Is This "Boring" Pipeline Stock a Bargain, or Is the 7.4% Yield a Warning Sign? An Honest Look.

Key Points The "midstream" crude oil and natural gas pipeline and logistics business generates reliable cash flow. What this industry doesn't do particularly well is generate growth without equally significant investments. This type of holding can also create some tax-filing headaches, but this one may be worth the trouble. 10 stocks we like better than MPLX › Income-minded investors obviously like high yields. Dividend yields that are unusually high, however, are understandably viewed with suspicion. Frothy yields are often the result of a falling stock, and a falling stock is often an indication that trouble is brewing. Enter MPLX (NYSE: MPLX) . This oil and gas pipeline company's forward-looking dividend yield currently stands right around 7.4%, and just as shockingly, the ticker's trailing price-to-earnings ratio is just under 13. Both are at the deep-value end of the midstream sliver of the energy sector . Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » What gives? Why is MPLX so bargain-priced? A handful of factors are at work here, not the least of which is that the company is built from the ground up to generate income rather than produce net growth. Although its dividend payment can and does grow -- it's done so for 13 consecutive years now, in fact -- the prospect of meaningful, sustained capital gains from MPLX without dilutive or debt-based fundraising is modest compared to alternatives. The stock's valuation and dividend yield reasonably reflect this reality relative to its risk, with perhaps the biggest risk simply being an unpredictable degree of dividend growth from one year to the next. Image source: Getty Images. The other (and arguably bigger) reason MPLX shares are so cheap is the underlying company's legal structure. It's not a conventional corporation, as most publicly traded companies are. It's organized as a master limited partnership , which requires additional tax forms and additional steps when filing your taxes. Although the investment income that some publicly traded partnerships generate can be more fruitful than dividend-paying stocks of seemingly similar companies, this added tax-filing burden can make limited partnerships less attractive to many investors. That's particularly true if the position in the partnership is relatively small. Even so, with a dividend yield that's so much stronger than most other options right now, MPLX might be worth the trouble here. Should you buy stock in MPLX right now? Before you buy stock in MPLX, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MPLX wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $430,571 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,399,268 !* Now, it’s worth noting Stock Advisor’s total average return is 986 % — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 28, 2026. James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The "midstream" crude oil and natural gas pipeline and logistics business generates reliable cash flow.

What this industry doesn't do particularly well is generate growth without equally significant investments.

This type of holding can also create some tax-filing headaches, but this one may be worth the trouble.

Income-minded investors obviously like high yields. Dividend yields that are unusually high, however, are understandably viewed with suspicion. Frothy yields are often the result of a falling stock, and a falling stock is often an indication that trouble is brewing.

Enter MPLX (NYSE: MPLX) . This oil and gas pipeline company's forward-looking dividend yield currently stands right around 7.4%, and just as shockingly, the ticker's trailing price-to-earnings ratio is just under 13. Both are at the deep-value end of the midstream sliver of the energy sector .

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

A handful of factors are at work here, not the least of which is that the company is built from the ground up to generate income rather than produce net growth.