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Top Dividend Stocks: This Energy Name Boasts An 8.7% Yield And Is In Buy Zone

Among the top dividend stocks, MPLX (MPLX) warrants a closer look, with an impressive 8.7% yield and growing dividend.

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MPLX is an energy company that owns and operates midstream energy infrastructure such as pipelines, logistics assets and provides fuel distribution services. Headquartered in Findlay, Ohio, the company primarily operates in the Midwest and Gulf Coast regions.

MPLX was formed from a spinoff from Marathon Petroleum (MPC) and runs as a limited partnership. This allows MPLX to pass on profits directly to shareholders as distributions.

Compared with the 1.2% yield on the S&P 500, MPLX's annualized yield of 8.7% certainly has rewarded investors. MPLX has also increased its distributions every year since its inception in 2012.

These steadily increasing distributions have come despite highly volatile energy prices. While MPLX had a loss in 2020 due to the pandemic, the firm continued to pay distributions even as the sector recovered slowly. Amid higher oil prices, a resounding recovery unfolded the past year. Full-year EPS is expected at $2.86, the most profitable year for MPLX since inception.

Top Dividend Stock In Buy Zone; Earnings Upcoming

MPLX will round out the fiscal year when it reports Q4 earnings on Feb. 2. EPS is estimated at 75 cents, up 19% from a year ago, while revenue is projected at $2.45 billion, a 9% increase. Full-year EPS estimates for 2022 stand at $3.10, according to FactSet.

After forming a cup without handle pattern, MPLX is breaking out and is currently near a 31.37 buy point. Investors should take caution in the added risk of entering a position before a company's earnings.

Nevertheless, MPLX has historically had muted moves on earnings. The last time the company moved more than 5% after an earnings event was in Q3 of 2017.

Another risk is that MPLX is sensitive to highly cyclical oil prices. This could result in increased volatility, though could also provide some diversification against inflation.

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