MLP investors don’t need any reminders just now about the scarcity of a free lunch. Wherever there’s reward there’s risk, and more of one implies more of the other.

Picking Best Buys requires finding the best tradeoffs between the two in the context of the market’s clear current risk aversion. Hypothetically, at least, that argues for going against the grain and preferring to take on more risk while it’s cheap. Practically, we continue to take the middle road given the extremely high cost of being wrong right now.

1. Magellan Midstream Partners (NYSE: MMP)

The least leveraged large MLP hasn’t issued equity in a decade, financing its investments in refined fuel and crude pipelines mostly out of cash flow instead. That conservatism is looking very smart right now with the unit price holding above its August lows; it’s actually up 13% over the last six weeks.

The crude pipelines (30% of recent margin) represent a longer-term risk in the current pricing environment of course, but one mitigated by long-term, fee-based contracts on pipelines originating in the Permian Basin of west Texas, which has emerged as the most attractive and resilient drilling region.

Meanwhile, the refined fuels pipelines (60% of margin) are a bedrock of stability amid the oil bust as low prices continue to stimulate fuel demand.

The 4.7% current yield might seem modest now that double-digit ones on other MLPs are commonplace. But it’s as secure as they come, and management has credible plans to increase it by at least 10% in each of the next two years. Buy MMP below the reduced limit of $80.    

2. Energy Transfer Equity (NYSE: ETE)

ETE has become the industry’s biggest lightning rod now that Kinder Morgan (NYSE: KMI) has been forced to admit the error of its former promises. The market is having a particularly hard time stomaching the $6 billion in cash that ETE has promised to pay for Williams (NYSE: WMB), given the plunge in oil and gas prices since that deal was announced in September. Speculation is rife that the merger could be renegotiated as strictly a share swap, or even abandoned.

ETE will almost certainly attempt to renegotiate if it hasn’t already done so, but I find it difficult to imagine its CEO Kelcy Warren backing out of the deal altogether, so his negotiating leverage may be limited.

The proposed $6 billion cash payout, to be financed with debt that has already been committed, will only increase ETE’s considerable leverage to the midstream sector’s growth as the general partner of three large MLPs, with more in the wings. Think off ETE equity as a capsule riding into space on several booster stages representing the affiliated partnerships. If one of those fails the consequences for the capsule’s crew will be severe.

Yet the odds of such a failure, while certainly elevated of late, are still quite low in absolute terms, and ETE’s cash flow is broadly diversified among gathering, processing, gas transmission, terminal services and fuel distribution, with considerable upside from its proposed liquefied natural gas export terminal.

The unit price is down 75% from a record high hit on June 15, clearly pricing in almost everything short of a liquidity crisis and bankruptcy filing. Yet even at these energy prices and even with the possibility that ETE will need to subsidize capital spending by its MLP affiliates, the bulk of its forecast cash flow looks secure.

The equity is currently priced for a yield of 13% on a distribution that’s grown more than 35% over the last year, and while that growth is likely to slow significantly, ETE could probably help its affiliates fill all their funding gaps if it were to merely maintain the current payout.

This has now become a very speculative short-term investment with unparalleled long-term upside. Buy ETE below the reduced limit of $15.

3. Enterprise Products Partners (NYSE: EPD)

Enterprise is the largest MLP and the most financially secure one after Magellan. Though leverage has increased of late as low natural gas liquids prices hurt fractionation margins, Enterprise’s fractionation hub and its network of logistics assets along the Gulf coast remain unparalleled. The partnership will be a major long-term beneficiary from the recent lifting of the crude export ban, and is also building a big propylene manufacturing chemical plant to take advantage of the dirt-cheap U.S. ethane.

The scale, asset diversity and strong distribution coverage have limited the units’ downside to just 13% since early August. The yield is up to 6.9% on a distribution expected to continue growing 5-6% annually. Although Enterprise is not burdened with incentive distribution rights, it does have a supportive general partner that’s recently bought units worth $100 million and now owns a 34% stake. Buy EPD below the reduced limit of $30.  

4. Delek Logistics Partners (NYSE: DKL)

Refinery logistics partnerships have been one of the MLP sector’s few safe harbors over the last year, boosted by their fixed cut of refinery sponsors’ rising throughput and profits. That hasn’t been the case so far this year, as frightened investors generally sick of MLPs weigh evidence that domestic fuel demand has slowed.

It’s not particularly strong, based largely on two weeks of big builds in gasoline supplies that merely brought the total back to normal, and a 4.3% drop on the four-week average of demand from an unusually strong stretch a year earlier.

That’s been enough to knock down DKL units to the lowest price in almost three years last week, in what was almost certainly an overreaction. Refining margins remain strong, unemployment low and record auto sales have been paced by vehicles that guzzle fuel rather than sip it.     

DKL now yields 7.9% with 1.46x distribution coverage in the most recent quarter based on a payout that should continue to grow 15% annually. Buy DKL below $40.

5. PBF Logistics (NYSE: PBFX)

Like DKL, PBFX is another logistics offshoot serving a small but fast-growing refiner. Its unit price has held up better than those of its rivals of late, but still provides a 7.9% yield expected to grow 15% annually. The distribution coverage in the latest quarter was 1.59x. Buy PBFX below $28.  

6. AmeriGas (NYSE: APU)

The leading U.S. propane distributor lost depreciated 26% between Nov. 5 and Dec. 11 as the unseasonably warm weather in the east undoubtedly cut into its sales.  It’s fared better since winter finally got underway and is among the handful of MLPs actually up so far in the new year.

Units currently yield 10.3% on with 1.16x coverage in the unusually warm quarter ended last September. Low wholesale propane prices have allowed AmeriGas to increase its margins in the recently completed fiscal year by enough to offset approximately half the drag from warmer temperatures. The distribution is growing approximately 4.5% annually. Buy APU below $51.

7. Capital Products Partners (NYSE: CPLP)

The shipping stock lost 32% over the last two weeks, and 63% over the last year, on worries about the slumping container rates and, recently, worries about Chinese growth as well as a pullback in crude tanker rates.

CPLP does has significant exposure to the currently slumping container trade starting in 2020-21, when the current charters on 8 of its 10 containerships will expire. It also has limited near-term exposure to a crude tanker market that should prove resilient by wat of its four Suezmax crude haulers.

Product tankers account for 20 ships in CPLP’s 35-ship fleet, and should benefit from the growing maritime fuel trade as the distances between refineries and their customers continue to grow at the tail end of  dramatic capacity expansions in Asia and the Middle East.  

The partnership kept its distribution level all through the dark days of the tanker slump that preceded the current revival, and needs to do little more than keep rolling over staggered product charters at the higher rates now on offer in order to meet its goal of growing the payout 2-3% annually for the next few years.

If CPLP does that, and there is every reason to expect that it will, shareholders will benefit from a distribution yielding more than 25% after the market pounding over the last two weeks. CPLP is on pace to distribute the entirety of its current price before any of its long-term container charters expire.

There is plenty of potential upside from a cyclical rebound in containership rates as well, as recently strong supply of vessels tails off and an enlarged Panama Canal permits the shipping of larger cargos from Asia directly to the U.S. East Coast. Buy CPLP below the reduced limit of $5.50.

8. Global Product Partners (NYSE: GLP)

Global has been severely punished for its increasingly challenged crude logistics business, which ships oil trains from North Dakota to refiners on the coasts. But crude accounted for just 9% of the margin in the most recent quarter, and 16% year-to-date. The bulk of the cash flow comes from the recently much expanded gasoline distribution and retail segments, as well as distribution of fuel oil. Those profits should prove very steady in the current low-price environment, supporting a distribution currently yielding 16.7% with 1.6x coverage year-to-date. Buy GLP below $21.