This 8.9% yielding dividend stock is growing surprisingly fast (and adding more fuel to the tank).

MPLX (MPLX 1.21%) We recently closed our books in 2023. It was another very strong year for master limited partnerships (MLPs). The midstream energy company grew its revenue and cash flow at high single-digit rates. That’s surprisingly fast for a company with such high returns (recently around 8.9%). Strong growth has fueled a 10% increase in payouts for the second year in a row.

That great reward rests on a very solid foundation. Meanwhile, MLP Especially after recently purchasing a car, you have plenty of fuel to keep you going. joint venture Working together to strengthen our Permian Basin growth strategy. These factors make MPLX an attractive option for those seeking a growing income stream.

a great year

MPLX generated approximately $6.3 billion in adjusted earnings before interest, taxes, depreciation and amortization (Evita) The year is 2023. This is almost 9% higher than the 2022 total. Meanwhile, the MLP’s distributable cash flow rose more than 7% to $5.3 billion. That was enough money to cover the company’s large payout by 1.6x, even after taking into account the 10% increase.

The company used that excess cash to pay for capital expenses, which totaled about $1.2 billion last year. That level of spending was covered with over $800 million in spare costs. This has allowed the MLP to maintain a very strong balance sheet. Ended year with $1 billion in cash and 3.3x revenue leverage ratioThis is well below the 4x level that a stable business can support.

MPLX’s strong coverage and leverage ratios provide high-yield payouts on a very solid foundation. MLPs also offer a lot of flexibility to return additional capital to investors through share repurchases and to make opportunistic acquisitions.

There’s still plenty of fuel left in the tank.

MLPs have recently taken advantage of acquisition opportunities. In December, it purchased the remaining 40% stake in its Permian Basin gathering and processing joint venture from its partner for $270 million. This acquisition advances our growth strategy in these key regions. It will also provide incremental cash flow to MPLX beyond 2024.

In addition to the momentum from this acquisition, MPLX expects to continue to benefit from its organic expansion strategy. The MLP expects to invest $950 million in growth capital projects this year and an additional $150 million on maintenance projects. These expansion projects will help address bottlenecks in logistics and storage assets and expand collection and processing capacity.

The company expects to complete that aspect of the Agua Dulce Corpus Christi (ADCC) pipeline in the third quarter. Meanwhile, the BANGL joint venture pipeline is also expanding and is expected to enter service in the second half of next year. MPLX is also building two more natural gas gathering plants in the Permian Basin. The first plant is scheduled to start operation in the second quarter of this year, and the second plant is scheduled to start operation in the second half of 2025. The company is also building another plant in Marcellus that will be operational by the end of this quarter.

These expansion projects will fuel growth over the next two years. They will increase profits and cash flow while lowering their leverage ratio. This will give the MLP the fuel to continue growing its large payouts while also putting its distribution on a more solid footing. Meanwhile, the company’s strong financial profile will continue to provide opportunistic flexibility in repurchasing units or making additional acquisitions to further enhance value for investors.

best profit stocks

MPLX is coming off another strong year. Given its strong balance sheet and visible growth profile, it enters 2024 in an excellent position. The company must ensure it has enough fuel to continue increasing its monster distribution. This makes it an ideal choice for those looking for an attractive and growing source of income.