MarkWest (NYSE:MWE) Potential Distribution Growth from 5-7 Percent

Even though MarkWest Energy (NYSE:MWE) hasn't grown distribution since 2008, Barclays (NYSE:BCS) sees them growing at a 5-7 percent rate over the next three years, generating a return of 12 to 14 percent.

Barclays said, "MWE reported strong Q3 results above our estimates and raised guidance for 2010. MWE also established 2011 DCF guidance that implies 1.4x coverage based on current distribution. While MWE has not raised distribution since 3Q 2008, we believe MWE has the potential to grow distribution by 5-7% per year in the next three years, resulting in 12-14% total return prospects. We believe this level of growth can be attained organically given its organic expansion plan in the Marcellus and current cost of capital of around - 7.5% which is amongst the lowest in the group given no IDR burden. Assuming 6x return on projects can lead to - 9% accretion."

Barclays maintains an "Overweight" on MarkWest Energy, which closed Wednesday at $40.99, down $0.48, or 1.16 percent. They raised their price target on them from $36 to $43.