Dividends4Life: 3 High-Yield Energy MLPs to Buy Now

3 High-Yield Energy MLPs to Buy Now

Posted by D4L | Tuesday, October 21, 2014 | | 0 comments »

For investors seeking high yields, it’s hard to overlook master limited partnerships (MLPs) and their eye-popping distributions — particularly in the booming energy sector. But although most energy MLPs blow away bonds (and most dividend stocks) with their high yields and tax advantages, MLPs aren’t a one-size-fits-all asset. First a few facts: MLPs are similar to publicly traded real estate investment trusts (REITs) in that they’re structured a certain way that creates tax advantages. In return, they must return certain amounts of income back to shareholders.

However, the tax advantages of MLPs don’t necessarily extend to shareholders — the tax reporting requirements can also be more complex. And while REITs are required to distribute 90% of their income to shareholders, MLPs are only required to distribute the amounts set forth in the partnership agreement — although they can (and often do) increase that amount. The lion’s share of high-yielding MLPs can be found in the energy sector, so let’s look at a few choices for those looking to tap the partnership well for income: BreitBurn Energy Partners (BBEP), Northern Tier Energy LP (NTI) and Energy Transfer Partners (ETP).

Source: InvestorPlace

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