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Oil prices are absolutely soaring in 2019. Year to date, WTI crude oil is up more than 30%, including a nearly 3% jump yesterday (Monday).
For the first time in five months, crude oil prices have reached $60 per barrel thanks to OPEC's production cuts.
And while renewable energy is becoming more prevalent, oil will continue playing a massive role in the energy market over the next several decades.
Still, many investors are wary of investing in oil after a volatile 2018. Prices started at $63.70 in January. By July, oil prices had climbed to $70.98. Once December rolled around, oil dropped again to $40 per barrel. Investors who held on all year were looking at a 30% loss by year's end.
Despite the price fluctuations, U.S. crude oil production reached record highs in 2018 of 12.1 million barrels per day (bpd). And in 2019, production is already up 19% year to date.
One of the best ways to play climbing demand and higher crude oil prices is with a master limited partnership (MLP).
And MLPs offer quite a few advantages…
- MLP payments are similar to quarterly stock dividends. They're not treated as income; they're seen as a return of capital. This means your portion of the earnings is tax-deferred up until oil is sold.
- They're also taxed at a lower rate on capital gains instead of the greater personal income rate.
- MLPs are "slow" investments. This means they're inherently much less risky than others.
- They also provide consistent cash flow (a stable income) and consistent distributions of money (that often grow a bit faster than inflation and are tax-deferrable).
- But there's also no double taxation. So, future projects have more available capital. And this makes MLP companies competitive within their industry.
- If you transfer your MLP to another person (like a family member), neither of you will have to pay taxes during that time.
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This company is absolutely booming. First, its net profits increased by 50% last year alone. Beyond that, this company has a dividend yield of 6.44%. That's more than double the yield of the Energy Select Sector SPDR Fund ETF (NYSEARCA: XLE) of 3.04%.
This company also has over 9,000 miles of pipelines for refined product, roughly 800 miles of pipeline for crude oil, and 83 petroleum products terminals.
And now, we're at the beginning of another massive surge in oil stocks. One analyst even says share prices for this company could go up another 27%. That's on top of the 6.44% payouts.
So you won't want to miss out on this MLP to buy…
This Is the Best MLP to Buy Right Now
About the Author
Daniel Smoot is a Baltimore-based editor who helps everyday investors with stock recommendations and analysis. He regularly writes about initial public offerings, technology, and more. He earned a Bachelor's degree from Towson University.