EQM Midstream Partners, LP (EQM) announced plans to merge with its general partner Equitrans Midstream (ETRN) in an all-stock transaction, continuing the trend of MLP simplifications. Each unit of EQM would be exchanged for 2.44 shares of ETRN stock.  The exchange ratio represents only a 3% premium based on EQM's average price over the 20 days leading up to the deal's announcement. Making matters worse for income investors, it also means EQM unitholders will face an effective distribution cut of nearly 70%. EQM paid annual distributions of $4.64 per unit, whereas ETRN's annual dividend was lowered to $0.60 per share. After receiving 2.44 shares of ETRN stock for every unit they hold, EQM investors will earn a comparable dividend of $1.464 per unit [...]

In August 2019, we published a note about MPLX (MPLX) and some of the challenges weighing on the stock, including low natural gas prices, questionable acquisition decisions, and Marathon Petroleum's (MPC) control over MPLX. One month after our note was published, activist investor Elliott Management pressured Marathon Petroleum to split its conglomerate business up with hopes of unlocking value. As we recently discussed here, Marathon's management team then announced plans to spin off its Speedway convenience stores and review strategic alternatives for its midstream business, which primarily consists of its 63% stake in MPLX's limited partner units and ownership of MPLX's general partner interest. MPLX unitholders are understandably nervous about Marathon's reevaluation of its relationship with MPLX. Marathon expects to provide an update by the [...]

Cisco (CSCO) was founded in 1984 and has grown to become one of the most important technology companies in the world. While the business sells a wide variety of products and services to businesses of all sizes, its main offerings connect computing devices to networks or computer networks with each other. The company’s website provides an overview of switches and routers, which are Cisco’s largest product segments and part of its infrastructure platform business segment.  Switches are used in buildings, offices, and data centers to connect devices such as workstations, servers, and phones together on a computer network. They help receive and forward data to the right device. Routers pass along data packets between computer networks to connect wireline and mobile networks [...]

On Tuesday, Franklin Resources (BEN) announced plans to acquire rival asset manager Legg Mason (LM) for $4.5 billion. Franklin's assets under management will rise from about $700 billion to $1.5 trillion once the deal closes by the third quarter of 2020, underscoring the significance of this transaction. Fortunately, Franklin's payout ratio, balance sheet, and cash flow generation will remain strong. As a result, we expect Franklin to maintain its Very Safe Dividend Safety Score. We estimate the combined company will generate about $1.5 billion of free cash flow while paying out around $500 million of dividends annually. This would put Franklin's payout ratio somewhere between 30% and 40%, a very reasonable level that also remains in line with the firm's [...]