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News

MLPs Undergo Some Growing Pains

Aaron Levitt Dec 31, 2017


With interest rates so low, many investors have been forced to look outside their comfort zones to find yields. A host of different asset classes got the nod from income-starved investors, one of the chief places being master limited partnerships (MLPs).

Investors were drawn to the steady payouts and high dividend yields of North America’s pipeline sector. And then the bottom fell out.

Since 2014, MLPs have been in the dog house. A variety of factors have conspired against them and lately, the hits keep coming. The question now is, are MLPs still worthy of your dividend dollars?

Not Tied to Oil Prices

One of the main reasons investors were drawn to the high yields of MLPs was their perceived safety. Many market pundits, including myself, highlighted the fact that many MLPs were pipeline companies focused on moving crude oil, natural gas and other products through their systems. And here, the focus was on volume of product, not the price of the underlying commodity. This was true for the vast majority of MLPs’ histories.

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