investing in MLPs
Investing in master limited partnerships (MLPs) has long been known - and loved - as a reliable income source.
MLPs generate stable cash flow by charging user fees for the transportation of oil, gas, and other fuels through pipelines and other energy infrastructure.To continue reading, please click here...
The Best MLP Investments You Can Make Today
One of the very best choices any investor can make when looking at master limited partnership (MLP) investments is going for those in the energy sector.
These MLPs offer investors both income and growth: Income through relatively high yields, and growth thanks to their involvement in America's booming energy industry.
As Money Morning Global Investing & Income Strategist Robert Hsu told readers Aug. 15, a $2,500 stake in energy MLPs 10 years ago is worth $10,000 today - twice the return of the S&P 500.
- The Benefits of Investing in Master Limited Partnerships
Investing in Master Limited Partnerships 2013: Three Stocks with Yields Over 8%
Anyone who wants high-yield stocks in their portfolio should be investing in Master Limited Partnerships (MLPs).
MLPs are special kind of dividend stocks. Technically, MLPs are tax-advantaged limited partnerships whose units are traded on exchanges just like common shares of stock.
But what sets MLPs apart from most stocks is that MLPs pay very high yields - typically 5% to 12%. This is because U.S. law mandates that they pass most of their income on to unit holders.
And yet, because MLPs are limited partnerships, ordinary shareholders do not suffer unlimited liability as they would in a regular partnership and so can treat their investment as if it was in an ordinary company.
That's why investing in MLPs is such a smart strategy for the dividend-hungry investor.
However, the unusual nature of MLPs -- their income is not taxed at the partnership level - means the government only allows businesses deemed essential to the U.S. economy and national security to adopt the model.
In practice, that typically means companies engaged in the extraction, storage, and transportation of energy commodities like oil, natural gas, and coal, although MLPs do crop up in other industries, such as shipping.
While knowing how to invest in MLPs is great to boost your income, as stocks they usually don't have a lot of upside unless the underlying commodity experiences a price spike.
Nevertheless, the exceptionally high dividends make investing in MLPs worthwhile for at least a portion of a portfolio.
Investing in MLPs: Three Set to Soar on Shale Expansion
If you're one of the millions of investors trying to find decent yielding income investments, there's one place you should be looking -- Master Limited Partnerships (MLPs).
That's because if you play your cards right you can pocket a cool 6% to 10% or more from investing in MLPs - while the yield on the broad market barely cracks 2%.
As an added bonus, 80% to 90% of distributions from MLPs are tax-free until you sell.
As America's newfound shale formations spew forth million of barrels of oil and gas an infrastructure boom will be needed to store and ship it.
And a few select MLPs will be primed to cash in.