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Five MLPs to Bolster Your Portfolio

Secure Returns for Decades to Come

Written by Keith Kohl
Posted March 8, 2012

Last week, one of my Energy Investor readers expressed concern about his exposure to the wild swings of the market.

The minute he told me so, I had a feeling he took the risk factor a little too far...

The very next thing he asked was, “So how do I limit that risk?”

“Simple,” I said. “Start looking into a few safe, high-yielding MLPs.”

What are MLPs?

Simply put, a Master Limited Partnership is a limited partnership that trades like any other stock on the exchange.

The MLP consists of a general partner (that controls the operation) and limited partners.

Typically, these investments offer distributions that are paid out on a regular basis.

For us, there's only one sector to start hunting for these annual yields...

You Can't Beat Energy

Picking an MLP in the oil and gas industry is a no-brainer. After all, we can guarantee oil and gas consumption will be around for decades.

Forget about world demand for just a second...

Here in the United States, we're heading back into record consumption levels:

Oil and gas demand 3-8click to enlarge

As far as natural gas is concerned, we're already in record demand territory!

Considering oil and gas make up 62% of our total energy demand, even novice traders can recognize the potential profits that can be made over the next several decades...

We've been capitalizing on this notion for years.

Too Good to for Investors to Pass Up

You don't have to tell us twice that there are huge opportunities here for individual investors.

Here's the rub for most people: Generating these profits consistently takes an extraordinary amount of time and effort in your due diligence.

You may not have the time for boots-on-the-ground research or meetings with company execs and CEOs.

You may not have countless hours to spend checking — and double-checking — your potential investment.

You might not have the patience to sift through annual reports, ingesting every snippet of information...

But we do.

So aside from taking our advice when it comes to these little-known plays that are still under Wall Street's radar, owning secure, high-yielding stocks only serves to strengthen your portfolio — and should be a staple for any individual investor.

Generally, I consider an annual yield of about 5% enough to warrant my attention.

Today let's go beyond that range and talk about five Master Limited Partnerships (MLPs) beating the 5% standard.

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Five MLPs to Bolster Your Portfolio

MLPs aren't simply for conservative investors.

In fact, you'd be hard-pressed to find a better stock that can endure severe recessions.

What's more, these stocks haven't just weathered the economic storm since 2008 — many of them have managed to increase their payouts.

And as we mentioned before, our energy demand isn't heading anywhere but up going forward.

Some of my favorite MLPs also happen to be in the oil and gas pipeline sector:

Company Name

Stock Symbol

Annual Yield

Current Price

Spectra Energy Partners

SEP

6.00%

$32.30

Enbridge Energy Partners

EEP

6.70%

$32.00

TC Pipelines

TCP

6.80%

$45.60

Boardwalk Pipeline Partners

BWP

7.70%

$27.6

TransMontaigne Partners

TLP

7.40%

$34.78

Each one of the MLPs above offers a safe, steady return — limiting your risk to the extreme volatility that has become a regular occurrence in today's markets.

Anyone who has put a dime into the markets since 2008 understands the sort of unpredictability that can happen...

It's enough to make the most bullish investors think twice. 

Remember to always try to balance your risk.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.


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