For investors, master limited partnerships (MLPs) continue to pay the goods with fat yields and capital appreciation. Benefiting from rising natural gas and oil production, the midstream sector has been on fire. Big money can be made in owning the critical infrastructure required to bring energy from wellheads to end users.
Even more can be made if all those pipelines, storage tanks and gathering systems are placed in an MLP because of a tax structure that provides big benefits for individual investors and the sponsoring firms alike. Strong stable cash flows and high tax-deferred distributions — in the 5% to 8% range — await investors who take the MLP plunge.
However, as investor interest swelled, yields on popular MLPs — like Kinder Morgan (NYSE:KMP) or Enterprise Products Partners (NYSE:EPD) — have diminished. That makes these firms less attractive to big yield hunters, even if there’s nothing wrong with KMP and EPD.
For those investors looking for large distributions from their MLPs, jumping off the beaten path is a necessity. With that in mind, let’s take a look at five ignored MLPs with big yields.