About this website

The website explains how distributable cash flow (DCF) is defined and why it is important to analyze it and derive a sustainable measure of DCF. Results reported by master limited partnerships (MLPs) are analyzed. comparisons of reported DCF to sustainable DCF are generated, and various coverage ratios and reports analyzing performance are generated. Simplified sources and uses of funds statements are presented to focus readers' attention on key cash flow items. The website also features general articles about MLPs and about other topics of interest to yield-focused investors.



The documents and opinions in this website are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the securities mentioned or to solicit transactions or clients. The information in this website is believed, but not guaranteed, to be accurate. All content on this website is presented as of the date published, is not updated and may be superseded by subsequent market events or for other reasons Under no circumstances should a person act upon the information contained within without first conducting his/her own independent research and consulting with his/her investment advisor and tax professional as to whether such action is suitable based on the investor’s investment objectives, personal and financial situation, and specific legal or tax situation.

Comparison of Selected Performance Metrics for Nine MLPs

Author: Ron Hiram

Published: August 6, 2016


  • Nine MLPs are compared based on selected metrics including total returns, valuation multiples based on EBITDA and DCF, and leverage ratios; best and worst performers are highlighted.
  • The MLP selection process is not formula driven; highest total return performers are not necessarily those providing the highest yields, best DCF coverage or lowest leverage.
  • The tables help put performance in perspective for the selected measurement periods but must be accompanied by assessment of many additional factors.

Continue reading Comparison of Selected Performance Metrics for Nine MLPs

Have MLPs generated returns that justified the investment? A historical perspective

Author: Ron Hiram

Published: August 29, 2016


  • A methodology for comparing total returns of the Alerian MLP Index and the S&P 500 is presented.
  • Three distinct time periods are identified and compared: a very long period of AMZX over-performance, a short one of similar performance and, most recently, a fairly long period of underperformance.
  • The only opportunity to beat the S&P 500 in the last 8 years came in February 2016.

Continue reading Have MLPs generated returns that justified the investment? A historical perspective

BWP - A Closer Look at Boardwalk Pipeline Partners’ results for 2Q 2016

master limited partnership logos-BWP



Author: Ron Hiram

Published: August 28, 2016


  • The trends in operating income and EBITDA per unit appear encouraging. For the past 4 consecutive quarters each metric increased substantially vs. the comparable prior year period.
  • DCF coverage exceeds 4x because quarterly distributions were cut from $0.5325 to $0.10 per unit in February 2014; current yield is 2.42%, substantially below peers, but much better covered.
  • Leverage has been brought down but remains high and is expected to increase as additional amounts required to complete expansion projects are borrowed.
  • $1.5 billion of projects commencing operations in 2017-2018 will drive EBITDA significantly higher; but distribution growth prior to 2019 is unlikely given management’s leverage reduction goal and contract renewal challenges.
  • BWP’s value proposition has become more compelling for investors less concerned about current yield and wiling to patiently wait for substantial distribution growth, hopefully bringing with it capital appreciation

Continue reading BWP – A Closer Look at Boardwalk Pipeline Partners’ results for 2Q 2016

SPH - A Closer Look at Suburban Propane Partners' Results for 3QFY16

master limited partnership logos-SPH

Author: Ron Hiram

Published: August 27, 2016


  • Key metrics (volumes, gross margins, Adjusted EBITDA, DCF) are trending down; leverage has increased significantly.
  • Coverage of distributions deteriorated substantially and was below 1x in the latest TTM period; distributions were funded from non-sustainable sources.
  • Overall demand for propane is expected to be flat or to moderately decline over the next several years; while SPH may continue consolidating, that path is becoming harder.
  • Given demand outlook, negative distribution coverage, reluctance to speculate on the next winter being colder, and recent SPH outperformance, I would reduce my position were I an investor.

Continue reading SPH – A Closer Look at Suburban Propane Partners’ Results for 3QFY16

PAA - A Closer Look at Plains All American Pipeline's results for 2Q16

master limited partnership logos-PAA



Author: Ron Hiram

Published: August 25, 2016


  • The 5% increase in 2Q16 segment operating profit over the prior year reflects 2Q15 costs associated with the Line 901 incident. Lower Supply & Logistics margins continue to burden results.
  • Coverage remains below 1x. In the TTM ending 6/30/16 PAA funded distributions by issuing debt and limited partnership units, and by reducing cash reserves.
  • The Simplification Transaction will eliminate conflicts of interest, reduce annual distributions by ~$320 million and, over time, improve PAA’s leverage.
  • Even with reduced distributions, sustainable coverage is likely to be below 1x if the same underlying business conditions and performance are repeated in the coming twelve months.
  • PAA will have to issue a significant amount of equity or debt before year-end to fund growth capital projects that could increase EBITDA by 11% by 2018.

Continue reading PAA – A Closer Look at Plains All American Pipeline’s results for 2Q16