Low capital costs plus abundant opportunities to bring shale gas and liquids to market: That formula continues to drive our MLP Profits Portfolio favorites’ cash flows and distributions higher.

To be sure, unit prices for many, if not most, have been range-bound the past several months. That’s been due in large part due to uncertain market conditions, profit-taking after the run-up since the March 2009 bottom, negative press surrounding shale development and rumors Washington was considering changing the favorable taxation of master limited partnerships (MLP).

The good news is as long as our picks continue to perform well as companies all of these negative factors will prove ephemeral. In fact, if overall market conditions stabilize, we’re likely to see all of them move higher the rest of the year.

The key catalyst is distribution growth. Whenever one of our MLPs lifts its payout, it sets a higher baseline for its unit price. As we’ve seen several times this year, individual MLPs’ prices can be volatile in the near term for a wide range of reasons. Sooner or later, however, distribution growth pushes unit prices higher. And that means hefty returns in addition to rising, tax-advantaged cash flow streams for investors.

The key to a rising stream of distributions is management’s ability to operate its existing base of assets effectively while finding lucrative opportunities to add new ones. That’s a hallmark of each of the five MLP Profits Portfolio recommendations to report their second-quarter results thus far.

The good news they didn’t disappoint this time around either. In fact, all five MLPs profiled below actually raised distributions along with their announcements of robust profits.

Kinder Morgan Energy Partners LP (NYSE: KMP) lifted its distribution for the sixth consecutive quarter, to $1.15 per unit from the prior quarter’s $1.14 and a year-ago payout of $1.09. That’s in line with management’s early 2011 projection and reflects the continuing successful addition of fee-generating energy infrastructure to the MLP’s asset base.

CEO Richard Kinder is now the dean of the MLP universe after the death of Enterprise Products Partners LP’s (NYSE: EPD) legendary founder Dan Duncan. The initial public offering of Kinder’s general partner Kinder Morgan Inc (NYSE: KMI) had created some consternation that executives intended to skim more from the MLP. But while Kinder Morgan Inc has performed well since the launch, the MLP’s solid showing since should set those concerns to rest.

The new distribution level, for example, reflects a solid 6 percent boost over the past year, and it left $37 million to strengthen the balance sheet. Expansions of liquids and natural gas pipelines are on target, and the recently completed Haynesville Shale gathering system (KinderHawk) and Fayetteville Express Pipeline are now generating cash flow.

The Rockies Express pipeline system results were hit by higher property taxes, and the company saw slightly lower throughput at its liquids terminals, despite an 11.5 percent jump in jet fuel volumes. Gas transport volumes were up 16 percent, largely on the asset additions.

Looking ahead, there are several potential catalysts for faster cash flow growth. One is BHP Billiton’s (NYSE: BHP) pending acquisition of Petrohawk, which promises a substantial ramping up of that company’s drilling program and a corresponding increase in need for infrastructure in the Haynesville and Eagle Ford Shale formations, along with the Permian Basin.

Another is the gas liquids venture in the Eagle Ford Shale with Copano Energy LLC (NSDQ: CPNO), which has already entered into three long-term agreements with shippers. Finally, the carbon dioxide segment is at last performing to expectations. CO₂ injected into oil wells is a low-cost way to revive output from depleted reserves. The company also continues to pursue new opportunities to acquire and build energy storage terminals, including coal. And it’s getting involved in shipping of oil sands production in Canada to the West Coast for export.

During the MLP’s second-quarter conference call, CEO Kinder noted, “The long-term opportunities for midstream energy infrastructure development, in my judgment, have never been better during the 30-plus years I have been in the business.” That’s an extremely bullish statement from a man who knows his industry as well or better than almost anyone. Kinder’s forecasts are “to do better than we thought in 2011” as well as in 2012.

The projection for 2011distributable cash flow is “north of $4.80.” The long-term growth rate is at least 5 percent growth per year on the current yield of 6 percent-plus. Those numbers are all the more predictable because of Kinder’s solid diversification. With no debt maturities for the rest of 2011, little exposure to commodity prices and a revenue mix that was steady throughout the turmoil of 2008, there are few risks either.

Kinder Morgan Energy Partners remains an extremely conservative buy up to 75.

Sunoco Logistics Partners LP’s (NYSE: SXL) second-quarter results featured several pieces of very good news. Distributable cash flow (DCF) of $106 million rose 92.7 percent from year-earlier levels to a record, covering the quarterly distribution by a robust 2-to-1 margin. That enabled management to boost the payout for the 25th consecutive quarter to $1.215 per unit, a 1.7 percent increase from the prior quarter and 6.6 percent from a year ago.

The MLP was able to take advantage of robust throughput at its crude oil and gas liquids infrastructure, as well as a favorable price contango, to boost returns from its existing asset base. Certain customers’ unplanned refinery issues crimped revenue from refined products pipelines. But that was more than offset by robust income from terminal facilities and the crude oil pipeline system, which saw operating income nearly triple on expansion and acquisitions.

Equally encouraging, Sunoco Logistics continues to build its asset base, putting the pieces in place for strong future cash flow and distribution growth. Expansion capital expenditures were ramped up 121 percent to $168 million in the first half of 2011. And the company expects to deploy another $100 to $150 million in the second half.

The biggest move to date is the acquisition of a controlling interest in the Inland Corporation from privately held Texon LP for $205 million plus inventories, announced along with earnings this week. That deal is expected to be immediately accretive to DCF and will add lease crude business and gathering assets in 16 primarily western states. The merger will immediately boost Sunoco’s lease business by more than 30 percent and gains it entry to several high growth shale energy-rich areas, including the Bakken, Granite Wash and Eagle Ford areas.

The Inland deal will be initially financed with the MLP’s revolving credit facilities and will eventually require more permanent capital. The company’s credit position, however, is strong, leaving it some flexibility should overall conditions tighten. Credit raters S&P and Fitch still rate the company at BBB with a stable outlook, having recently affirmed their opinions. The company also continues to find opportunities for “tuck in” expansion, i.e. acquiring additional stakes in assets it’s already familiar with.

Sunoco Logistics units have fluctuated above and below our buy target of 85 all year. Now yielding close to 6 percent, it’s again selling below that level. Now is a great time to pick up units if you’ve been waiting to do so. Buy Sunoco Logistics Partners up to 85.

Linn Energy LLC (NSDQ: LINE) has announced a “continuous equity offering,” under which it will sell $500 million in units over a period of time. That’s the latest innovation from the fast-growing producer of oil and gas, which posted a 39.8 percent jump in overall output in the second quarter versus year-earlier levels.

That gain coupled with aggressive hedging of output lifted cash flow 50 percent, not counting one-time factors. Distribution coverage with distributable cash flow (DCF) was a very solid 1.42-to-1, a robust level that induced management to boost the quarterly distribution to 69 cents per unit, a 4.5 percent jump from the prior quarter’s 66 cents and the seventh increase for the MLP since its January 2006 initial public offering.

Keeping those distribution boosts coming depends on Linn continuing to add to its reserve base at a reasonable cost, accessing low-cost capital to make such deals, controlling operating expenses and finally locking in selling prices in advance at levels that ensure robust cash flows. Second-quarter results verify once again that management is doing all that and more.

Linn closed some $621 million in acquisitions during the period, bringing total year-to-date purchases to $850 million. That includes key additions to its properties in the Permian Basin and Williston Basin. Though it carries a credit rating below investment-grade, the company was able to offer $750 million of bonds due 2019 at an interest rate of 6.5 percent, using the proceeds to among other things buy back 11.75 percent bonds due in 2017 and 9.875 percent notes due in 2018.

As for locking in favorable pricing, the company has now hedged 100 percent of its expected natural gas output through 2015. Oil production, meanwhile, is 100 percent hedged through 2013 and 80 percent in 2014 and 2015. Drilling results appear to be exceeding expectations, despite extreme weather in several key operating areas that inhibited activity. Lease operating expenses were up 4.9 percent in the quarter over year-earlier tallies, but were offset by a 13 percent drop in transportation costs and a 5.8 percent dip in general and administrative costs per unit of production.

Including the distribution boost, DCF coverage in the second quarter came in at a very strong 1.36-to-1. That leaves the door open for more boosts going forward, as output continues to expand. There are no meaningful debt maturities until 2016, eliminating refinancing risk. Those are two good reasons why of the 14 analysts covering the MLP, 13 rate it a buy. Our buy-in target for those who don’t already own Linn Energy is 40.

Navios Maritime Partners LP (NYSE: NMM) units have been moving mostly lower since early May, when investors began reacting to weak conditions in the dry-bulk shipping market globally. Ironically, Navios itself hasn’t given anyone any reason to worry, lifting its distribution for the second time in three quarters in July to 44 cents from the previous 43 cents.

The 2.3 percent lift is due entirely to Navios’ ability to lock up its fleet under long-term contracts that insulate revenue from poor overall industry conditions, as well as to take advantage of opportunities to add new capacity at a low cost. Second-quarter revenue surged 37.2 percent and operating surplus–a measure of cash flow less cash commitments–soared 43.5 percent from year earlier levels.

Navios’ latest purchase came on May 19 for two vessels for total consideration of $130 million, which are expected to generate annual cash flow of $20.3 million. One is fully contracted until April 2014, the other until November 2020. Both are state of the art, having been built in 2004 and 2010, respectively.

Fleet-wide, Navios’ ships are contracted for an average remaining term of 4.2 years. The MLP has contracted 98.1 percent of its capacity for the remainder of 2011, 91 percent for 2012 and 78 percent for 2013. The average rental rate is well above the abysmal level in the market. Aggressive hedging and staggered contract maturities, however, leaves relatively little revenue at risk during any given year.

Moreover, the company’s ships are relatively new and therefore tend to fetch better than market rental rates. Charter contracts are fully insured against credit default by a AA+ rated European Union governmental agency. That’s valuable insurance against counterparty risk, i.e. non-payment of contract terms by customers. One major user is currently in arrears of roughly $5 million on three vessels, but Navios is already being compensated. The company also has a healthy reserve to cover the cost of operating problems with its vessels, such as the Apollon engine breakdown that has that vessel currently out of operation.

During the MLP’s second-quarter conference call CEO Angeliki Frangou noted that the long-awaited retirement of older shipping capacity globally was proceeding at last, with scrapping running at the highest rate since 1986. That will progressively benefit Navios going forward, as its 18 dry-bulk vessels have an average age of just 5.1 years. Some 20 percent of the global dry bulk fleet is now more than 20 years old and is likely to eventually be shut down, particularly with steel prices high enough to recoup nearly 30 percent of their cost.

On the leverage front, Navios’ net debt to asset value fell to 31.9 percent in the second quarter of 2011. And there are no meaningful debt maturities until 2017, when a loan comes due and a credit tranche is up for renewal.

Navios’ second-quarter distributable cash flow covered the payout by a solid 1.15-to-1 margin. For her part, Ms. Frangou assured investors during the second-quarter call that “the distribution is at no point at risk” thanks to a “strong balance sheet that cannot undermine in any way, state or form the distribution and that distribution will grow in a consistent way.” That’s about as strong an endorsement of the payout as you’re likely to hear from any company with a yield of nearly 11 percent.

One question we’ve received from more than a few readers is that if Navios is so solid, why has its unit price lost ground in recent months. With every analyst following the stock rating it either buy or hold, it’s not fair to blame Wall Street. Institutions–which don’t share the tax advantages individuals do owning Navios–have also been net buyers.

Rather, the explanation seems to be a fundamental misunderstanding of just how Navios operates and its profound differences with other dry-bulk shipping companies–along with some shrill calls in the financial media to sell all shippers, regardless of pedigree. Such is the way the market works in the short term.

Long-term investors, however, will continue to build wealth with this unique company, as it boosts assets, cash flow and distributions relentlessly in coming years. If you haven’t already bought into Navios Maritime Partners, now’s a great time to do so up to our buy target of 20.

Penn Virginia Resource Partners LP (NSYE: PVR) is also lifting its quarterly dividend, a 2.1 percent boost to 49 cents per unit. That’s the second increase in as many quarters, a good sign the taking of the general partner interest “in house” is paying off with higher distributable cash flows for the limited partners.

The owner of coal royalty lands and operator of a midstream natural gas system posted record quarterly cash flow, up 54.3 percent from year earlier levels. Distributable cash flow (DCF) after $6.7 million for maintenance capital expenditures came in at $34.1 million, up 17.2 percent. And net income adjusted for one-time items rose 7.6 percent. DCF coverage of the distribution was roughly 1-to-1 for the quarter, and 1.1-to-1 for the six months.

The keys were the acquisitions of the Antelope Hills gas processing plant and related midstream assets and additional coal assets in the Illinois Basin. The company also boosted its gathering system in the Marcellus Shale region. In addition, coal royalty tons rose 13.5 percent, while revenue per ton surged 12 percent. And income from the natural resource management segment was up 27 percent.

The natural gas midstream results were driven by a 43.8 percent jump in system throughput. That was spurred by a 55.4 percent surge in volumes at the Panhandle (Texas) systems, which are 68.3 percent of overall traffic. Marcellus Shale region throughput rose 19-fold and has immense upside at 8.3 percent of current overall system throughput. Rising volumes lifted profit, though margins per unit shipped dipped due to a greater reliance on lower risk, lower margin “percent of proceeds” and fee-based contracts.

Penn Virginia spent $38.9 million on internal growth projects and $26.8 million on acquisitions during the quarter. And it anticipates spending $180 million to $200 million in growth capital for the full year, two-thirds in the Marcellus shale. That should keep cash flow on the rise going forward. There are no debt maturities before $1 million in first-lien loans mature in April 2016, meaning there’s no near-term refinancing risk.

A greater reliance on fee-based businesses and less dependence on commodity prices appears to have emboldened management to translate that growth and balance-sheet strength into distribution growth, even as the pace of asset growth continues. Management has boosted its DCF guidance range for 2011 to $145 million to $160 million, up from a prior $140 million to $150 million. That’s at least partly dependent on the health of global coal markets, which is why Penn Virginia is an Aggressive Holding. But this is perhaps the lowest risk, high yielding bet on coal around. Buy Penn Virginia Resource Partners up to 29 if you haven’t yet taken a position.

Here are second-quarter earnings announcement dates for the remainder of the MLP Profits Portfolio. All dates are confirmed. We’ll review the numbers for each in the coming weeks.

Conservative Holdings

• Enterprise Products Partners LP (NYSE: EPD)–Aug. 9
• Genesis Energy Partners LP (NYSE: GEL)–Aug. 5
• Magellan Midstream Partners LP (NYSE: MMP)–Aug. 3
• Spectra Energy Partners LP (NYSE: SEP)–Aug. 4

Growth Holdings

• DCP Midstream Partners LP (NYSE: DPM)–Aug. 3
• Energy Transfer Partners LP (NYSE: ETP)–Aug. 3
• Inergy LP (NYSE: NRGY)–Aug. 9
• Kayne Anderson Energy Total Return Fund (NYSE: KYE)–N/A (fund)
• Targa Resources Partners LP (NYSE: NGLS)–Aug. 8
• Teekay LNG Partners LP (NYSE: TGP)–Aug. 11

Aggressive Holdings

• Encore Energy Partners LP (NYSE: ENP)–Aug. 4
• Legacy Reserves LP (NSDQ: LGCY)–Aug. 3
• Regency Energy Partners (NSDQ: RGNC)–Aug. 4