MPLX LP's Dividend Analysis
A Comprehensive Examination of MPLX LP's Dividend Performance and Sustainability
MPLX LP (NYSE:MPLX) recently announced a dividend of $0.85 per share, payable on November 13, 2023, with the ex-dividend date set for November 2, 2023. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into MPLX LP's dividend performance and assess its sustainability.
Introduction to MPLX LP
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MPLX is a partnership that owns both pipelines and gathering and processing assets with extensive holdings in the Appalachian region. The asset base is made up of pipeline assets dropped down from Marathon Petroleum, its sponsor, and gathering and processing assets from MarkWest, which it acquired in 2015. MPLX also acquired Andeavor Logistics in July 2019.
Overview of MPLX LP's Dividend History
MPLX LP has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. MPLX LP has increased its dividend each year since 2013. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years.
Analysis of MPLX LP's Dividend Yield and Growth
As of today, MPLX LP currently has a 12-month trailing dividend yield of 8.64% and a 12-month forward dividend yield of 9.45%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, MPLX LP's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate increased to 5.00% per year.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of June 30, 2023, MPLX LP's dividend payout ratio is 0.77, suggesting that the company's dividend may not be sustainable.
MPLX LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks MPLX LP's profitability 8 out of 10 as of June 30, 2023, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Examining MPLX LP's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. MPLX LP's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. MPLX LP's revenue has increased by approximately 3.10% per year on average, a rate that underperforms approximately 64.89% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, MPLX LP's earnings increased by approximately 55.40% per year on average, a rate that underperforms approximately 20.83% of global competitors.
Conclusion
While MPLX LP has a track record of consistent dividend payments and growth, the company's high payout ratio raises questions about the sustainability of these dividends in the long term. However, its strong profitability and growth metrics suggest potential for future earnings, which could support ongoing dividend payments. Investors should consider these factors when evaluating MPLX LP as a potential dividend investment.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
