NextEra Energy Partners (NYSE: NEP) and Phillips 66 Partners (NYSE: PSXP) both proudly proclaim themselves to be "growth-oriented" master limited partnerships. So far they have both done a pretty good job of living up to that, with distribution growth over the past three years of roughly 20% annualized at each. With that as a backdrop, Phillips 66 Partners' fat 6.1% yield is way higher than NextEra Energy Partners' 3.9% yield. But don't rush here -- there's an important nuance that might sway you toward the lower-yielding MLP.
Phillips 66 Partners is controlled by Phillips 66 (NYSE: PSX). It owns a collection of domestic energy and refined product pipelines, processing facilities, and storage assets. It is a funding source for parent Phillips 66, which sells assets (called drop downs in the industry) to Phillips 66 Partners, freeing up cash that Phillips 66 can use to invest in new growth projects -- which could eventually get dropped down to the partnership, too. In addition to that, Phillips 66 Partners also invests in its own projects, like the roughly $1 billion worth of projects it is working on right now (with end dates through 2021).
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