Northern Tier Energy (NTI)
Speaking of those end-users, refiner Northern Tier Energy LP (NTI) might be an interesting high yielding pick.
The key for NTI is that it is a variable-distribution master limited partnership. Essentially, NTI plans on distributing all of its cash flows back to investors as dividends. That has resulted in some huge swings in its underlying yield. Just a few quarters ago, NTI was yielding a monster 19%.
However, as crack spreads began to dwindle, so did NTI’s yield. Today, Northern Tier pays out 5.1% in distributions.
Yet, NTI’s refinery is located in one of the best areas to take advantage of cheap WTI and Canadian crude. That means as crack spreads begin to widen — which they currently are — NTI will be able to increase its margins on the products it refines. All in all, that could send NTI’s dividend higher in the future.
While it most likely won’t yield 19% again anytime soon, NTI’s current 5.1% dividend yield is still pretty juicy and makes the MLP an interesting choice.