Williams Partners LP (NYSE: WPZ) has been a long-term holding for two key reasons: the MLP’s strong relationship with its general partner, Williams Companies (NYSE: WMB), and the potential for the partnership to benefit from attractive long-term returns in the gas gathering and processing business.

Both factors have remained major tailwinds for the LP. Last year, in the dark days of the financial crisis, the general partner voluntarily waived its incentive distribution rights (IDRs) to shore up confidence in Williams Partners LP’s ability to maintain its payout.

And earlier this year, Williams Companies announced it was merging sister MLP Williams Pipelines Partners (NYSE: WMZ) into Williams Partners LP, a deal we covered at length in A Transformative Deal, a Flash Alert issued on Jan. 19, 2010. The surviving entity, Williams Partners LP (NYSE: WPZ), derives its revenues from an attractive and well-diversified mix of fee-based pipelines and more commodity-sensitive businesses such as gathering and processing. After the merger, Williams Partners LP is a far steadier and less commodity-sensitive MLP. Lower risk spells higher valuations; units of Williams Partners LP have soared since the merger was announced in mid-January.

Meanwhile, the gathering and processing business has improved markedly. The low price of gas relative to crude boosts the profitability of processing gas. And ethane derived from gas is in high demand as a feedstock for the production of ethylene, the basic building block of most plastics.

I still like Williams Partners LP’s core business and think the MLP is well-positioned to thrive over the long haul. But due to strong price appreciation, units of Williams Partners LP yield around 6.3 percent, making the partnership one of the lowest-yielding plays in our coverage universe. The MLP is likely to raise its distribution to an annualized $2.63 for the next quarter, but even that hike will only boost the yield to about 6.5 percent. This is less than established giants like Proven Reserves bellwethers Enterprise Products Partners (NYSE: EPD) and Kinder Morgan Energy Partners (NYSE: KMP).

All the news looks bright for Williams Partners LP today, but often the best time to sell and take a capital gain is when the future looks most promising–especially when all the good news is priced into the units.  And the stock is up 75 percent in a period when the S&P 500 has traded lower. Sell Williams Partners LP and take a solid profit of 75 percent.

I am also recommending that you raise your stops for Gushers holding Valero Energy (NYSE: VLO) from $15.65 to $16.95. Subscribers who have yet to take a position in Valero can buy the stock on dips under $19.50.

In the Feb. 17, 2010, issue of The Energy Strategist, A New Dark Age for Refiners, I explained why the next few years are likely to be challenging for the refining industry. But I also outlined my rationale for a shorter-term trade in Valero Energy between now and May.

As I predicted, the normal seasonal jump in refining margins is underway; Valero’s stock price has jumped around 10 percent since my recommendation. To control risk, I am tightening my stop-loss recommendation. I expect the stock to jump to around $23 in the coming weeks and will update subscribers via Flash Alerts when I think it’s time to take profits or raise the stop further.