What Are Master Limited Partnerships (MLPs)?

Many energy companies have assets that generate a consistent income over time. For instance, a natural gas pipeline will transport a predictable amount of gas through it each year, generating very stable revenues. These stable revenues often lead to a distribution of earnings to shareholders in the form of a dividend. Unfortunately, investors are double taxed when standard corporations issue dividends – once when the company earns the revenue (corporate income tax) and once when the dividends are paid out (personal income tax). Master limited partnerships (MLPs) solve this problem by eliminating double taxation for revenues derived from qualified sources – as determined by the U.S. Internal Revenue Service. These sources include almost all activities associated with the production, processing or transportation of oil, natural gas and coal assets in the U.S. [for more MLP news and analysis subscribe to our free newsletter].

Posted in Academic Research, Commodity ETFs, Commodity Producers, Energy, MLPs, Natural Gas, WTI | Tagged , , , , , , , , , | 4 Comments

MLPs Are Getting Crushed

Investors knew that the results of the election would bode well for some asset classes and be a hindrance for others, and it appears that one of the losers has come out of the weeds. The MLP sector has been stuck in a downward spiral since Barack Obama was announced the winner of his second presidential term. Romney’s policies were largely considered to be more beneficial for big oil and gas with projects like the Keystone XL Pipeline approval, among others [for more MLP news and analysis subscribe to our free newsletter].

Posted in Actionable Ideas, Asset Allocation, Commodity ETFs, Commodity Producers, Energy, Natural Gas, WTI | Tagged , , , | 11 Comments