Portfolio Action Summary:

• OCI Partners (NYSE: OCIP) added to Aggressive Portfolio; buy below $29 (see Best Buys)
• AmeriGas Partners (NYSE: APU) added to Growth Portfolio; buy below $51 (see Best Buys)
• UGI (NYSE: UGI) added to Growth Portfolio; buy below $50 (see Best Buys)
• Magellan Midstream Partners (NYSE: MMP) buy below target raised to $70 from $60

Alliance Holdings (Nasdaq: AHGP) reported strong results Jan. 28 thanks to the performance of its operating affiliate Alliance Resource Partners (Nasdaq: ARLP). ARLP’s increased coal sales and production volumes in 2013, the partnership saw an 18 percent improvement in EBITDA and 17.3 percent growth in net income. ARLP’s balance sheet remains solid with debt-to-EBITDA at 1.27 times, liquidity at approximately $519.4 million, and a distribution coverage ratio of 1.59.

“The coal industry continues to face challenges as coal stockpiles are above normal,” CEO Joseph Craft said on the Jan. 28 conference call. “On the plus side, however, weather so far this winter has been significantly colder than normal. The increase in power demand is driving natural gas prices north of $5 per million btu.”

AHGP simultaneously declared a quarterly cash distribution of 82.75 cents per unit, for an annualized rate of $3.31 per unit. This represents an 11.8 percent increase over the distribution for the fourth quarter of 2012. At the Jan. 28 closing price of $59.32, AHGP offered an annualized yield of 5.6 percent based on the latest payout.

Management is counting on steady coal prices and lower costs to drive ARLP’s EBITDA to a range of $660 million to $760 million. The midpoint would represent a 3.5 percent increase from 2013. But that includes a drain of $30 million or so for investment in a new highly efficient mine that’s expected to become accretive to cash flow sometime next year. The coal industry’s low-cost producer, Alliance enjoys additional downside protection from the fact that 87 percent of its expected 2014 production is already been committed and priced.

AHGP’s receipts from ARLP, the sole source of its distributions, increased 2.4 percent from the prior quarter, and this year’s payout to unitholders should  extend the streak of double-digit gains. Buy AHGP below $68.

Crosstex Energy (Nasdaq: XTXI) and its affiliated partnership Crosstex Energy L.P. (Nasdaq: XTEX) are due to report fourth-quarter results on Feb. 28. On March 7, Dallas-based Crosstex will hold a shareholder meeting to approve its merger with the midstream division of Oklahoma-based Devon Energy (NYSE: DVN) to form EnLink Midstream Partners. The new entity should be a major player in bringing energy from the Barnett Shale, Permian basin and the Marcellus/Utica formations to refineries and utilities in the country’s midsection.

As soon as Devon declared that it was considering spinning off its midstream business in a public offering, Crosstex CEO Barry Davis went to Oklahoma City to argue for a union of the two companies.

Investors have also been enthused by the emergence of a big new midstream gatherer with priority access to Devon’s huge mid-Continent resource base. Crosstex has now hit our price target just two months after we recommended it. Buy XTXI below $37.

Crestwood Midstream Partners (NYSE: CMLP) declared a distribution of $0.41 per unit ($1.64 annually) for the quarter ended Dec. 31, representing an increase of 1.2 percent sequentially and 5.1 percent year-over-year.  The partnership has been one of the portfolio’s worst performers year-to-date, surrendering the rapid gains made in late December. It will look to turn sentiment around with quarterly results due Feb. 26. And in the meantime the yield is up to a healthy 7.3 percent. Buy CMLP below $25.

CVR Refining (NYSE: CVRR) has been one of the more volatile securities in the portfolio and the most mistimed of last year’s picks. The unit price of this variable distribution MLP has plunged from a high above 35 in May to little more than 21 presently. The decline was largely the result of weakening crack spreads during the summer, compounded by significant downtime at one of the refineries to repair a fluid catalytic cracking unit.

But even so CVRR did manage to pay out $3.23 per unit for the first nine months of 2013, with the distribution for the final quarter to be announced in the earnings report due Feb. 20. The lower bound of CVR’s latest 2013 distribution guidance is $3.45 per unit, for a projected trailing yield of 16.3 percent. And even if the good times of early 2013 don’t return, CVRR and its two advanced mid-Continent refineries ought to deliver more than the market currently credits. Buy CVRR below $26.

Energy Transfer Equity (NYSE: ETE) recently increased its distribution by 3 percent sequentially and 9.1 percent year-over-year. The partnership’s board of directors also authorized a 2-for-1 stock split and approved a $1 billion equity buyback.

The post-stock split distribution rate of 34.625 cents per unit will be effective from the fourth quarter of 2013 and is scheduled to be paid on Feb. 19 to unitholders of record as of Feb. 7.

The new annualized cash distribution rate of $1.385 per unit works out to a yield of 3.4 percent t the recent unit price of $40.53.

Natural gas usage has been on the upswing in the US, and ETE’s pipelines, processing plants and storage facilities are well-positioned to benefit. Buy ETE up to $37.

Energy Transfer Partners (NYSE: ETP) has raised its fourth-quarter 2013 cash distribution to 92 cents per unit, or $3.68 annually. The new distribution represents an increase of 1.7 percent sequentially and 2.9 percent year-over-year.

It was the second straight increase since an intramural deal giving ETE a share of incentive distribution rights in fast-growing Sunoco Logistics (NYSE: SXL) allowed ETP to boost its payout.

In other news, a trial got underway in  state court in Dallas over Energy Transfer’s claim that rival Enterprise Products Partners (NYSE: EPD) backed out of a promise to jointly build a pipeline from Cushing, Okla., to Houston. We covered the details of the lawsuit here: https://www.investingdaily.com/mlp-profits/articles/18071/texas-three-step/.  Investors should keep their focus on the fundamentals. Buy ETP below $55.

EQT Midstream Partners (NYSE: EQM) declared a distribution of $0.46 per unit for the fourth quarter of 2013. This represents a 7 percent increase over the distribution for the third quarter of 2013 and a 31 percent boost year-over-year. EQT’s focus remains owning, operating, acquiring, and developing midstream assets in the Appalachian basin, where it is aiding the exploitation of Marcellus Shale by fast-growing sponsor EQT (NYSE: EQT). Despite the rapid distribution growth the yield is down to 2.8 percent because the unit price has run up 0.7 percent year-to-date. We’re sticking with our original August buy below target of $51 for now.

Genesis Energy  (NYSE: GEL) will pay a distribution of $0.535 for the quarter ended Dec. 31. This represents an increase of 10.3 percent over the fourth quarter 2012 and a 2.4 percent increase sequentially.

This is the 34th consecutive payout hike by Genesis, and 29 of those represented increases of 10 percent or more year-over-year.

Genesis’ operations include pipeline transportation, refinery services and supply and logistics. Eagle Ford Shale has been one of the most productive areas in 2013, and was of particular interest to many of GEL’s customers. Volume can ramp up in unpredictable ways during fracking operations, but Genesis has done well in this unpredictable environment.  It gathers refined products from refineries and provides immediate transport for refined products via truck, railcar or barge. Its network of terminals comes with approximately 420,000 barrels of crude oil storage capacity. Other services include gathering crude oil from producers at the wellhead, transporting by truck to pipeline injection points, and marketing it to refiners. On Jan. 9 Credit Suisse upgraded the units to Outperform; the price is up 3.6 percent year-to-date. Buy GEL up to $55.

Magellan Midstream Partners (NYSE: MMP) just reported blowout quarterly results, surpassing analysts’ revenue and cash flow targets on stronger shipping volumes and higher rates driven in part by the improved demand for gasoline and diesel. Magellan  set its fourth-quarter distribution at 58.5 cents per unit. That’s the 47th  increase since the initial public offering back in 2001, and one that represents an increase of 17 percent year-over-year.

In 2014 the partnership now expects to do even better than that, now targeting per unit distribution growth of 20 percent with a 1.2x coverage ratio. Magellan also set a 2015 target of boosting its payout by another 15 percent.

Landenburg Thalmann upgraded the units to a Buy with a $71 price target following the results, while RBC Capital Markets set its own bar at $72. The price rose nearly 3 percent on the day and is now up 22 percent since we changed our recommendation to a Buy on Aug. 12.

With Magellan firing on all cylinders and highly likely to meet its goal of distributing $2.62 per unit this year, the prospective forward yield is still 3.9 percent, with more strong growth probable in 2015. We’re raising our buy below target on MMP to $70 to take advantage of the positive momentum.  

Kinder Morgan Energy Partners (NYSE: KMP) needed to deliver strong fourth-quarter results in the wake of the recent controversy over its growth prospects that left its capital appreciation lagging badly behind that of most other MLPs last year. And the second-largest US pipeline operator did just that last month, delivering revenue and earnings above estimates.

Revenue was up 29 percent year-over-year, aided significantly by the acquisition of Copano Energy last year and the dropdown of assets that general  partner Kinder Morgan (NYSE: KMI) acquired as part of its deal for El Paso Pipelines. Those additions also lifted distributable cash flow 28 percent.

But on a per unit basis that translated into a considerably smaller 6.8 percent year-over-year gain given $1.1 billion in equity issuance by KMP and its affiliate Kinder Morgan Management (NYSE: KMR) over the course of last year. The quarterly distribution increased by an even more modest 5 percent to $1.36 per KMP unit ($5.44 annualized) and is forecast to rise 4.7 percent this year.

We remain cautious, albeit not bearish, for reasons detailed in this month’s In Focus feature. KMP remains a Hold.

Kinder Morgan (NYSE: KMI), KMP’s general partner, is expected to see a more significant slowdown in its own distribution growth, from 14 percent in 2013 to 8 percent this year.

The partnership family’s larger size may be playing its part, along with a downturn in gas trading and storage income that would have left the flagship natgas transportation segment’s bottom line down 3 percent year-over-year without the benefit of the Copano acquisition.

The fact that KMI affiliate El Paso Pipelines (NYSE: EPB), expensively acquired in 2012, now expects not to resume its distribution growth until 2017 in the wake of two adverse rate rulings has also weighed on investor sentiment.

While Kinder Morgan founder, CEO and chairman Richard Kinder has complained about the declining unit price and spent more than $27 million on the shares in December, we don’t see  quick recovery ny longer, even though KMI remains attractive in the long run. Continue to Hold KMI. 

Navios Maritime Partners (NYSE: NMM) concluded a turbulent year on a hopeful note last week , promising in its final fiscal 2013 report that the current distribution rate would not go lower through the end of 2015, a year longer than previously pledged.

The Q4 payout of $0.4425 per unit, payable on Feb. 14 to holders of record as of Feb. 10, worked out to a 9.6 percent annual yield based on the closing price of $18.44 on the reporting date. The coverage ratio on that distribution based on the operating surplus was a subpar 0.83 times during the quarter, but 1.07x pro-forma for the full quarter’s contribution from the five container ships, all on 10-year charters, the partnership acquired in December.

Even so, the $122 million paid out by NMM in the most recent fiscal year is less than the $148 million raised over the same period from equity offerings, not to mention the additional $252 million in net long-term debt taken on. Bulking up at a discount in the severely battered shipping market has been part of Navios Partners’ long-term  strategy, as well as an expedient tactic used to make up for the ongoing decline in shipping rates.

Time charter equivalent (the industry-standard average daily charter rate) was down 17 percent year-over-year in the most recent quarter, and nearly 7 percent below the average for all of 2013. The lower charter rates, higher debt expenses and operating costs as well as  increased management fees charged by NMM’s general partner caused net income to drop 20 percent in 2013 even after adjusting for the prior year’s one-time accounting gain.

Yet management was especially emphatic that better times are on the horizon, driven by improving global growth and shipping fleet fundamentals. Incremental growth in demand is finally outstripping the gains in supply as more newbuild contracts get canceled for lack of financing and more of the older inefficient vessels are scrapped.

Navios Partners’ relatively modern fleet figures to profit in this environment, so much so that the partnership has continued to add dry bulk vessels and is chartering them out for relatively short periods in the expectation that shipping rates will be higher in a year or two. Meanwhile, the addition of the container ship brings stable cash flows, providing downside protection to the payout should the market outlook prove too optimistic. If, on the other hand, rates do improve, Navios could make good sooner rather than later on its hope to raise the distribution “in the medium term.” The 1.1x distribution coverage it considers a pre-requisite for such a step isn’t much above the most recent pro-forma ratio.

Though Navios will be hard-pressed to match last year’s total return of 62 percent, its rich yield makes the wait for the next shipping boom worth enduring. Continue to buy NMM on dips below $17.70.

Oaktree Capital Group (NYSE: OAK) is due to report results on Feb. 13. The alternative assets manager distributed $4.71 per unit last year, though that was boosted by the liquidation of particularly large and lucrative distressed debt funds, and is unlikely to be repeated in 2014. Deutsche Bank still upgraded Oaktree to a Buy with a $68 price target, citing “cyclical tailwinds,” “strong secular dynamics” and an attractive valuation. Those factors have driven the 15 percent return on the units since September for us. Buy OAK below $56.

Sunoco Logistics Partners (NYSE: SXL) declared a distribution of $0.6625 per unit ($2.65 annualized) to be paid on Feb. 14. This represents a 5 percent increase over the third quarter and a 22 percent rise year-over-year.

Sunoco has now logged five consecutive quarters with a sequential distribution increase of 5 percent, and 35 successive quarters of increased payouts. Quarterly results are due  Feb. 20, and the numbers should be solid. Buy SXL up to $67.

Targa Resources (NYSE: TRGP) and Targa Resource Partners (NYSE: NGLS) are due to report results Feb. 13, and should show the benefit of rising natural gas liquids prices. Targa is benefiting from recent investments that have dramatically expanded its propane export capacity. Last month, TRGP lifted its dividend by 33 percent year-over-year, to an annualized $2.43 per share representing a 2.7 percent yield at the current record high. NGLS, meanwhile, raised its distribution 10 percent year-over-year to an annualized $2.99 per unit, for a 5.7 percent current yield. We expect the rapid growth to continue into next year and beyond.  Buy TRGP below $85 and NGLS on any dips south of $44.

Vanguard Natural Resources (Nasdaq: VNR) declared a monthly cash distribution $0.2075 per unit ($2.49 on an annual basis) payable on Feb. 14, for a yield of 8.5 percent at the current unit price level. The payout has now held steady for six months, and we should have a better sense of when it might next rise after Vanguard reports quarterly results and provides its 2014 outlook on Feb. 26. The partnership recently bought 87,000 producing gross acres in southern Wyoming that it said would be immediately accretive to distributable cash flow; that acquisition recently closed with an effective date backdated as of Oct. 1, 2013. The transaction is expected to double VNR’s proved reserves. Buy VNR below $28.

Williams Companies (NYSE: WMB) declared a first-quarter cash dividend of $0.4025 per share payable March 31 to holders of record as of March 14. The raise amounted to a year-over-year increase of 18.8 percent.

The current yield is 3.9 percent at the record high share price just reached, and 4.3 percent based on the $1.75 per share in dividends planned this year. The company maintained its forecast for dividend increases of 20 percent in 2014 and in 2015.

In other news, an activist hedge fund agitating for change at Williams recently said it had failed to come to an agreement with the board on representation and would make its own director nominations. Buy WMB below $39.