Morgan Stanley Cushing MLP High-Income ETN
Dividend yield: 7.3%
The other big index in the MLP sector is the Cushing 30. This popular index equally weights its constituents and focuses on the entire MLP spectrum — not just midstream firms. The Morgan Stanley Cushing MLP Hi-Income ETN (MLPY) takes it a step further by screening and weighting the Cushing 30 by dividend yield.
Among the top holdings for MLPY are upstream/production MLPs like BreitBurn Energy (BBEP), and propane distributors like Suburban Propane (SPH). The fund also includes exposure to shipping and coal MLPs.
MLPY focuses on MLPs with high yield across the entire spectrum, producing a basket of MLPs that yields a huge 7.32%. However, investors should keep in mind that many of these “other” MLPs perhaps aren’t as stable when it comes quarterly payouts.
Distributions from the fund could fluctuate widely, as several of these other sectors are heavily tied to commodity prices or economic conditions. The bright side for MLPY is the fund’s 0.85% expense ratio. Unlike AMLP, MLPY is an ETN and there is no tax liability on behalf of the fund.