products assets generate roughly four-fifths of its adjusted EBITDA and then owns some NGL assets in Western Canada. Magellan, meanwhile, boasts a leading refined products portfolio that has generated the midstream industry's best returns on invested capital over the past fifteen years (16% average). Both businesses generate remarkably stable cash flows despite the high volatility of energy commodity pricing as the vast majority of their pipelines have long-term fixed-fee contracts attached to them. Some of their assets - particularly their refined products assets - have inflation index linked annual tariff escalators, giving them pretty good resistance to inflation. Overall, we give the edge to MMP here given its impressive returns on invested capital and vastly superior long-term track record: Data by YCharts Magellan Vs. Plains: Balance Sheet Once again, MMP wins this competition in a pretty clear-cut manner. Plains' balance sheet is investment grade (BBB- credit rating), has plenty of liquidity ($3.3 billion including $600 million in cash on hand), and has been making significant progress recently towards deleveraging by paying down debt aggressively. Furthermore, Plains anticipates continuing to deleverage aggressively and eventually earning a credit rating upgrade to BBB by paying off debt as it matures while also fully self-funding capital expenditures and cash distributions, which makes it almost entirely immune to current capital market conditions. However, MMP's industry-best BBB+ credit rating and very conservative approach to capital allocation gives it the edge. None of its long-term debt matures until 2025, giving it over two years of runway to either pay off or opportunistically refinance that debt. On top of that, 83% of its total net long-term debt does mature until the 2030s and beyond and the significant majority of its debt does not mature until 2042 or later, meaning that it has locked in low interest rates for decades to come. Magellan Vs. Plains: Distribution Outlook When you combine its high quality, stable cash generating business model and very strong financial position, MMP is largely freed up to allocate its cash flow as it sees fit. Unlike some of its larger midstream peers, MMP does not have significant high return organic investment opportunities at the moment, so its capital expenditures have plummeted to levels not seen in a decade. Data by YCharts As a result, its free cash flow has shot significantly higher in recent years Data by YCharts This has enabled MMP to pour its cash flow into buying back units and continuing to incrementally grow its already very high distribution. Data by YCharts Moving forward, MMP is expected to grow its distribution per share at a 0.9% CAGR through 2026, supported by a 5.1% DCF per unit CAGR over that same time span. This should enable MMP to improve its distribution coverage ratio from an expected 1.27x in 2022 to a much more conservative ~1.5x in 2026. While this is definitely a satisfactory growth rate given MMP's low risk profile and high 8.11% current distribution yield, Plains' distribution growth profile is vastly superior. Management announced in its Q3 report that: Management currently intends to recommend to the Board of Directors of PAA GP Holdings LLC (“the Plains Board”) an annualized increase of $0.20 to PAA’s and PAGP’s fourth-quarter 2022 distribution payable in February 2023 (one quarter earlier than our standard beginning-of-the-year annual budgeting process), which would increase the annualized rate from $0.87 to $1.07 per common unit and Class A share. Beyond 2023, as part of its standard annual review process, management anticipates targeting annualized common distribution increases of approximately $0.15 per unit each year until reaching a targeted Common Unit Distribution Coverage Ratio of approximately 160% This projected growth path means that the 2023 distribution yield on current cost is currently 9% with mid-teens growth rates in the distribution in the years following. While the projected DCF per unit CAGR through 2026 is a mere 2.5%, given that the distribution is already at such a high yield and likely to continue growing at a rapid pace over that period along with significant continued deleveraging of the balance sheet, Plains' total return profile looks very attractive. Magellan Vs. Plains: Valuation Both businesses also look attractively priced when compared to their own histories. Here is a side-by-side comparison of them: PAA MMP EV/EBITDA 8.82x 10.46x EV/EBITDA (5-Yr Avg) 9.65x 11.87x P/2023 DCF 4.99x 8.78x Distribution Yield 9.00% 8.28%

Seeking Alpha • Nov 07

Magellan Midstream: 8% Yield With Buybacks And Low Leverage

Summary Magellan Midstream Partners continues to trade strongly amidst a choppy environment. The company pays an 8% yield fully covered by the distribution. Asset sales have enabled the company to engage in aggressive unit buybacks. MMP is highly buyable as a lower-risk name in midstream. Magellan Midstream Partners (MMP) has traded at a high yield for so long that it may be easy to overlook that it is one of the few stocks still trading near 52-week highs. The midstream pipeline company has engaged in an aggressive unit repurchase program - something very atypical for the industry - funded by sizable asset sales. While I expect unit repurchases to slow down considerably moving forward, management appears to have shown a commitment to limit growth capital expenditures over coming years. I find it unlikely for units to continue yielding over 8% if the company commits to generating free cash flow and buying back units. I continue to find MMP highly buyable here. Heads up: MMP issues a K-1 tax form and may complicate your tax filing process - consider the tax ramifications before investing. MMP Stock Price While MMP remains much lower than 2015 highs, the stock is one of the stronger performers this year. Data by YCharts I last covered MMP in July where I explained why I flipped bullish on select midstream operators. MMP has risen slightly since then but arguably not enough. MMP Stock Key Metrics MMP is most well known for having the longest refined petroleum products pipeline system in the country. August Presentation While MMP is technically in the energy sector, its profits are typically far more stable than traditional energy producers because as a "landlord" of pipelines, MMP earns 85% of its margin from fees. August Presentation Within the midstream sector, I consider MMP to be one of the lower risk names. That may surprise some investors considering the low 1.25x DCF distribution coverage ratio - but in my opinion leverage and track record are the more important risk factors. MMP maintained a 3.7x debt to EBITDA ratio as of the latest quarter and has kept leverage below 4x for decades. August Presentation Regarding track record - MMP has the highest historic ROIC, meaning that it has delivered the strongest returns on its growth projects. August Presentation With that in mind, it may surprise some investors to see MMP prioritizing unit repurchases over growth projects this year. August Presentation MMP spent $138 million in buybacks in the quarter, bringing its YTD total to $377 million or 3.5% of units outstanding - and that's after spending big in buybacks in 2021. These unit repurchases were made possible primarily due to a reduction in growth capital spending as well as asset sales. In spite of those asset sales, MMP still grew distributable cash flow ((DCF)) to $290 million from $277 million. Free cash flow was $273 million versus $252 million. I note that excluding asset sales, free cash flow after distributions YTD was $140 million versus $65.5 million in 2021. Management also raised guidance on the conference call, now expecting $1.1 billion in DCF for the full year. Even after deducting the projected $90 million in growth capital this year, free cash flow would comfortably cover the approximately $858 million in full-year distributions - and that's before accounting for any asset sales. MMP did not give guidance yet for 2023 but did reiterate guidance for annual distribution coverage of at least 1.2 times for the foreseeable future. Is MMP Stock A Buy, Sell, or Hold? Even though MMP trades near 52-week highs, its distribution yield remains high compared to historic levels. Seeking Alpha That may surprise some readers considering that MMP has grown its distribution for over 20 consecutive years. August Presentation Management has guided for annual growth capital spend to hover around $100 million annually moving forward, noting that it has already budgeted for $100 million in 2023, and $40 million in 2024. Management did hint that 2023 is likely to see growth capital spend higher than $100 million as they budget for additional projects. I am pleased to see reduced growth capital ambitions, but note that their strong track record means that investors shouldn't necessarily be concerned if management eventually reverts to old ways.

Seeking Alpha • Oct 26

Magellan Midstream Partners Q3 2022 Earnings Preview

Magellan Midstream Partners (NYSE:MMP) is scheduled to announce Q3 earnings results on Thursday, October 27th, before market open. The consensus EPS Estimate is $1.15 (+5.5% Y/Y) and the consensus Revenue Estimate is $754.03M (+18.0% Y/Y). Over the last 2 years, MMP has beaten EPS estimates 100% of the time and has beaten revenue estimates 63% of the time. Over the last 3 months, EPS estimates have seen 2 upward revisions and 0 downward. Revenue estimates have seen 3 upward revisions and 1 downward.

Seeking Alpha • Oct 20

Magellan Midstream Partners raises dividend by 1% to $1.0475

Magellan Midstream Partners (NYSE:MMP) declares $1.0475/share quarterly dividend, 1% increase from prior dividend of $1.0375. Forward yield 8.47% Payable Nov. 14; for shareholders of record Nov. 7; ex-div Nov. 4. See MMP Dividend Scorecard, Yield Chart, & Dividend Growth.

Seeking Alpha • Oct 06

Magellan Midstream Is A 9% Yield You Can Trust In These Crazy Times

Summary Magellan has one of the industry's most consistent payout track records, a 20-year streak that is expected to reach 25 years by 2027. Over the next three years, analysts think MMP could deliver 85% total returns, or a Buffett-like 31% annually. If you're tired of losing sleep in markets that can swing 7% in a single day, then it's time to consider relatively safe ultra-yield to pay the bills.

Seeking Alpha • Sep 13

Magellan Midstream: Strong Yields Yes, But Not A Buy Now

Summary Magellan Midstream is a leading refined petroleum products midstream company that benefited from the strong energy pricing environment in 2022. Magellan's largely fee-based operating model provides tremendous visibility to its capital allocation strategy, driven by strong underlying profitability. However, we noted that the market had not re-rated MMP, despite its robust performance in H2. We also gleaned that MMP remains susceptible to downside volatility in its underlying markets. With a secure NTM dividend yield exceeding 8%, it should provide robust buying support, underpinned by a stock repurchase authorization with just under $500M remaining. We discuss why we still rate MMP as a Hold and urge investors to be patient. Thesis Magellan Midstream Partners (MMP) is a leading midstream company focusing mainly on refined petroleum products. Through its extensive pipeline system (longest in the US), it has delivered tremendous visibility to investors with its largely fee-based operating model, with escalators/tariffs to cope with higher costs. As a result, it gives the company strong confidence in delivering its continued growth in dividends with a disciplined CapEx framework, supporting the growth of its distributable cash flow ((DCF)). Magellan has also benefited from the heightened commodity pricing environment in 2022, as MMP posted a YTD total return (including dividends) of 16.2%, well above its 10Y total return CAGR of 8%. Notwithstanding, management sees less potential upside to its guidance in H2'22, as commodity prices moderated markedly through Q2. Furthermore, underlying commodity prices have remained relatively tepid through September as the market continues to be concerned about demand destruction. Despite that, management accentuated that its business model is relatively inelastic to the movement in underlying prices and, therefore, has kept its guidance for FY22. We gleaned that MMP has continued to trade at levels well below its 10Y valuation mean. However, we also noted that the market had not re-rated MMP despite its low valuations. Therefore, with less potential for upside surprises through Q4 and even through Q1'23, MMP could continue to trade in a tight range. We believe the near-term downside risks for MMP due to underlying market volatility could offer investors another opportunity to add at more reasonable levels. Hence, we now rate MMP as a Hold and urge investors to await a better entry point. Magellan's Commodity Pricing Tailwinds Could Level Off Magellan's ability to maintain its guidance demonstrated the resilience of its business model and relative inelasticity to the recent commodity price movements. Despite that, management's commentary suggests that investors should expect less potential for further upside surprises that could lift the momentum of MMP in the near term. Coupled with an expected cost increase, it could further hamper its near-term upside. Magellan Volume shipped for refined products (Part I) change % (Company filings) Magellan Volume shipped for refined products (Part II) change % (Company filings) Also, we gleaned that more challenging comps for Magellan could impact the growth in its volume shipped for refined products moving ahead. As seen above, volume shipped growth across its products has continued to moderate through FQ2'22, even though liquefied petroleum gas and aviation fuel remain strong. Therefore, it remains to be seen how the weakness in forward commodity prices could worsen the growth cadence given the growth deceleration in its volume shipped. Robust Distributable Cash Flow Should Still Underpin Buying Sentiments Magellan FCF and DCF change % consensus estimates (S&P Cap IQ) Notwithstanding, the consensus estimates (neutral) suggest that Magellan's strong free cash flow ((FCF)) generation should continue to underpin its distributable cash flow ((DCF)) through FY23. As a result, we believe it should help underpin buying sentiments in MMP, spurring investors' confidence in delivering management's strategic focus on distribution. We believe the estimates seem credible, given management's confidence in maintaining its guidance, despite recent weakness in commodities pricing. Magellan Dividend per share and TTM dividend yield % consensus estimates (S&P Cap IQ)

Seeking Alpha • Aug 28

Magellan Midstream Partners: A Very Misunderstood Partnership

Summary The partnership is investment grade. The distribution is well covered. A K-1 is issued. The main businesses are refined products and oil transportation and storage. The connection to the green revolution has not been made as strongly by the oil part of the industry as it has been by the natural gas part of the industry. Oil, coal, and coal-tar are all considered related with a large customer base of beauty product manufacturers. (Note: This article appeared in the newsletter on June 26, 2022, and has been updated as needed.) Magellan Midstream Partners (MMP) is a very sound partnership with one of the higher financial strength ratings in the industry. Like Enterprise Products Partners (EPD), this company is also rated investment grade. But unlike Enterprise Products Partners, this company transports refined products and does a lot of oil related business. The market does not make the connection with the green revolution here that is made with natural gas products. Yet oil-based products find their way into our lives in so many ways that the future remains bright even if fuel demand disappeared tomorrow. Some of the more unexpected products made from oil include Aspirin, yarn, crayons, lotion and Vaseline. In fact, one would be surprised at all the beauty products (like lipstick) that have a basis in oil, coal, and coal tar. In addition, oil has the easier carbon-hydrogen chemical bonds that are easier to break than the oxygen-hydrogen bonds in water. If the day ever comes when natural gas becomes too expensive to serve as a raw material for the fast-growing hydrogen market, then oil would be another possible place to look to make hydrogen (though it is not the only one by far). In the meantime, oil, like natural gas is slowly finding its way into the green revolution. This part of the industry has done far less to trumpet the progress made in helping the market find those green end products. Nonetheless, the dependency on nonrenewable resources will have to first change before we ever lose that dependency. That implies some ingrained habit changing that is not likely to be a fast process. Because of that, many still show the need for oil growing in the future as well as natural gas. Magellan Midstream is largely involved in the "first step". That first step largely involves getting product to and from refineries Magellan Midstream Refined Product Distribution And Storage Map (Magellan Midstream August 2022, Corporate Presentation) The company aims to be a "one-stop-shop" for its main customers. The whole business is largely fee based. The convenience of dealing with a large transporter of these types of goods is obvious. The partnership does have competition "all over the place" but has a competitive advantage simply because its large size allows its customers many convenient alternatives. Magellan Midstream Breakdown Of Fee Based Business (Magellan Midstream August 2022, Corporate Presentation) The business is largely fee-based business and is further insulated from industry cycles by long term take-or-pay contracts. This company will show something of a cyclical nature. But it will not be anything close to the upstream cyclical swings that investors constantly see. Nonetheless, Mr. Market does not like the negative earnings comparisons that come with any cyclical nature. Despite the steadiness of this business and the good financial strength, these units will often follow the upstream companies down whenever upstream has a cyclical downturn. As often as not, the cushion provided by the financial strength usually makes this company a bargain whenever the upstream industry suffers from weak commodity prices. Magellan Midstream Long-Term Profitability Comparison (Magellan Midstream August 2022, Corporate Presentation) Despite some cyclical tendencies in the business, management has kept the partnership profitability well within an excellent range. Good profitability also provides some investment downside protection because the market does have respect for decent profits and the cash flow that comes with those profits. One of the side issues with a lot of "story stocks" and "pioneers of new industries" is the tendency to report profits without cash flow. That happens when the depreciation and other cost allocation methods are insufficient to actually record the amount of expense necessary to cover the revenues. Investors need to remember that public accountants gain new customers through a competitive process. This competitive process puts pressure on them to "mitigate" their normal conservative tendencies. Public accountants are well known for adjusting cost allocation guidelines after a problem has made public headlines. This is due to that competitive pressure that limits the amount of income and so the time spent to find outright fraud as well as aggressive accounting that is likely to not be allowed in the future.

Seeking Alpha • Aug 13

Better High Yield Buy After Q2 Results: NuStar Or Magellan?

NS and MMP are two sky-high distribution yield midstream MLPs that recently reported Q2 results. Which one is a better buy after Q2 results? We compare them side by side and offer our take. Both NuStar Energy (NS) and Magellan Midstream Partners (MMP) are midstream master limited partnerships that sport sky-high distribution yields of 10.6% and 8.0%, respectively. In this article, we will review their Q2 results and then compare them side by side and offer our take on which one is a better buy. Q2 Results NS's Q2 results were solid. Highlights included: NS is set to be a big beneficiary from inflation as a large percentage of its revenue comes from refined products. 95% of its pipeline contracts are indexed to FERC and virtually all of them are set to benefit from the full PPI increases in 2022 and 2023. Management continued to make excellent progress towards deleveraging the balance sheet, ending the quarter with a leverage ratio below 4x and management guiding for further deleveraging moving forward. With EBITDA set for a boost from inflation-linked contract increases and continued management focus on using excess cash to pay down debt and redeem preferred units, the continued deleveraging path is quite clear. Management is focused on cutting costs aggressively in order to drive further free cash flow and thus far has reduced 2022 expenses by $20 million and 2023 spending by over $40 million. They believe they will be able to drive even further efficiencies. The common distribution is currently covered 1.88x by distributable cash flow, which - when combined with the deleveraging progress - implies that the distribution is very safe. Management will be increasingly focused in the coming years on continuing to pay down debt as well as redeeming its Series D preferred units. Both of these efforts will serve to further strengthen the coverage and safety of its common distributions. Meanwhile, MMP continued to churn out solid results as well, posting yet another "boring" quarter. Highlights included: Closing the sale of its independent terminals, generating considerable cash proceeds of which $190 million have already been deployed towards buying back equity units. Given the strict discipline with which management is handling capital expenditures, free cash flow is now expected to come in at nearly $1.5 billion this year, or $578 million net of distributions. This gives management considerable flexibility to buy back a lot of common equity. In fact, if it were to put every single dollar of free cash flow into buybacks at the current market cap, it could repurchase a whopping 5.5% of the company's equity on top of its already very generous distribution yield. Given that MMP is heavily weighted towards refined products, it is also a big beneficiary from inflation just like NS is. Management reiterated its commitment to conservative capital allocation and emphasis on unit buybacks during the earnings call, stating: We remain committed to maintaining the financial discipline we are known for while delivering long-term value for our investors through a combination of capital investments, cash distributions and equity repurchases... We repurchased nearly 3.9 million units in the second quarter at an average purchase price of $48.79 for a total spend of $190 million. Year-to-date, we have allocated $240 million to unit repurchases, bringing the total since inception to $1.04 billion... Further, we continue to see unit repurchases as an important focus of our ongoing capital allocation efforts. And as previously stated, we currently expect free cash flow after distributions to generally be used to repurchase our equity. Business Model NS owns three primary businesses: renewable fuels, refined products, and crude supply and export. Its renewable fuels business operates along the West Coast for servicing ethanol and biodiesel blending. On top of that, NS is developing an ammonia system that includes the United States' only ammonia pipeline. It spans over 2,000 miles and reaches seven states running along the central U.S., from Louisiana to Nebraska and Indiana. Meanwhile, its refined products business services Colorado, New Mexico, Texas, and Northern Mexico. Last, but not least, its crude supply and export businesses are divided into three assets located in: the Permian (its crown jewel asset), Corpus Christi, and its St. James Terminal. Its cash flows are also quite stable given that 63% of their revenues come from investment-grade customers, 72% of their pipeline revenues are either take-or-pay or structurally exclusive, and 62% of their storage revenues are take-or-pay. MMP is known for its high quality refined products assets and management's prudent capital allocation practices which have generated an industry-best 16% 15-year average return on invested capital. MMP's cash flows are also quite stable, given that 85%+ are fee-based. Management expects the refined products business (generating over 70% of MMP's cash flow) to boom for decades to come, given the strategic location of the assets and the company's overall competitive positioning. Both businesses certainly have their strengths. However, MMP's track record for returns on invested capital is unmatched and the competitive positioning of its refined products business gives it the edge here. Balance Sheet MMP is the clear winner in the balance sheet category given that it boasts an industry-leading BBB+ credit rating compared to NS's significantly inferior BB- credit rating. While NS has made great aforementioned strides in reducing its leverage ratio and clearing out its debt maturity calendar for the foreseeable future, it is plagued by high levels of floating rate preferred and baby bond debt in a rising interest rate environment. Given that its Series D preferred units are set to reset to a higher yield in the near future and will also be redeemable at the option of the unitholders later this decade, management is under pressure to maximize free cash flow and allocate it as much as possible towards redeeming these units beginning next year once it is able to do so. As a result, while NS is in little danger of financial distress for the foreseeable future, its balance sheet's exposure to rising interest rates and its heavy preferred and baby bond burden means that it remains heavily leveraged and restricted in uses of its free cash flow. In contrast, MMP has no long-term debt maturing before 2025 and only 17% of its total net long-term debt matures prior to 2030. With the vast majority of its debt due in 2042 or later, plenty of liquidity, and a relatively low leverage ratio, MMP has plenty of financial flexibility to continue growing its distribution, buying back units aggressively, and even pursue attractive growth opportunities when they become available. Distribution Safety

Seeking Alpha • Aug 01

Magellan Midstream Partners: Still Cheap And Still Buying Back Units

Magellan recently reported Q2 earnings which confirmed the bullish thesis. They closed the sale of the independent terminals in June for $447M, which is likely to go toward continued unit buybacks. Shares trade at 10x cash flow, which is below the average multiple of 11.3x. With an 8% distribution yield, double digit returns are likely for long term investors. In my opinion, units are worth $60 and the market is likely to realize that in the coming years. During a vacation last week to Lake Chelan, I planned a rough outline of what I would be writing about when I got back. Over the next couple weeks, I will be covering the big tech companies, but I will also be writing updates on the companies that I own and plan to own for the foreseeable future. While I was gone, one of my largest holdings, Magellan Midstream Partners (MMP), reported Q2 earnings. I listened to the earnings call, and I figured a quick update was in order. Investment Thesis Magellan Midstream Partners is an MLP with a market cap of $10.9B. Magellan operates a large network of pipelines in the center of the US and is trading at a very cheap valuation today. Even after a nice little 10% run from $46 in early July, units trade at 10x cash flows, which is below the average multiple of 11.3x. The company has been pretty aggressive with their unit repurchase program over the last couple years and spent another $190M in Q2 on buybacks. While the valuation is cheap, one of the biggest draws for investors is the large distribution yield. The yield is just over 8% today, and if the pattern of the last couple years holds, we will likely see another distribution hike in Q4 this year. That would put the streak of annual raises at 21 years. While the distribution growth has slowed in recent years, a growing 8% yield is attractive in my mind, especially in today's market. A Brief Summary & An Update on Q2 For the investors who aren't familiar with Magellan, the company is a midstream business focused on the transportation and storage of fossil fuels. I would assume most readers are familiar, but if not, a brief summary of the company and its assets is below (I have also covered the business in more detail in previous articles if readers are curious and have some extra time to burn). Magellan Footprint (magellanlp.com) One of the biggest updates on Magellan is the finalization of the sale of independent terminals. The sale closed in June for $447M, which the company plans to use for more buybacks. While they haven't been growing the business much as of late, the main driver of the bullish thesis is the cheap valuation. Valuation Magellan has spent the last couple of years at a large discount. While units have had a nice little run since early July, they are still cheap today. You can pick up shares at 10x cash flows, which is a turn below the average 11.3x multiple. I think units are worth $60 today, and I think it is only a matter of time before the market agrees. Price/Cash Flow (fastgraphs.com) When you throw in an 8% distribution yield, I think it is very likely that we will see double digit returns over the next couple years. Even if we don't get the slight multiple expansion that I'm expecting, I think the returns will still be attractive relative to the rest of the equity market. The buybacks are another reason to be bullish at current prices. Distributions And Buybacks As I have mentioned in previous articles on MLPs, Magellan's distributions are treated differently from regular C-Corp dividends. Owning units of Magellan also forces investors to file a K-1 tax form, so you should be aware of the tax implications before buying units. If you understand the nuances of owning an MLP, I think Magellan is one of the better options out there. The distribution yield of 8% is juicy, and the company is riding a 20-year streak of annual raises. If you purchase units this week, you can receive the distribution that will be paid out in a couple of weeks. Units tend to sell off a little bit after each distribution, though, so you might be able to pick up units below $50 in the next month. The company is also rewarding unitholders with continued repurchases.

Seeking Alpha • Jul 21

Magellan Midstream Partners declares $1.0375 dividend

Magellan Midstream Partners (NYSE:MMP) declares $1.0375/share quarterly dividend, in line with previous. Forward yield 8.34% Payable Aug. 12; for shareholders of record Aug. 5; ex-div Aug. 4. See MMP Dividend Scorecard, Yield Chart, & Dividend Growth.

Seeking Alpha • Jul 08

Inflation Won't Interrupt Cash Flows For Magellan Midstream

Magellan is positioned to benefit from decades of continued demand for refined products and crude oil. The company's strong free cash flow generation funds its 8.8% dividend yield. Units are worth $67+ even if profits never reach 2018 levels. This pipeline system operator offers low-cost, low-carbon, and high-volume transportation to half of U.S. refinery capacity. Better yet, the company's ability to consistently adjust its tariffs means it is well positioned to deliver strong cash flows even in a high inflation environment. Magellan Midstream Partners L.P. (MMP) is this week's Long Idea. MMP presents quality risk/reward given the company's: position to benefit from decades of continued demand for refined products and crude oil middleman positioning as a transportation network provides stable earnings in a cyclical industry strong free cash flow generation to fund its 8.8% dividend yield operations are safer and cheaper than competing transportation providers superior profitability to peers units are worth $67+ even if profits never reach 2018 levels. Refined Products Demand Will Persist in the U.S. According to the U.S. Energy Information Administration's ((EIA)) 2022 Annual Energy Outlook ((AEO)), U.S. demand for refined products[1] will remain strong over the next three decades. Even in the pessimistic low growth scenario below, the EIA forecasts refined product consumption will fall just 2% from 2021 to 2050. See Figure 1. Notably, the EIA's reference case projects refined product demand will grow 7% by 2050. Figure 1: EIA's U.S. Refined Products Consumption Forecast: Low Growth Scenario Through 2050 New Constructs, LLC and EIA Magellan's Middleman Advantage Revenue for fossil fuel exploration and production companies is typically cyclical and very dependent on oil and natural gas prices. Except for the supermajors, which operate across the entire energy vertical, energy producing companies either boom or bust based on commodity prices. In contrast, Magellan is less affected by oil and natural gas price fluctuations because the company manages a tariff-collecting business in the middle of the supply chain. The company is shielded from the full volatility of commodity markets by the need for production companies and refiners to get their products to their respective customers. Magellan operates the largest common carrier[2] refined products pipeline system in the United States, and revenue from its refined products segment accounted for 77% of its total revenue in 2021. Pipeline systems, such as Magellan's, offer the most reliable, lowest cost, least carbon intensive, and safest transportation method for crude oil and refined products. Magellan's footprint gives it access to nearly 50% of U.S. refining capacity. Per Figure 2, Magellan's pipeline system connects refineries in America's Midwest to various end markets and the Houston Ship Channel. Figure 2: Magellan's Refined Products and Crude Oil Assets New Constructs, LLC and Investor Relations Network Effect is a Competitive Advantage Refined products pipeline volumes are driven by demand from connected markets, which contrasts with crude-oil pipeline systems, whose volumes are dependent on supply levels. Except for pandemic-related lockdowns, the consumption of hydrocarbons is very stable. In contrast, the demand for crude fluctuates because refiners vary their sourcing of crude oil from their inventories or domestic and international producers. That variance can result in large swings in crude pipeline usage over time. Accordingly, a refined product pipeline system offers more volume stability, which translates to revenue stability for a tariff-driven business. The breadth of Magellan's pipeline system provides a strong network effect that offers more optionality to its customers and serves as a large competitive advantage over other refined product delivery systems that cannot offer the same flexibility. Middleman Advantage Drives Consistent Cash Flows and Funds Large Distributions Magellan's tariff-based transportation system supports the company's unit distribution, which, when annualized, provides an 8.8% yield. Magellan has paid a distribution in every year since 2011. Since 2017, Magellan has paid $4.4 billion (41% of current market cap) in cumulative dividends. Magellan generates significant cash flow that supports the company's high distribution yield. Per Figure 3, over the past five years, Magellan generated $5.0 billion (47% of market cap) in free cash flow. In addition, Magellan's contracts include "take-or-pay" provisions which guarantee customers pay for a minimum amount of capacity, whether they use it or not. These provisions offset the risk of fluctuating demand. During the COVID-19 pandemic, the transportation sector's consumption of petroleum products fell 15% year-over-year (YoY) in 2020, whereas Magellan's revenue declined by just 11% while its FCF rose by 104% YoY. Figure 3: Magellan's Cumulative Free Cash Flow Since 2017 New Constructs, LLC and company filings Transition to EVs Will Take Decades and Decades Bears may be quick to dismiss Magellan due to its strong ties to the demand of internal combustion engine ((ICE)) vehicles. Per Figure 4, 94% of the refined products Magellan transports are diesel and gasoline. Figure 4: Percent of Total Refined Products Transported on Magellan's Pipeline: 2021 New Constructs, LLC and company filings However, as we showed in Vive la Hydrocarbons, Vive la Petrochemicals, even if the world adopts electric vehicles (EVs) in line with the EIA's expectations, there will still be ~15% more ICE vehicles on the road in 2050 than in 2020. In addition, analysis on the EV market frequently ignores the number of diesel-fueled heavy engines needed to dig the minerals for batteries out of the ground and move the components back and forth during refining and manufacturing. Magellan's physical footprint should also alleviate concerns of a speedy EV transition. The company largely operates in parts of the country that have been slow to adopt EVs. Even if the U.S. as a whole transitions to EVs faster than the rest of the world, Magellan's access to the Houston Ship Channel could help inland refineries offset declining domestic demand by increasing exports. An Overlooked ESG Winner An increased focus on decarbonization in the Energy sector will drive demand for pipeline capacity, given that it offers the least carbon-intensive form of long-haul transportation. Additionally, pipelines are safer than other forms of refined products transportation, as they destroy less property and cause fewer deaths than trucking and rail transporters. Governmental resistance to expanding the current pipeline system in the U.S. due to other environmental concerns means the barriers to entry for potential competitors are growing. As an established player with access to key production and consumption regions, Magellan stands to benefit from any limits on new pipelines. Renewables Need Transportation and Blending Facilities, Too Over the short-to-medium term, regulatory promotion of renewable fuels such as biodiesel and ethanol threaten the volume of refined products available for Magellan to transport on its pipeline network, as most renewables are transported by rail, truck, or barge. However, these other transportation methods still rely on Magellan's terminals to store, blend, and distribute renewables into the fuel stream. As renewables become a larger part of the refined product mix, we expect Magellan will increase the renewable capacity of its pipeline system. Once again Magellan's physical footprint provides a competitive advantage because it is located in the primary renewable fuel production areas of the country. Over the long term, Magellan's outlook for volume (renewables or other) shipments on its pipeline system is strong. Tariff Increases Will Offset Inflationary Pressure Magellan is better equipped than most companies to deal with a high-inflation environment. As a low-cost provider, the company has more room to adjust pricing upwards than more expensive transports do. The company expects the average tariff to increase 6% by July 2022. Furthermore, 30% of Magellan's tariff caps are tied to the Federal Energy Regulatory Commission (FERC) oil index, which will increase to 1.09 on July 1 - up from 0.98 over the prior year. Magellan's ability to increase tariffs demonstrates its competitive strength in the market and insulates the company from many of the effects of inflation. Magellan is Less Exposed to Labor Market Than Others Magellan's general and administrative (G&A) expense (which includes labor costs) as a percent of revenue is much lower than its trucking and rail peers[3]. Figure 5 shows that in 2021, Magellan's G&A (inclusive of compensation and benefit costs) as a percent of total revenue of 8% was much lower than the compensation and benefit costs as a percent of total revenue of 20% for rail peers and 30% for trucking peers. Magellan's cost-efficient operation will enable it to continue to provide relatively low-cost tariffs as its peers are forced to increase shipping rates to offset rising labor costs. Figure 5: Compensation and Benefit Costs: Magellan Vs. Peers: 2021 New Constructs, LLC and company filings Sources: New Constructs, LLC and company filings*General and administrative expense (inclusive of compensation and benefits) / total revenue Self-Driving Tanker Trucks Face Technological, Logistical, and Safety Concerns As labor costs comprise such a large percentage of a tucking operators' expense, the adoption of self-driving tanker trucks would make road transportation much more competitive with a pipeline system. However, the adoption of self-driving tanker trucks faces numerous challenges. To begin, urban environments, bad weather conditions, and lack of 5G connectivity challenge current self-driving technology. Pipelines accounted for 77% of all petroleum product transportation in the U.S. in 2021. Should automated trucking increase the volume of refined products on highways, concerns over the danger of transporting such hazardous materials through communities would likely rise quickly. The controversies surrounding crude-by-rail and the destruction of nearly an entire town in Canada in 2013 would pale in comparison to the squabble over deaths caused by automated fuel trucks. Eliminating drivers doesn't remove all the risk of tanker truck accidents. According to the Federal Motor Carrier Safety Administration ((FMCSA)), 22% of cargo tank rollovers do not involve driver error. Pipelines are much safer and can be routed away from densely habituated areas that road and rail corridors frequently pass right through. Concerns Over Excess Permian Pipeline Capacity are Overblown Magellan has felt the impact of a surge in new pipeline capacity from the Permian basin over the past two years. Volume shipped on 100%-owned Magellan crude pipelines fell from 317 million barrels in 2019 to just 190 million barrels in 2021. Increased capacity from the Permian Basin has also driven down the rates Magellan can charge on the pipelines it operates in this region. Lower volumes and lower tariffs drive lower operating profit from the crude oil segment, which fell from $493 million in 2019 to just $305 million in 2021. The company has options if the Permian crude oil transportation market remains over-serviced. Magellan is evaluating the possibility of converting the company's 100%-owned, Permian-based Longhorn pipeline to a Houston to El Paso refined products pipeline, which could expand Magellan's reach to markets in Arizona and Mexico. We believe the company's handling of the Longhorn pipeline shows the flexibility of its capital and business plan, which is not fully appreciated by the market. An underappreciation of the value of the firm's franchise is what the market is missing about this company and others like it. More Profitable Than Other Pipeline Peers Despite the recent volume declines in its crude oil segment, Magellan is more profitable than its pipeline peers. The company's return on invested capital ((ROIC)) of 14% over the TTM is tops among peers, which include Enbridge (ENB), Kinder Morgan (KMI), and Williams Companies (WMB). See Figure 6. Figure 6: Magellan's Profitability Vs. Pipeline Peers: TTM New Constructs, LLC and company filings Tariff-Focused Business Drives Consistent Core Earnings Magellan's tariff-centered pipeline system helped the company generate positive Core Earnings in each of the past 10 years. Core Earnings grew from $451 million in 2012 to $876 million in 2021, or 8% compounded annually. While the company's Core Earnings over the TTM are lower at $818 million, the tariff increases that the company will implement in July 2022 should send profits higher in the second half of the year. Figure 7: Magellan's Core Earnings Since 2012 New Constructs, LLC and company filings Cheap Valuation and Buybacks Offset MLP Risk Of course, the big risk with MLPs is that the general partner operating the MLP might have interests that conflicts with those of the unitholders. As a result of this structural concern, we give all master limited partnerships (MLPs) a suspended Stock Rating, since the complex nature of MLP agreements could potentially cause significant unitholder dilution. Unlike other MLPs, Magellan's general partner operates no other business, which reduces much of this risk to unitholders. Importantly, rather than being diluted, Magellan's unitholders have seen their share of ownership in the company grow since 2012 as the company's unit count has fallen from 228 million in 2015 to 212 million in 1Q22. In other words, unitholders have gained 7% more of the company since 2015. Looking ahead, unitholders can expect buybacks to continue. The company authorized an additional $750 million of unit repurchases through December 2024. Should the company use all of its authorization, it would buyback ~16 million more units at today's price. Despite the strength of Magellan's business model and favorable distributions to unitholders, investors price MMP at a discount compared to its non-MLP peers. Figure 8 compares the price-to-economic book value ((PEBV)) ratio of Magellan to its pipeline peers that are not organized as an MLP, which include ONEOK (OKE), Enbridge, Kinder Morgan, and Williams Companies. Figure 8: Magellan's PEBV Ratio Vs. non-MLP Pipeline Peers: TTM New Constructs, LLC and company filings Below, we use our reverse discounted cash flow model to quantify the expectations baked into Magellan's stock price, as well as the upside potential in units should the company exhibit only moderate profit growth in the coming years. DCF Scenario 1: To Justify the Current Stock Price. We assume Magellan's: NOPAT margin remains at its TTM level of 38% (vs. 5-year average of 43%) in 2022 through 2046 and revenue falls 25% from 2021 - 2046 (vs. EIA's 2022 AEO Refined Products Low-Growth Scenario decline of 4% from 2021 - 2046) In this scenario, Magellan's NOPAT falls 1% compounded annually over the next 25 years and the stock is worth $49/unit today - equal to the current price. In this scenario, Magellan earns $796 million in NOPAT in 2046, which is 25% below TTM levels and 20% below its 10-year average NOPAT. DCF Scenario 2: Units Are Worth $57+. If we assume Magellan's: NOPAT margin remains at its TTM level of 38% and revenue falls at a 4% CAGR through 2046, in line with the EIA's 2022 AEO Refined Products Low-Growth Scenario, then MMP is worth $57/unit today - a 16% upside to the current price. In this scenario, Magellan's NOPAT falls to $1.0 billion in 2046, or 2% below TTM levels. In this scenario, Magellan's ROIC in 2046 is just 11%, which is well-below its 10-year average ROIC of 16%. Should Magellan's ROIC remain in line with historical levels, the stock has even more upside. DCF Scenario 3: More Upside Should Margins Return to 5-Year Average Each of the above scenarios assumes Magellan's NOPAT margin remains at TTM levels. However, management anticipates the company will be able to consistently increase tariffs for the foreseeable future, which will likely result in a higher NOPAT margin. If we assume Magellan's: NOPAT margin improves to its 5-year average of 43% from 2022-2046 and revenue falls in line with the EIA's 2022 AEO Refined Products Low-Growth Scenario through 2046, then MMP is worth $67/unit today - a 37% upside to the current price. In this scenario, Magellan's NOPAT in 2046 is $1.1 billion, or equal to TTM levels. This scenario assumes the EIA's most pessimistic economic assumptions, should the economy grow at a higher rate, the stock has even more upside. Figure 9 compares Magellan's historical NOPAT to the NOPAT implied in each of the above DCF scenarios. Figure 9: Magellan's Historical and Implied NOPAT: DCF Valuation Scenarios New Constructs, LLC and company filings Each of the above scenarios includes a terminal value that assumes revenue permanently remains at $1.0 billion after 2046, or 50% below 2046 levels and 63% below TTM levels. Additionally, these scenarios assume Magellan is unable to offset volume declines with tariff increases. If demand for refined products beyond 2046 remains stronger than this assumption, or Magellan is able to increase tariffs over the long term, the stock has even more upside. Sustainable Competitive Advantages Will Drive Unitholder Value Creation Here's a summary of why we think the moat around Magellan's business will enable it to continue to generate higher NOPAT than the current market valuation implies. The following competitive advantages also help Magellan generate strong cash flows for decades to come: superior network effects than competitors lowest cost and carbon footprint among available transport methods high profitability compared to peers. What Noise Traders Miss with Magellan These days, fewer investors focus on finding quality capital allocators with unitholder friendly corporate governance. Instead, due to the proliferation of noise traders, the focus is on short-term technical trading trends while more reliable fundamental research is overlooked. Here's a quick summary of what noise traders are missing:

Seeking Alpha • Jun 22

Use The Selloff To Buy Magellan Midstream As Unit Repurchases Accelerate

MMP units are cheap and offer some of the strongest inflation protection in the midstream sector. Our price target for the units is $60. As long as the units remain underpriced, unitholders will benefit from continued repurchases.

Seeking Alpha • Jun 10

8% Yielding Magellan Midstream Can Help You Retire In Safety And Splendor

High-yield blue-chips are the lowest risk and easiest way to beat inflation and retire in safety and splendor. Magellan Midstream is one of the hottest stocks on Wall Street in 2022, up 19% and climbing while the bear market ravages almost everything else. MMP remains 19% undervalued, trading at 9.9X cash flow and offers one of the safest 7.9% yields on earth, backed up with a 20-year payout growth streak. Management, analysts, rating agencies, and the bond market are confident that MMP's core business will remain stable until 2035, and beyond that it will pivot to renewable energy. The industry's most aggressive buybacks are expected to drive 5.2% long-term growth, potentially delivering market and aristocrat beating 13% long-term returns, along with 20% annual returns through 2024 and 15% through 2027 (3X more than the S&P 500).

Seeking Alpha • May 12

Magellan Midstream Partners: Attractive, But Risky

Without much doubt, Magellan Midstream Partners has a wide economic moat due to the cost advantages stemming from its pipeline. However, the company is also facing major risks like high debt levels and the threat of switching to alternative energy sources. If I had to choose between being bearish and bullish, I would rather choose the latter, but Magellan Midstream Partners is not a bargain right now.

Seeking Alpha • Apr 11

Magellan Midstream Partners: Former Bear Upgrades The Stock

Magellan Midstream Partners is yielding 8.43%. The distribution is covered 1.2x by distributable cash flow, but unlike prior years, is also fully covered by free cash flow. The company has scaled back expansion projects and has prioritized unit repurchases. I expect those unit repurchases to be key in unlocking multiple expansion and creating strong returns over the long term.

Seeking Alpha • Mar 11

Magellan Midstream: The Safest 8.4% Yield On Wall Street Is Ready To Roar

2022 is a year of war, inflation, rising interest rates, and incredible volatility on Wall Street. The Russian invasion has caused an unprecedented commodity spike, that has sent stocks skidding, but also creates incredible opportunities for smart investors. MMP is my favorite way to play soaring oil prices while enjoying 6X the market's yield, and protecting yourself from the inevitable oil bust. MMP's 20-year payout growth streak, created by a fortress balance sheet and some of the most conservative and brilliant capital allocation in the industry proves this MLP is the quality king of high-yield. MLP is 25% undervalued, trading at 8.9X cash flow, and offering long-term investors the safest 8.4% yield on Wall Street today, and 107% total return potential over the next five years. MMP is one of the best high-yield options for anyone who wants to profit from a year when energy is soaring, and value is the new tech.

Seeking Alpha • Feb 07

Magellan Midstream Partners Is An Under The Radar Investment

Magellan Midstream Partners has a unique portfolio of midstream assets that'll be essential for the upcoming decades. The company has a 1.22x dividend coverage ratio, with a yield of almost 9%. The company has a 20-year dividend increase ratio. The company has 85% fee-based cash flow which shows the company's overall financial strength.

Seeking Alpha • Jan 22

Technical Update On Magellan Midstream Partners - 8.5%

MMP has a huge portfolio of pipelines for transporting crude oil and refined products. Increased demand means increased business for MMP. MMP possesses a moat due to the political hurdles to build new pipelines. They're one of the higher yielding names in one of the most undervalued sectors.

Seeking Alpha • Jan 13

Magellan Midstream: Stepping Up Return Of Capital To Unitholders

Over recent quarters, Magellan Midstream management has increased the amount of capital returned to unitholders. Management is comfortable with current debt levels and has pulled in the reins on capex. It's using MMP’s substantial free cash flow to repurchase units and increase distributions. MMP units are among the highest quality in midstream and should be bought at today’s discounted prices.

Seeking Alpha • Jan 01

Magellan Midstream Partners: A Steady Income Stock To Buy In 2022

Magellan Midstream Partners' 9.1% distribution yield is at minimal risk of being cut based on its payout ratios and the stability of its business model. The stock's distributable cash flow is up just over 8% year-to-date over the nine months ended last year. Magellan Midstream Partners maintains a firm investment-grade balance sheet. The stock is conservatively trading at a 16% discount to fair value. Magellan Midstream Partners' 9.1% distribution and low-single-digit annual DCF growth potential alone should allow for low-double-digit annual total returns in the next decade.

Seeking Alpha • Nov 29

Magellan Midstream: Your Opportunity Is Knocking On This High Yielder

Magellan Midstream Partners operates a moat-worthy pipeline system of petroleum products in the U.S. It has a best-in-class track record of earning high returns on invested capital, and maintains strong capital returns to unitholders. MMP also has 20 consecutive years of distribution growth, and the recent share price weakness provides an opening for value seekers.

Seeking Alpha • Oct 24

Magellan Midstream Partners: Who Wants To Become A High Yield MLP Investor?

Magellan Midstream Partners is an investment grade MLP with no IDR structure to suck profits from investors into the bank accounts of management. MMP has 37 million barrels of crude oil storage with a large presence in the key markets of Houston, TX and Cushing, OK. MLPs are not in vogue and higher potential share price volatility is the price Magellan and its unitholders pay for that.

Seeking Alpha • Oct 08

Magellan Midstream Partners LP Is A Buy Paying A 9% Yield

Magellan Midstream is in the buy zone yielding 9%. Management buying back stock units. Stock is trading at critical support level. Magellan wins fiscal responsibility award 3 years in a row.

Seeking Alpha • Sep 23

A Continued Refined Products Demand Recovery Will Benefit Magellan Midstream

U.S. refined product demand briefly touched 2019 levels in early July but then dipped due to the Delta variant. Refined product demand has now returned to pre-Covid levels. Going forward, it is likely to continue to increase. MMP will be a prime beneficiary, and we strongly recommend that investors buy MMP units.

Seeking Alpha • Sep 17

Magellan Midstream Partners: Still Worth Their Pre-Covid-19 Price, Near 30% Upside

Magellan Midstream Partners sees their unit price of $47 trading noticeably lower than its pre-Covid-19 price of around $60. After seeing their cash flow performance take a hit during 2020, they have now seen a clear recovery during the second quarter of 2021. Whilst their distributions appear safe, they are very sizable and thus given their very low growth capital expenditure, it would be unrealistic to expect any material growth. Even with zero future growth, their intrinsic value appears to offer a near 30% upside along with very favorably skewed results from a Monte Carlo Simulation. Since the target price for their intrinsic value was $60, this indicates that their units are still worth their pre-Covid-19 price and thus I believe that maintaining my bullish rating is appropriate.

Seeking Alpha • Aug 16

3 Reasons 8.5% Yielding Magellan Midstream Is A Rich Retirement Dream Stock

In our yield-starved world, retirees need safe income to pay expenses, but reaching for yield can be dangerous. Magellan Midstream Partners offers the safest high-yield on Wall Street, a mouth-watering 8.5% that's expected to grow at the rate of inflation over time. Analysts, bond investors, and credit rating agencies expect MMP's business to be stable or growing for at least the next 30 years as it transitions to a green energy economy. MMP is 34% undervalued and a potentially excellent long-term rich retirement investment for anyone comfortable with its risk profile and K-1 tax form. I've personally invested $141,000 and counting into Magellan across my retirement portfolios, because as Warren Buffett said, "when it's raining gold, reach for a bucket, not a thimble."

Seeking Alpha • Jul 15

Magellan Midstream Partners: Distributions Are Near Their Ceiling In The Age Of Electric Vehicles

During the turmoil of 2020 the question was whether Magellan Midstream Partners would sustain their distributions and thankfully they were successful, which now makes their future growth the question. Sadly this appears limited since their distributions are near their ceiling with them already consuming the vast majority of their cash inflows. Due to their focus on refined petroleum products, they face a long-term headwind in the age of electric vehicles that undermines demand and thus their earnings across the coming years. They are also restricted by their desire to not let their leverage increase materially from its current level, which limits their ability to invest in growth, whilst also sustaining their distributions. Whilst this may sound rather bearish, I still believe that a bullish rating is appropriate thanks to the appeal of their safe high distribution yield of near 9%.

CEO給与比率	20.11%
CEO在任期間	1.3yrs
CEOの所有権	0.04%
経営陣の平均在職期間	4yrs
取締役会の平均在任期間	7.3yrs

日付	総報酬	給与	会社業績
Jun 30 2023	n/a	n/a	US$1b
Mar 31 2023	n/a	n/a	US$971m
Dec 31 2022	US$4m	US$769k	US$859m
Sep 30 2022	n/a	n/a	US$906m
Jun 30 2022	n/a	n/a	US$799m
Mar 31 2022	n/a	n/a	US$882m
Dec 31 2021	US$4m	US$627k	US$932m
Sep 30 2021	n/a	n/a	US$876m
Jun 30 2021	n/a	n/a	US$860m
Mar 31 2021	n/a	n/a	US$725m
Dec 31 2020	US$3m	US$614k	US$788m
Sep 30 2020	n/a	n/a	US$897m
Jun 30 2020	n/a	n/a	US$965m
Mar 31 2020	n/a	n/a	US$1b
Dec 31 2019	US$3m	US$507k	US$988m
Sep 30 2019	n/a	n/a	US$1b
Jun 30 2019	n/a	n/a	US$1b
Mar 31 2019	n/a	n/a	US$1b
Dec 31 2018	US$2m	US$441k	US$1b
Sep 30 2018	n/a	n/a	US$1b
Jun 30 2018	n/a	n/a	US$862m
Mar 31 2018	n/a	n/a	US$858m
Dec 31 2017	US$2m	US$366k	US$870m
Sep 30 2017	n/a	n/a	US$845m
Jun 30 2017	n/a	n/a	US$841m
Mar 31 2017	n/a	n/a	US$818m
Dec 31 2016	US$1m	US$295k	US$803m

名称	ポジション	在職期間	報酬	所有権
Aaron Milford	President	1.3yrs	US$3.83m	0.041% $ 5.8m
Jeffrey Holman	Principal Accounting Officer	16.7yrs	US$2.51m	0.025% $ 3.5m
Douglas May	SVP, General Counsel	12.6yrs	US$1.59m	0.035% $ 4.9m
Michael Aaronson	Executive VP & Chief Commercial Officer of Magellan GP LLC	7.4yrs	US$1.91m	0.019% $ 2.7m
James Hoskin	Senior Vice President of Operations	less than a year	データなし	0.0012% $ 165.9k
Michael Pearson	Senior Vice President of Technical Services - Magellan GP LLC	4yrs	データなし	0.036% $ 5.0m
Lisa Korner	Senior Vice President of Human Resources & Administration	19.7yrs	US$1.84m	データなし
Paula Farrell	Associate Vice President of Investor Relations - Magellan GP LLC	no data	データなし	データなし
Mark Roles	Senior Vice President of Commercial & Refined Products - Magellan GP LLC	2.3yrs	データなし	0.0018% $ 246.8k
Kyle Krshka	Senior Vice President of Commercial – Crude Oil of Magellan GP	less than a year	データなし	0.0015% $ 206.4k
Suzanne Costin	Secretary of Magellan GP LLC	no data	データなし	データなし
Richard Carson	Secretary	no data	データなし	データなし

名称	ポジション	在職期間	報酬	所有権
Aaron Milford	President	1.3yrs	US$3.83m	0.041% $ 5.8m
Barry Pearl	Independent Chairman of the Board of Magellan GP LLC	14.3yrs	US$316.72k	0.014% $ 2.0m
Walter Arnheim	Independent Director of Magellan GP LLC	14yrs	US$269.50k	0.0026% $ 359.8k
James Montague	Independent Director of Magellan GP LLC	19.8yrs	US$272.50k	0.014% $ 1.9m
Chansoo Joung	Independent Director of Magellan GP LLC	4.3yrs	US$252.50k	0.023% $ 3.2m
Lori Gobillot	Independent Director of Magellan GP LLC	7.3yrs	US$258.50k	0.0010% $ 146.4k
Stacy Methvin	Independent Director of Magellan GP LLC	8.4yrs	US$273.50k	0.0072% $ 1.0m
Edward Guay	Independent Director of Magellan GP LLC	7.3yrs	US$265.51k	0.00099% $ 138.1k
Sivasankaran Somasundaram	Independent Director of Magellan GP	1.3yrs	US$166.52k	0.00052% $ 72.5k

データ	最終更新日（UTC時間）
企業分析	2023/09/26 16:55
終値	2023/09/22 00:00
収益	2023/06/30
年間収益	2022/12/31

パッケージ	データ	タイムフレーム	米国ソース例
会社財務	10年	損益計算書キャッシュ・フロー計算書貸借対照表	SECフォーム10-K SECフォーム10-Q
アナリストのコンセンサス予想	+プラス3年	予想財務アナリストの目標株価	アナリストリサーチレポート Blue Matrix
市場価格	30年	株価配当、分割、措置	ICEマーケットデータ SECフォームS-1
所有権	10年	トップ株主インサイダー取引	SECフォーム4 SECフォーム13D
マネジメント	10年	リーダーシップ・チーム取締役会	SECフォーム10-K SECフォームDEF 14A
主な進展	10年	会社からのお知らせ	SECフォーム8-K

アナリスト	機関
William Selesky	Argus Research Company
Richard Gross	Barclays
Danilo Juvane	BMO Capital Markets Equity Research

This company has been acquired

Magellan Midstream Partners マネジメント

マネジメント 基準チェック /44

主要情報

経営陣の近況

President exercised options to buy US$998k worth of stock.

Magellan Midstream Partners, L.P. Announces Resignation of Melanie Little as Executive Vice President and Chief Operating Officer, Effective January 1, 2023

Independent Director of Magellan GP LLC recently sold US$155k worth of stock

Insufficient new directors

Magellan Midstream Partners, L.P. Announces Board Changes

Senior VP recently sold US$572k worth of stock

Recent updates

Magellan Holders Now Own ONEOK; There Are Better Values In The Space

Unitholders File Six Lawsuits Against Magellan Midstream Partners, L.P

Magellan Midstream Partners, L.P. Declares Special Cash Distribution, Payable on September 25, 2023

Energy Income Partners Responds to Magellan Midstream Partners Scare Tactics

Energy Income Partners, LLC Launches a Website

Magellan Midstream: Overvalued, But Hold For Solid Dividend Yield

Magellan Midstream Partners, L.P. Provides Earnings Guidance for the Third Quarter and Full Year of 2023

New major risk - Revenue and earnings growth

Second quarter 2023 earnings released: EPS: US$1.18 (vs US$0.86 in 2Q 2022)

Magellan Midstream Declares Cash Distribution for Second Quarter of 2023, Payable on August 14, 2023

Magellan Midstream Partners, L.P. to Report Q2, 2023 Results on Aug 03, 2023

ONEOK Is A Buy With Or Without Magellan Midstream

Magellan Midstream: Long-Term Investors Should Reject The ONEOK Deal

Price target increased by 10% to US$63.35

ONEOK, Inc. (NYSE:OKE) entered into a definitive merger agreement to acquire Magellan Midstream Partners, L.P. (NYSE:MMP) for $13.8 billion.

Investor sentiment improves as stock rises 15%

First quarter 2023 earnings: EPS and revenues exceed analyst expectations

Full year 2022 earnings: EPS and revenues exceed analyst expectations

Magellan Midstream Partners, L.P. Provides Earnings Guidance for the First Quarter and Full Year 2023

Consensus revenue estimates increase by 10%

8% Yielding Magellan Midstream Is A Dream Recession Retirement Strong Buy

Upcoming dividend of US$1.05 per share at 7.7% yield

President exercised options to buy US$998k worth of stock.

Magellan Midstream Partners, L.P. Declares Quarterly Cash Distribution for the Period October 1, 2022 Through December 31, 2022, Payable on February 14, 2023

Magellan Midstream Partners declares $1.0475 dividend

Magellan Midstream: A Worthy Portfolio Diversifier But Coverage Is Tight

Magellan Midstream Partners, L.P. to Report Q4, 2022 Results on Feb 02, 2023

8.5% Yielding Magellan Is The Gift That Keeps On Giving

Magellan Midstream Partners, L.P. Announces Resignation of Melanie Little as Executive Vice President and Chief Operating Officer, Effective January 1, 2023

Better High Yield Buy: Magellan Midstream Or Plains?

Independent Director of Magellan GP LLC recently sold US$155k worth of stock

Magellan Midstream: 8% Yield With Buybacks And Low Leverage

Now 20% undervalued

Upcoming dividend of US$1.05 per share

Third quarter 2022 earnings: EPS and revenues exceed analyst expectations

Magellan Midstream Partners Q3 2022 Earnings Preview

Magellan Midstream Partners, L.P. Declares A Quarterly Cash Distribution for Third Quarter 2022, Payable on November 14, 2022

Magellan Midstream Partners raises dividend by 1% to $1.0475

Magellan Midstream Is A 9% Yield You Can Trust In These Crazy Times

Magellan Midstream Partners, L.P. to Report Q3, 2022 Results on Oct 27, 2022

Magellan Midstream: Strong Yields Yes, But Not A Buy Now

Magellan Midstream Partners: A Very Misunderstood Partnership

Better High Yield Buy After Q2 Results: NuStar Or Magellan?

Magellan Midstream Partners: Still Cheap And Still Buying Back Units

Upcoming dividend of US$1.04 per share

Magellan Midstream Partners, L.P. Declares Cash Distribution for the Second Quarter 2022, Payable on August 12, 2022

Magellan Midstream Partners declares $1.0375 dividend

Inflation Won't Interrupt Cash Flows For Magellan Midstream

Magellan Midstream Partners, L.P. to Report Q2, 2022 Results on Jul 28, 2022

Use The Selloff To Buy Magellan Midstream As Unit Repurchases Accelerate

8% Yielding Magellan Midstream Can Help You Retire In Safety And Splendor

Magellan Midstream Partners: Attractive, But Risky

First quarter 2022 earnings: EPS and revenues miss analyst expectations

Magellan Midstream Provides Earnings Guidance for Second Quarter and Full Year of 2022

Converge Midstream, LLC Files Suit Against Magellan Crude Oil Pipeline Company, L.P. and Magellan Midstream Partners, L.P

Insufficient new directors

Magellan Midstream Partners, L.P. Announces Board Changes

Magellan Midstream Partners, L.P. Declares Quarterly Cash Distribution for Period Ended March 31, 2022, Payable on May 13, 2022

Magellan Midstream Partners: Former Bear Upgrades The Stock

Magellan Midstream Partners, L.P. to Report Q1, 2022 Results on May 05, 2022

Magellan Midstream: The Safest 8.4% Yield On Wall Street Is Ready To Roar

Senior VP recently sold US$572k worth of stock

Magellan Midstream Partners, L.P., Annual General Meeting, Apr 21, 2022

Magellan Midstream Partners Is An Under The Radar Investment

Full year 2021 earnings: EPS and revenues exceed analyst expectations

Chairman exercised options to buy US$1.8m worth of stock.

Technical Update On Magellan Midstream Partners - 8.5%

Magellan Midstream: Stepping Up Return Of Capital To Unitholders

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