EC HH Dividend Death Watch Update

Try to imagine a zebra without stripes, Thanksgiving without turkey, or a pair of Nike’s without the iconic “swoosh.”

Of course, it’s nearly impossible to envision certain things without their distinguishing characteristics.

Which is why a master limited partnership (MLP) without a distribution is such a strange entity. These tax-advantaged vehicles were basically created to provide yield – the more the better.

But MLPs like Breitburn Energy Partners LP (BBEP), once coveted by yield hogs for their high payouts, have become a slow-motion train wreck within the financial markets.

Just last month, Breitburn suspended its distribution, thus joiningLinn Energy, LLC (LINE) as the second member of my Dividend Death Watch to go yield-less.

Here’s an update on this list of securities with dividend/distribution sustainability issues:

As you can see, their performance has been abysmal. In just under a year, the average return is -50% (distributions included but not reinvested).

A few of the MLPs have continued to increase their distributions.Enbridge Energy Partners, LP (EEP), for instance, has increased its distribution by 2% this year. MarkWest Energy Partners, LP (MWE), which merged with MPLX LP (MPLX) on Friday, has hiked by 3%.

Sunoco Logistics Partners LP (SXL) has increased its payout the most of any security on the list. However, over the last four quarters, operating cash flow – never mind free cash flow – has been insufficient to cover cash distributions. This shortfall is partly due to the 19% increase in the number of units (shares) outstanding this year, which increases the amount of cash being distributed.

The management of SXL seems to have a dividend death wish.

ONEOK Partners, LP (OKS) and Williams Partners LP (WPZ) have held their payouts steady in 2015. This is interesting because both previously had long strings of distribution increases.