For investors, master limited partnerships (just MLPs for short) continue to pay the goods with weighty yields and capital appreciation. The midstream sector has benefited from rising natural gas and oil production and has been on fire the past few years.
Big money can be made in owning the critical infrastructure required to bring energy from wellheads to end users as strong stable cash flows and high tax-deferred distributions await investors who take the MLP plunge.
Given this asset class’s propensity to throw off those big distributions in good times and bad, it’s no wonder why pipelines are popping up in more portfolios.
However, as the sector has caught the attention of John Q. Public, top MLPs — such as MPLX, LP (KMP) and Phillips 66 Partners, LP (PSXP) — are now yielding far less than the sector’s historical norm. In this case, only around 4%. While that’s all well and good — MLPs don’t have to have enormous yields to be good investments — sometimes you just want/need a fat dividend to pay the bills.
Luckily, there’s plenty of midstream, pipeline and other firms structured as master limited partnerships that are paying fat yields in excess of 6%.
Here’s some of the top choices.