Master limited partnerships are fantastic vehicles for generating meaningful portfolio income.
By avoiding tax at the organizational level in exchange for paying out most of their income as unitholder distributions, these investment vehicles create more unitholder income for each dollar of corporate profit.
For this reason, MLPs appeal to retirees and other income investors. This MLP List contains pertinent investment information on all 134 publicly traded master limited partnerships.
Black Stone Minerals (BSM) is a master limited partnership that holds particular investment appeal because of its remarkably high dividend yield of 7%+. This makes Black Stone Minerals one of the very few securities with 5%+ yields in today’s market. The High Dividend Stocks List contains a comprehensive database of all stocks with 5%+ dividend yields (including Black Stone Minerals).
Black Stone Minerals’ high dividend yield and tax-advantaged distribution payments make it an appealing security for income investors.
But, as with any high yield security, due diligence should be performed to ensure the safety of this security’s distribution payments.
This article will analyze the investment prospects and distribution safety of Black Stone Minerals in detail.
Business Overview
Black Stone Minerals is a master limited partnership that owns oil and natural gas mineral rights and royalty interests across much of the domestic United States.
The partnership is the largest publicly traded vehicle focused on oil and gas mineral and royalty interests with a market capitalization of $3.1 billion.
In aggregate, Black Stone Minerals has an interest in more than 18 million energy-rich acres across more than 40 states and 60 producing basins. The partnership does not own a 100% interest in each of its projects. Instead, it has a weighted average ownership interest of ~45%, which allows it to have higher diversification.
Source: Black Stone Minerals 2017 Annual Meeting Presentation, slide 3
Black Stone Minerals is much younger as a publicly-traded security than most of the investments analyzed on Sure Dividend.
The company completed its initial public offering on May 6, 2015, issuing 22.5 million common units at a price of $19 per unit. All said, the IPO raised $401 million of share capital for Black Stone Minerals.
For context, that same security is currently trading at $15.99, which means it has been a very poor investment for the IPO investors. With that said, the future appears brighter than the partnership’s short history as a public security.
And, it’s important to remember that Black Stone Minerals operated privately for decades prior to its IPO.
