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Preferred High-Profit Pipeline Company to Invest in 2025 for Passive Revenue Generation

Preferred High-Profit Pipeline Company to Invest in for Passive Income in 2025
Preferred High-Profit Pipeline Company to Invest in for Passive Income in 2025

Preferred High-Profit Pipeline Company to Invest in 2025 for Passive Revenue Generation

Investing in pipeline companies can be an excellent choice for those seeking passive income. These companies often offer stable revenue thanks to long-term contracts and government-regulated rate structures, which in turn allow them to pay attractive dividends. 2023 saw a resurgence in the pipeline sector due to an expected increase in natural gas demand, pushing many pipeline stocks up. Despite the compression of dividend yields across the industry, some pipeline operators still provide enticing yields compared to the broader market.

MPLX, for one, offers one of the highest yields, making it my top pick for 2023 for those seeking passive income. With a 7.5% yielding distribution, MPLX outperforms the S&P 500's 1.2% yield. The MPLX's high-yielding payout is backed by a solid foundation. Its diversified business, including partnerships with high-quality customers like Marathon Petroleum, generates stable cash flow.

The company's financials are impressive. In the first nine months of 2023, MPLX produced $4.3 billion of net cash provided by operating activities, covering its distribution payments of $2.6 billion with a comfortable 1.6 times cushion. MPLX used its retained cash to fund organic expansion projects and acquisitions, maintaining a robust balance sheet with a low leverage ratio of 3.4.

MPLX also shows impressive distribution growth. The company has increased its distribution every year since its formation in 2012, delivering a robust 10.7% compound annual distribution growth rate since 2021. With ample expansion projects and acquisition opportunities, MPLX is well-positioned to continue growing its payout.

In conclusion, MPLX stands out as an excellent choice for passive income investors. Its strong financial performance and promising growth prospects make it a reliable and high-yielding investment. Keep in mind, however, that as a master limited partnership (MLP), MPLX does send out the Schedule K-1 federal tax form each year.

Sources:

  1. MPLX Earnings Release, October 26, 2023
  2. MPLX Investor Presentation, November 1, 2023
  3. S&P Global Market Intelligence, November 2, 2023
  4. CNBC, November 6, 2023
  5. Barron's, November 9, 2023

Investing in MPLX, a pipeline company, can provide substantial money returns for individuals seeking finance opportunities with passive income. The company's high yielding distribution of 7.5%, surpassing the S&P 500's 1.2%, can attract investors looking to grow their investing portfolio.

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