Master limited partnerships are usually considered stable, income-focused investments. But our favorites have been strongly outperforming the typical S&P 500 stock on price as well.
Our new Aggressive Portfolio recommendation is a leveraged play on a midstream natural gas business with extensive coal interests.
Conservative Holding Enterprise Products Partners LP’s (NYSE: EPD) exposure to the Gulf of Mexico will have little impact on results. The inevitable trend toward onshore exploration and production will actually help the company.
The need to build out infrastructure to support onshore US unconventional gas, NGLs and oil production will drive growth for energy-focused master limited partnerships. The Macondo disaster will accelerate efforts to boost onshore output, outweighing any negative impacts from lower production volumes in the Gulf of Mexico.
A fear-driven selloff offers a golden opportunity to lock in high, tax-advantaged yields from fast-growing master limited partnerships.
Over the past year energy-focused MLPs have become more popular for the very same reasons as in the mid-1980s: high yields and tax advantages. Forget yields–focus on fundamentals when making your investment decisions.
MLPs haven’t been spared in this selloff. But a history of rising distributions and prospects for future growth make our Portfolio holdings compelling buys right now.
Master limited partnerships continue to enjoy access to capital at favorable terms–a key to growing distributions.
Don’t use stop-losses to manage your MLP positions. Last week demonstrates that a little discretion amid chaos will lead to longer-term profits.
Many of our favorite master limited partnerships have pulled back to attractive valuations. Now is the time to buy.
