Investing involves inherent uncertainties, but income investing with a focus on absolute current income growth can mitigate some risks. Yet, even if such a strategy is devised, risks remain on the income cut side. In this article, I have shared two ~6% yielding picks, one from REIT and one from MLP sector.
MLP ETFs have generated attractive returns for investors, but remain a compelling investment opportunity as valuations in the space have not become overextended. Valuations suggest midstream ETFs still have compelling upside potential, even as the Alerian MLP ETF (AMLP) has generated strong returns for four consecutive years and outperformed broader energy for two consecutive years.
Investing for high yields and for income growth requires different strategies. Yet, sometimes it is possible to find a middle ground by locking in decent yields and growing distributions. In the article I share my three favorite picks for capturing income growth in 2025.
The AI boom, low rates and the lure for dividends make master-limited-partnerships or MLP ETFs hot investments currently.
Following a careful analysis of the Zacks Oil and Gas - Refining & Marketing MLP industry, we advise focusing on companies like TRGP, SUN and WES.
Midstream ETFs are the only segment of energy that has seen inflows in 2024, as broader energy and other subsectors have continued to see outflows. The Alerian MLP ETF (AMLP) has seen $1.2 billion in net flows year to date through November 19.
Western Midstream offers a 9% distribution yield and is growing EBITDA and free cash flow rapidly, making it an attractive investment. The MLP focuses mainly on natural gas assets in the Delaware and DJ Basins and has potential to use its excess free cash flow for other acquisitions or distribution increases. Valued at an enterprise-value-to-EBITDA ratio of 9.1X, Western Midstream is attractively priced compared to industry averages.
My top midstream picks are Energy Transfer, Enbridge, and Enterprise Products Partners, with EPD being the best for durable income. After dissecting the fundamentals of WES, I have concluded that WES definitely deserves a spot in my Top 2 income producing midstream list, ranking just below EPD. In this article, I explain in a detailed manner why I have become so bullish on WES.
In real estate and midstream infrastructure segments, investors have some decent opportunities to find durable income plays. Even though these segments provide attractive tailwinds for income investing, to avoid value traps and capture truly sustainable dividend yielders, there has to be a meaningful due diligence involved. In this article, I present two picks, which offer attractive yields that are supported by defensive and growing cash flows.
The Alerian MLP Index ETN offers exposure to high distributions from midstream MLPs with certain tax advantages over MLP ETFs, making it attractive for income-focused investors. Despite its volatility and underperformance compared to broad-market ETFs, AMJB's 6.2% yield is significantly higher than SPY's 1.23%, appealing for ongoing income. The positive outlook for midstream MLPs, supported by strong utilization rates and declining interest rates, suggests continued growth and higher distributions for AMJB.
Millennial Potash Corp (TSX-V:MLP, OTCQB:MLPNF) told investors that the President of Gabon Brice Oligui Nguema has reaffirmed his support for the company's Banio Potash Project following a visit to the towns of Mayumba and Ndindi on the project. MLP's Gabonese subsidiary, Mayumba Potasse SARL, provided a corporate presentation including the results of its recent Preliminary Economic Assessment (PEA) highlighting the project's potential production timeline.
Following a careful analysis of the Zacks Oil and Gas - Refining & Marketing MLP industry, we advise focusing on companies like Targa Resources, Sunoco LP and CrossAmerica Partners LP.