This High-Yield Stock Could Provide Patient Investors With a Big-Time Payoff
Crestwood Equity Partners (NYSE: CEQP) isn't a household name by any means, even for those who know the energy sector well. However, one of the benefits of its relative obscurity is that investors can currently buy this master limited partnership (MLP) for a bargain price. That's exactly what analysts at investment bank UBS recently suggested after they upgraded to it to buy and set a $27 price target, which alone implies about 9% upside. However, that could easily be underestimating the payoff patient investors could earn given what seems to be coming down the pipeline.
Like many MLPs, the oil market downturn hit Crestwood hard. The partnership found itself stretched way too thin when market conditions deteriorated, which forced it to work hard to turn things around. One of the many decisions it made was cutting shareholder distributions, which it needed to do after coverage dropped to 0.76 times at the end of 2015, meaning Crestwood only generated enough cash to cover 76% of what it paid out to investors. However, the reset payout -- which still yields an impressive 9.7% -- is now on a much firmer foundation: Crestwood covered it with cash flow by 1.19 times last quarter.
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Source: Fool.com
