economy
These high-yielding energy plays could be a ‘win/win,’ regardless of what happens with oil, Bank of America says
Master limited partnerships can offer solid income and hold up even as oil prices swing.
TL;DR
- Oil prices have experienced sharp swings, impacting stock performance.
- Master limited partnerships (MLPs) are identified as a potential income-generating investment in the energy sector, regardless of oil price direction.
- MLPs offer attractive dividend yields (around 3%) and are currently valued below historical averages.
- Unlike C-corporations, MLPs are not subject to federal income taxes, but investors (limited partners) are taxed on distributed income.
- Investors receive a Schedule K-1 form for tax filing, which may necessitate filing extensions.
- Recommended investment plays include the Tortoise North American Pipeline Fund (3.3% yield) and Global X MLP & Energy Infrastructure ETF (4.1% yield), both up approximately 20% in 2026.
- Energy Transfer, a natural gas play, offers a 7.1% dividend yield and has agreements with Oracle and CloudBurst Data Centers.
- The shutdown of Qatar's liquefied natural gas production may lead to increased demand for U.S. LNG, potentially boosting related investments.