Eagle Rock Energy Partners
Market Cap: $1.2 billion
YTD Share Performance: -22%
Eagle Rock Energy Partners (NASDAQ:EROC) is one of the many energy partnerships out there. This is a natural gas play, as Eagle focuses on processing and transporting natural gas and natural gas liquids. But it’s not exposed to commodity price volatility. As a pipeline operator, think of EROC simply as a toll-taker as the gas moves through its infrastructure. It makes money on volume it moves, not on the price of gas.
This provides stability for Eagle Rock Energy Partners. Also, its MLP status means it avoids the double taxation typical of conventional dividend payers. Corporations pay taxes on income, then shareholders also pay taxes on dividends. Your payment for each “unit” held in an MLP (they technically are not shares or dividends, though often called such) avoids the front-end corporate tax altogether, preserving more cash that will flow into your pocket.
Eagle Rock still posts an occasional quarterly loss, and shares admittedly are suffering in 2012 as the recovery slowed in spring and energy demand waned. Still, EROC is staying aggressive, agreeing early last week to buy processing plants and pipelines in the Texas Panhandle from BP (NYSE:BP).
Plus, profits are humming along nicely on an annual basis, and so are the dividends. Eagle Rock’s recent distributions tally 22 cents in August 2012, 22 cents in May 2012, 21 cents in February 2012 and 20 cents in November 2011. It adds up to a 9.4% yield based on these past four paydays, so even a slight decline in distributions will serve you well.