Master Limited Partnerships
English: Natural gas burning (Photo credit: Wikipedia)
If you are looking for good current income and commodity upside, oil and gas limited partnerships are an excellent investment option. There is also the potential for some tax deferral of distributions. The downside is that tax reporting is more complex than other types of investments, but that's a small price to pay for the additional diversification that this investment class provides. A few of my favorite MLP's are Targa Resources Partners LP (NGLS), Vanguard Natural Resources LLC (VNR) and Linn Energy LLC (LINE). NGLS is primarily in the natural gas processing business, while VNR and LINE are in the business of acquiring and developing long-lived natural gas and oil properties. These entities hedge their exposure to commodity risk and run their businesses to maximize cash flow available to distribute to limited partners. All three of these have performed well over the past couple of years and continue to offer a dividend yields in the 6% to 7% range.
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