Right now there’s an excellent sale happening in the oil and gas pipeline sector. As you know, this sector has undergone an incredible correction since last summer, as it has been pressured by the huge pullback in energy prices. But this is only a short-term correction in a secular bull market for oil and natural gas.

Here’s why: Energy prices continue to be a function of demand and production, and it can be influenced by factors like supply interruptions, political events, hedge fund speculation and OPEC policy.

Pipeline operators, on the other hand, are dependent on the sheer demand for oil and gas by commercial and residential end users in order to collect their fees and make a profit.

And since we all know that high demand for energy will remain a strong trend, as people need to gas up their vehicles and heat their homes, we’ll see crude oil and natural gas prices will resume their uptrend.  

When that happens, we’ll see more emphasis placed on natural gas, because its development, production and transportation costs become competitive with oil at around $80 per barrel.

As such, companies like Kinder Morgan Energy Partners (KMP) will benefit greatly as its mix of transported products should become an ever-larger percentage of its business.

That’s why the current sale in the oil and gas pipeline sector is giving us an incredible entry point to buy Kinder Morgan.

A Solid 9% Yield

Kinder Morgan is the likely beneficiary from the long-term bull market for oil and natural gas because it is one of the largest publicly traded master limited partnership (MLP) in America. It has an enterprise value of $20 billion.

In addition, the company is:

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In addition, the company is:

• The largest independent transporter of refined petroleum products in the United States.
• A major transporter and storage operator of natural gas.
• The largest transporter and marketer of carbon dioxide for enhanced oil recovery projects in North America.
• The largest independent terminal operator in America.
• A significant transporter of crude oil and petroleum products from Alberta to British Columbia, Washington State and the Midwestern United States.

Basically, Kinder Morgan is the 800-pound gorilla in the oil and gas pipeline business.

The company’s success recently has been led by the carbon dioxide, natural gas pipelines and terminals business segments. And its earnings have been exceptionally strong when you consider the reduced gasoline demand, and the increases in construction and fuel costs that are impacting capital expansion and existing operations.

But you must bear in mind that master limited partnerships are really based off cash flow, so they’re more of a cash flow story than an earnings story. So they pay income distributions that come out of cash flow. While no company is 100% immune to external conditions, KMP continues to demonstrate that a diversified portfolio of stable assets is capable of generating consistently strong cash flow, even in very difficult market conditions.

Case in point: Last year, KMP had clash flow of $4.15 per share, up 14% from the $3.55 per share in 2007. So, in turn, Kinder Morgan increased their distribution, which is dramatic considering the declining stock market. Right now, the company boasts a solid 9% yield with distributions made on a quarterly basis.

There’s no denying that its elegantly simple business model is working like a charm, and as long as America’s population trend keeps pointing north — something we can count on — end-user demand and the numerous other applications will increase in the years ahead.

Whether it’s a play on a weakening currency or an investment in a booming business, Bryan Perry’s top Cash Machine holdings are set to deliver consistent, reliable and impressive yields in even the worst of times. Click here for details on how join Cash Machine risk-free for 90 days.