This Stock Offers a 7.6% Annual Dividend Yield. Time to Buy?

Key Points

• MPLX is a midstream leader with close ties to Marathon Petroleum Corporation.

• The stock offers a juicy distribution, an appealing valuation, and solid growth prospects.

• Now could be a good time for some -- but not all -- investors to buy MPLX stock.

• 10 stocks we like better than MPLX ›

Baby boomers are retiring in full swing. And many of them are looking for ways to boost their retirement income. Unsurprisingly, quite a few ultrahigh-yield dividend stocks are receiving serious attention.

MPLX (NYSE: MPLX) is one of those stocks that some income-seeking investors are evaluating. It offers a juicy annual forward dividend yield of 7.6%. Is it time to buy MPLX?

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About MPLX

MPLX is a master limited partnership (MLP) created in 2012 by Marathon Petroleum Corporation (NYSE: MPC). The company is a leading U.S. midstream operator with natural gas, natural gas liquids (NGLs), and crude oil pipelines and other assets, including fractionation and storage facilities. It handles over 10% of all natural gas produced in the U.S.

The MLP's relationship with Marathon is still important. MPLX remains the primary midstream provider for the oil company, which has the largest refining capacity in the U.S. Marathon owns MPLX's general partner, MPLX GP LLC, and around 64% of its outstanding common units.

Nearly half of MPLX's total revenue comes from Marathon. However, that means more than half of the company's revenue is generated from providing services to other customers. In particular, MPLX has long-term relationships with crude oil and natural gas producers in the Bakken Shale, Marcellus Shale, Permian Basin, STACK Shale, and Utica Shale regions.

MPLX reported $1.05 billion of net income for the second quarter of 2025. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q2 totaled $1.69 billion. The MLP also generated solid adjusted free cash flow of $1.13 billion.

Why this MLP stock is a good pick

I think now is a good time to buy this MLP stock for many investors. MPLX's ultra-high distribution ranks at the top of the list of attractions.

Sometimes yields of 7% or more raise yellow flags because of concerns about their sustainability. That's not a problem with MPLX. The midstream operator's distribution coverage (distributable cash flow attributable to unitholders divided by the total distribution) is a healthy 1.5.

MPLX's valuation is also appealing. The stock's forward price-to-earnings ratio is only 11.5. That multiple compares well with those of other top midstream stocks, including Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD).

To add icing to the cake, MPLX's growth prospects look good. The MLP plans to invest over $5 billion in growth this year. Some of those funds are related to the launch of the Secretariat processing plant and expansions of pipeline projects in Texas. However, roughly $3.5 billion of the total is earmarked for acquisitions.

In July, MPLX announced plans to acquire Northwind Midstream for $2.375 billion. Northwind provides sour gas gathering, processing, and treatment services in New Mexico. MPLX thinks the transaction will close in the third quarter of 2025. Importantly for income investors, the acquisition of Northwind should be immediately accretive to distributable cash flow.

Why should you not buy MPLX?

You might have noticed that I said that now is a good time for some investors to buy MPLX stock. However, this stock might not be a great pick for all investors.

For example, if you want sizzling growth, MPLX probably isn't ideal for you. Wall Street analysts project the MLP's revenue will increase by around 5% this year and a little under 7% next year. While acquisitions could cause MPLX's actual growth to be higher, don't expect the kind of jaw-dropping growth that some tech stocks might deliver.

If you don't want the tax hassles associated with investing in MLPs, you'll want to avoid MPLX. Other midstream stocks, such as Enbridge (NYSE: ENB), might be preferable.

Finally, if your investment portfolio already has plenty of midstream stocks (as mine does), you may choose to take a pass on MPLX. Several of the company's peers also offer juicy distributions and solid growth prospects.

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Keith Speights has positions in Enbridge, Energy Transfer, and Enterprise Products Partners. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.