Company Profile: Devon Energy Corp.
The oil and gas exploration and production sector has significantly expanded over the past couple years, both domestically and around the world. With the advent of horizontal drilling and hydraulic fracturing, the U.S. is poised to overtake Saudi Arabia to become the world’s biggest oil producer before 2020, according to a new forecast by the International Energy Agency. Several oil and gas exploration and production companies are well positioned within the newly booming domestic industry [for more energy news and analysis subscribe to our free newsletter].
5 MLPs With Payout Ratios Under 90%
Master Limited Partnerships (“MLPs”) are well known among investors for their stellar yields, but they can come at the cost of a high payout ratio. By comparing dividends to profits, the payout ratio is commonly used to determine the sustainability of a dividend yield. MLPs often have higher payout ratios due to their flow-through status, but investors should seek out payout ratios below 90% if they are concerned about long-term sustainability [for more MLP news and analysis subscribe to our free newsletter].
BP’s Stock Struggles Amid Key Trial
In early 2010, British Petroleum (BP) was at the center of one of the worst oil spills in U.S. history, as an explosion on the Deepwater Horizon rig caused millions of gallons of oil to flow into the Gulf claiming 11 lives. Also involved were Transocean (RIG) and Halliburton (HAL), with each company doing their best to escape the weight of the charges. As BP goes on trial, along with Transocean and Halliburton, its stock has been taking a hit as investors hold their breath for the outcome [for more oil news and analysis subscribe to our free newsletter].
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].
Under The Hood: Junior MLP ETF (MLPJ)
The new year has proven to be surprisingly kind to equity investors as “risk on” sentiment has prevailed on Wall Street. Nonetheless, savvy investors remain wary as stocks can just as easily give up all of the profits accumulated on the year, if not more, at the first signs of economic turmoil. With interest rates around the globe expected to remain at ultra-low levels throughout 2013, the hunt for meaningful yield continues, which brings our focus to the newly launched Junior MLP ETF (MLPJ) from Global X [for more MLP news and analysis subscribe to our free newsletter].
How Are MLPs Taxed?
When rates hover around zero, investors often find themselves looking towards more “exotic” asset classes to gain yield. Everything from convertible bonds to emerging market debt becomes commonplace in portfolios. One of the more popular choices is master limited partnerships or MLPs. The corporate tax structure allows for investors and the sponsoring companies to reap some pretty nice benefits, including big dividend distributions [for more MLP news and analysis subscribe to our free newsletter].
iPath Debuts New MLP ETN (IMLP)
The MLP ETF space can add one more to its list, as the 12th fund made its debut on Friday. The iPath S&P MLP ETN (IMLP) hit the market and looks to compete with some of the biggest names in the space. The MLP sector has been one of the most talked about in recent years as paltry yields around the fixed income sector have led to investors finding their dividends in different places [for more MLP news and analysis subscribe to our free newsletter].
