We believe that investors searching for income consider owning Master Limited Partnerships, or MLPs. These stocks typically provide very high yields, often in the high single- to low double-digit range.

Of course, high yields often come with high risk, so investors need to identify high-quality MLPs that are likely to continue to at least maintain, if not raise, their distribution.

This article will discuss 3 of our top high yield MLPs that we believe will continue to pay high yields to investors.

Alliance Resource Partners LP (ARLP)

Alliance Resource Partners is the first publicly traded master limited partnership and the second-largest coal producer in the eastern United States. Apart from its primary operations of producing and marketing coal to major domestic and international utility users, the company also owns both mineral and royalty interests in premier oil & gas regions, like the Permian, Anadarko, and Williston Basins. 

Finally, the company provides terminal services, such as transportation and loading of coal and technology products and services. The company generates ~$2.7 billion in annual revenues and is based in Tulsa, Oklahoma. On July 29th, 2024, Alliance Resource Partners posted its Q2 results for the period ending June 30th, 2024. For the quarter, revenues declined by 7.6% year-over-year to $593.4 million. Lower revenues were primarily the result of lower coal sales volumes, which declined 11.8% primarily due to transportation delays. 

This was partially offset by increased coal sales price realizations, which rose 3.8% to $65.30 per ton sold compared to $62.93 per ton sold last year. Net income came in at $100.2 million, or $0.77 per unit, compared to $169.8 million, or $1.30 per unit last year. In 2024, Alliance’s management expects another record-breaking year in terms of revenues, driven by a strong coal sales book that mirrors the success of 2023. Over 90% of its coal sales volumes are committed at similar price levels to last year, signaling a promising outlook. More specifically, the company expects to sell about 34 tons of coal.

In the face of substantial regulatory challenges and media scrutiny, Alliance stands out as one of the last major players in the coal industry, enjoying notable advantages. The ongoing conflicts in Ukraine and the Middle East, coupled with unprecedented economic sanctions, such as the EU's ban on coal imports from Russia, are poised to maintain coal prices at above-average levels. 

Further, as the management sets its sights beyond 2024, they express optimism about the strengthening fundamentals of coal export demand and the emergence of opportunities in new markets.

ARLP currently yields 11.4%.

USA Compression Partners LP (USAC)

USA Compression Partners is one of the largest independent providers of gas compression services to the oil and gas industry, with annual revenues of $846 million (in 2023) and a market capitalization of $2.5 billion. 

The partnership is active in several shale plays throughout the U.S., including the Utica, Marcellus, and Permian Basin. It focuses primarily on infrastructure applications, including centralized high- volume natural gas gathering systems and processing facilities, requiring large horsepower compression units. It designs, operates, and maintains the compression units. USAC operate under fixed-fee, take-or-pay contracts, and does not have direct exposure to commodity prices.

USAC reported first quarter 2024 results on May 7th, 2024. Revenues for the quarter rose to a record $229 million compared to $197 million in Q1 2023. Distributable cash flow increased from $62.6 million to $86.6 million in Q1. The distribution was held steady at $0.525 per unit, in line with last year. Distributable cash flow coverage was 1.41X for the first quarter, compared to 1.21X last year. Revenue generating horsepower was up year-over-year to 3.497 million, an all-time high. 

Management raised its 2024 outlook for DCF and now forecasts $340 million to $360 million (from $310 million to $330 million previously). As a result, we are anticipating DCF per unit of $3.28 for the year.

Recent growth has been due to increased activity and business, in part due to budget increases in the industry. The demand for energy and natural gas strengthened in 2021 and 2022, and in 2023 the company had near-record utilization over 94%. Leadership expects the large-horsepower compression market will remain tight in 2024.

USAC currently yields 9.2%.

AllianceBernstein Holding (AB)

AllianceBernstein is an asset manager with an emphasis on fixed income investments, but offers diversified investment solutions for institutional investors, private wealth clients, and retail investors. The company traces its roots back to Sanford C. Bernstein & Company, founded in 1967, and to Alliance Capital, founded in 1971. 

In the first quarter of 2024, net revenues increased by 1% sequentially, driven mainly by higher investment advisory base fees and distribution revenues. However, there was a decline in performance-based fees, Bernstein Research Services revenues, and customer trading activity, leading to a 4% decrease in Bernstein Research Services revenues compared to prior periods. 

Operating expenses rose by 7% year-over-year, primarily due to increased promotion and servicing expenses, employee compensation and benefits expenses, and interest on borrowings. Nonetheless, there was a decrease in general and administrative expenses, partly attributed to an incentive grant received in connection with the company's headquarters relocation to Nashville, Tennessee. 

On the adjusted basis, net revenues increased by 6% year-over-year and 2% sequentially, primarily due to higher investment advisory base fees, partially offset by lower performance-based fees and Bernstein Research Services revenues. Adjusted operating expenses rose by 4% year-over year, mainly due to higher employee compensation and benefits expenses and promotion and servicing expenses, offset by lower general and administrative expenses. 

Adjusted operating income increased by 12% year-over-year and 5% sequentially, with adjusted operating margins improving by 160 basis points and 110 basis points, respectively. Adjusted diluted net income per unit for the first quarter was $0.73, representing an increase from both the first quarter of 2023 and the fourth quarter of 2023.

AB currently yields 8.2%.