Ever hear of Crestwood Equity Partners (NYSE: CEQP), Oasis Midstream Partners (NYSE: OMP), and Hess Midstream Partners (NYSE: HSM)? Probably not and because of that most investors might have missed the fact that these high-yielding master limited partnerships have been running hot this year. But while all have delivered strong returns in 2018 investors may want to continue to monitor new developments closely.
Crestwood Equity Partners, for example, has been running this year, gaining nearly 55% due to clear signs that the once-struggling MLP is not only back on more sound ground but could be ready to see accelerated growth. Steering that view is the company’s backlog of high return growth projects that it anticipates will fuel a more than 15% compound annual growth rate in earnings and cash flow over the next three years. These projects include a number of new natural gas processing plant expansions as well as the continued buildout of its oil and gas gathering systems across several fast-growing shale regions in the U.S.
Units of Oasis Midstream have jumped more than 33% in 2018, which is the MLP’s first full year as a public company. Pushing that return has been the more than 50% boost in the MLP’s earnings over the past year, aided by an uptick in volumes of oil, natural gas, and water flowing through its gathering systems. That growth has allowed Oasis Midstream to increase its distribution to investors by a 20% annualized rate in the last year so that it now yields more than 7%.
Hess Midstream Partners has benefited from a strong year, delivering a gain of nearly 20%. Helping the pipeline company’s return has been its own uptick in the volumes flowing through its pipelines, processing plants, and storage terminals, which have come in higher than anticipated as a result of rising oil prices. That better-than-anticipated growth enabled the company to boost its cash flow guidance range from $87 million-$92 million up to $91 million-$96 million. It also allowed Hess Midstream Partners to increase its distribution to investors by 15% over the past year so that it now yields 5.9%.
More to Come?
While Crestwood Equity, Hess Midstream, and Oasis Midstream have all delivered strong gains this year, that doesn’t mean investors have completely missed out on the upside that energy stocks have presented thus far. That’s because all three, as well as many others, are showing clearly visible growth potential. With that combination of upside opportunity and high yields, MLPs could continue to beat the market in the years to come.