Conservative capital spending by upstream players and gradual shifting to renewables may hurt the demand for midstream players' assets. Enterprise (EPD), Energy Transfer (ET) and Plains All American Pipeline (PAA) are surviving the industry challenges.
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Midstream MLP investments have continued to offer compelling income, with several companies increasing payouts. Energy markets have been volatile in recent weeks.
Alerian MLP ETF is a nearly $9 billion energy infrastructure MLP fund, outperforming the market and offering a convenient investment option. The fund's top holdings, including Enterprise Products Partners and MPLX, constitute almost 60% of assets, providing high single-digit dividend yields. Despite a 0.85% management fee, the ETF simplifies tax complexities, avoiding K1 forms and offering an 8% corporate dividend yield.
Summary There are two types of funds that own Master Limited Partnerships (MLPs). Funds are delineated by their weighting to MLPs and their resulting tax treatment.
Following a careful analysis of the Zacks Oil and Gas - Refining & Marketing MLP industry, we advise focusing on companies like TRGP, GLP and CAPL.
Your income portfolio needs to have low-risk and stable investments to reduce volatility and increase income stability. Enterprise offers both strong income and capital appreciation. This company is one of the rarest types of MLPs, one that works for unitholders, not against them.
It is rare to find sustainable 10%+ yields from common equities. However, there are exceptions to this. We share our favorite 10%+ yielding MLP and BDC right now.
Investors seeking to access the energy infrastructure space through passively managed vehicles have a menu of options, including half a dozen passive ETFs. Beyond ETFs, investors may also consider exchange-traded notes (ETNs).
EIPI, an ETF formed from MLP CEFs, uses a covered call strategy to reduce volatility and enhance income, making it compelling for investors. The fund's mix of MLPs, Oil & Gas Majors, and utilities, combined with active management, positions it well for a range-bound market. EIPI's innovative covered call structure targets low volatility and capital gains, outperforming peers like AMLP on a risk/reward basis.
Investors may prefer to own Master Limited Partnerships (MLPs) through an ETF for diversified exposure and to avoid receiving a Schedule K-1. Due to the pass-through structure, investing directly in an MLP will result in receiving a K-1 during tax season.
Summary Midstream companies are expected to continue generating free cash flow and prioritizing returns to shareholders. A muted oil outlook can favor midstream given its defensive qualities, namely fee-based businesses and generous yields.