The monumental drop in the price of oil originally was believed to leave some master limited partnerships (MLPs) unscathed. This has been far from universally true, and many MLPs have had to dial back on their distributions. That is not the case universally. Some MLPs are even still raising their distributions, and that allows for some investors to live off these distributions just like dividends — but often with some tax benefits due to a return of capital component.

24/7 Wall St. wanted to look at the few MLPs that have still been raising their distributions. Several distributions were raised in July, and we have seen a focal point with raised distributions in a few key MLPs so far in August. And now we have also seen that the key Alerian MLP index has bounced nearly 5% from its lows.

Another positive from this past week was that Credit Suisse upgraded the MLP segment to Overweight. This was on the heels of a sharp sell-off, and Credit Suisse believes that the MLP risks now are skewed to the upside.

24/7 Wall St. has reviewed the top MLPs with higher payouts in recent days and weeks. This matters far more than MLPs that raised their distributions earlier in the year and have left them static. After all, oil prices just challenged new six-year lows in recent days.

ALSO READ: 3 Top Energy MLPs to Buy That Need No Capital Raise

Energy Transfer Equity

Energy Transfer Equity L.P. (NYSE: ETE) released its results on August 5, showing that distributable cash flow was $335 million for the June 2015 quarter, up from $218 million a year earlier. Its board of directors approved a $0.02 increase in its quarterly distribution to $0.265 per ETE common unit on a post-split basis. This was an increase of 39% from a year ago and 8% from the prior quarter. Its distribution coverage ratio was listed as 1.19 to 1.00. As a reminder, the company had entered into an exchange and repurchase agreement with Energy Transfer Partners L.P. (NYSE: ETP) in July whereby it will exchange 21.0 million ETP common units for 100% of the general partner interest and incentive distribution rights of Sunoco.

Energy Transfer Equity is one of the top MLPs by market cap, with its $30.05 recent price bringing a value of about $32.5 billion. It has a consensus analyst target price of $41.00 and a 52-week trading range of $22.94 to $35.44. Credit Suisse was recently positive on ETE/ETP.

Magellan Midstream Partners

Magellan Midstream Partners L.P. (NYSE: MMP) announced net income of $177.4 million for its second quarter of 2015, which was up $31.1 million, or 21% higher, than in the second quarter 2014. Its distributable cash flow was $222.8 million, up 14% from a year ago. This allowed Magellan to increase its annual distributable cash flow guidance again for 2015. In July, Magellan Midstream’s board approved an increase in its second-quarter cash distribution by 3% sequentially to $0.74 per unit, but that is up 14% year over year.

Magellan’s current market cap is $15.5 billion, and its distributable yield-equivalent, if it were to remain static, is roughly 4.35%. Magellan Midstream Partners recently traded at $69.80, and it has a 52-week range of $61.37 to $90.08.

ALSO READ: Why Credit Suisse Sees 3 Key MLPs to Buy Now
MarkWest Energy Partners

MarkWest Energy Partners L.P. (NYSE: MWE) recently reported that its second quarter had distributable cash flow of $165.9 million and adjusted EBITDA of $218.9 million. In its release, MarkWest increased its quarterly distribution to $0.92 cents per common unit, with a 94% distribution coverage. The new distribution was up by $0.01 per unit (1.1 %) over the first quarter distribution, but it was up $0.04 per common unit from a year ago. Also, it had previously announced strategic combination with MPLX to create a diversified large-cap MLP with strong sponsor support.

What needs to be considered at MarkWest is that its units are close to the 52-week low, so there is some skepticism here. The yield-equivalent is 6.7%, and the $55.66 price and $10.6 billion market are against a 52-week range of $53.19 to $80.79. Credit Suisse and Wunderlich both downgraded MarkWest after the earnings report.

Sunoco

Sunoco L.P. (NYSE: SUN) had second-quarter results showing an adjusted EBITDA attributable to partners of $55.5 million, versus $15.6 million for the same period last year, and adjusted EBITDA attributable to partners ex-transaction expenses totaled $58.2 million. Its distributable cash flow attributable to partners was $39.3 million, versus $13.7 million a year earlier, and distributable cash flow per common unit was $0.9506. The distribution was increased by 7.5% from the first quarter of 2015, as well as 33.4% from second-quarter 2014 levels.

On August 4, Sunoco’s board declared a distribution for the second quarter of 2015 of $0.6934 per unit, or $2.7736 per unit on an annualized basis. Its prior quarterly distribution was roughly $0.645, and the new annualized payout generates a yield-equivalent of right at 7%. At $39.65 late on Friday, the stock’s 52-week range is $35.10 to $59.99. The market cap is right at $3 billion.

ALSO READ: Beyond Distribution Risks, MLPs Could Face Funding Risks If Low Oil Persists

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Be advised that the Sunoco and Energy Transfer Partners units have ties with each other here, which means that the ETE/ETP relationship needs to be kept in mind. Sunoco said that its favorable year-over-year comparisons were attributed to the contributions from the drop-down acquisitions of a 31.58% interest in the wholesale fuel distribution business of Sunoco LLC in April 2015 and the MACS convenience stores in October 2014 from Sunoco’s parent, Energy Transfer Partners, along with the purchase of Aloha Petroleum in December 2014. Sunoco even said that revenue was $4.2 billion, up 205.7% compared to $1.4 billion in second quarter of 2014.

When Credit Suisse upgraded the MLP sector, it was not a universal upgrade of all MLPs. The firm’s John Edwards said that a reversion to the mean yield ranges would suggest total return outlook of over 40%. With yield spreads above 500 basis points, total returns in the next 12 months have been positive 100% of the time over the history of the MLP index and positive 98% of the time when yield spreads exceed 450 basis points. Also noted was that the yield spread to the U.S. 10-year is 497 basis points and correlates to total returns of about 31% over the next 12 months.

Elsewhere, there are some other considerations about MLPs.

Fitch Ratings recently warned that continued pressure in the commodities could affect the available funding for the MLPs. This was when the Alerian MLP Index was still down by more than 20% so far in 2015.

That funding risk is of course a huge risk, but Fitch also offered a silver lining for what may lie ahead: the stronger MLPs likely would look at opportunities in the smaller MLPs that were good outfits but might not have the same access to capital. In short, that is a merger game ahead.

ALSO READ: 3 Drilling Stocks to Buy Ahead of 2016 Recovery

Jay Hatfield, co-founder and president of InfraCap and portfolio manager of InfraCap MLP ETF (NYSEMKT: AMZA), sent 24/7 Wall St. a note on the funding and potential merger trends ahead on Wednesday:

The large cap MLPs still have easy access to capital as most of the companies are investment grade or strong ‘BB’ type credits, so can issue debt in the 4% to 7% range, depending on exact credit rating. In addition, the large cap companies stock/unit prices are depressed, but are still liquid with ability to access incremental equity capital.

The MLPs that are in trouble are the smaller capitalization companies that rely on bank financing for debt capital and whose distribution yields make equity financing prohibitively expensive. We expect smaller capitalization MLPs are attractive acquisition targets for the larger capitalization companies that have access to reasonably priced debt and equity. We may see a number of acquisitions of this type over the next year.

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