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Terra Nitrogen Company, LP

Terra NitrogenYield (as of 8/8): 7.6%

The bulk of MLPs lie within the pipeline and midstream sector. However, there are plenty of other firms that have taken on the corporate tax structure.

One of the best is fertilizer play Terra Nitrogen Company, LP (TNH).

Terra owns just a single asset — a nitrogen manufacturing facility in Verdigris, Okla. However, that one factory manages to produce 1.9 million tons of urea ammonium nitrate solutions (UAN) and 1.1 million tons of ammonia annually. These are basic ingredients for most nitrogen fertilizers as well as many industrial products.

They also happen to be made from cheap, abundant U.S. natural gas.

That has allowed TNH to realize some of the lowest feedstock costs versus many of its international peers, and the firm has been able to enjoy juicy crack spreads on its “refining.” Those juicy margins have trickled down to shareholders in the way of capital appreciation and strong unit distributions. Terra Nitrogen currently yields a hefty 7.6%.

Article printed from InvestorPlace Media,

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