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Investing in MLPs – Resurgence?

Last update on: Mar 14 2020

The latest Barron’s has an update on master limited partnerships (MLPs) and comes to a positive conclusion. (Subscription probably is required.) The article says the restructuring and distribution cuts largely are in the past. Distributions from many MLPs should increase this year, and the sector should recover with the rise in energy prices and global economic growth.

Yet the industry is rebuilding and rebounding. MLP valuations appear cheap, and U.S. energy production is thriving, lifting cash flows for pipeline firms. Domestic oil production recently hit a record high of 10.5 million barrels a day. Natural-gas production is also booming, thanks to strong demand from utilities, petrochemical companies, and foreign nations.

Meanwhile, MLPs are now self-funding more capital expenditures and scrapping byzantine ownership structures. Several have converted to C corporations that pay standard dividends. The changes could attract more pension funds, mutual funds, and other big investors to replace individual investors, analysts say.




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