fbpx
QQQ
+ 9.45
304.69
+ 3.01%
DIA
+ 6.79
301.99
+ 2.2%
SPY
+ 9.42
370.59
+ 2.48%
TLT
-2.06
145.18
-1.44%
GLD
-0.29
162.13
-0.18%

3 Reasons To Invest In MLPs

by
August 8, 2014 10:36 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
3 Reasons To Invest In MLPs

Of the many methods that resulted in Warren Buffett becoming, well, Warren Buffett, was his willingness to invest in unusual opportunities. Shareholders of Berkshire Hathaway (NYSE: BRK-A) are surely happy with his strategies.

Master Limited Partnerships (MLPs) may be just such a profitable, unusual opportunity. An MLP is a publicly traded partnership.

Lots of Choices

The bulk of MLPs in the market today are for oil and natural gas pipelines, and more of those are coming. Royal Dutch Shell (NYSE: RDS-A) recently announced plans spin off its mid-stream pipeline into an MLP through an initial public offering. BP (NYSE: BP) and Occidental Petroleum (NYSE: OXY) are considering doing the same.

With lots of MLPs in the market and more to come, they can be bought in a diversified way, balancing out location, fuel, and more.

Related Link: 3 Sectors That Should Fear China

High Yield

Known for their high yields, MLPs are one of the best income classes on the market. As but one example, Kinder Morgan Energy Partners (NYSE: KMP) has a dividend yield of almost 7 percent. The dividend yield for El Paso Pipeline Partners (NYSE: EPB) is more than 7.7 percent. That easily tops the yield of Big Oil stocks such as Occidental Petroleum and Royal Dutch Shell.

Tax Advantages

MLPs have a pass-through tax structure. Owners do not suffer the double taxation of other investments. There is tax when the MLP is sold, as the income is treated as return of capital at that time.

For the right investor, MLPs are a very attractive income vehicle with tax preferences in a booming sector!


Related Articles

3 Reasons To Be Bullish About Peabody Energy

Why BofA Securities Is Overweight Energy Stocks In 2021

Energy sector investors have had another brutal year in 2020, with the Energy Select Sector SPDR Fund (NYSE: XLE) on track to finish the year down more than 34%. Yet BofA Securities said this week that it is betting on a big rebound and rating the energy sector Overweight in 2021. read more

How EVs Are Forcing A Relationship Change Between OEMs, Energy Suppliers, Governments

BP Could Be In The Early Innings Of A Multi-Year Inflection