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Alerian MLP ETF: High Dividends In An Optimistic Industry

Published Fri, 06 Jul 2018 18:34:49 -0400 on Seeking Alpha

Global O&G Market WTI oil prices have risen over the past several months and are likely to continue rising. This is due to a variety of factors.
Iran restrictions OPEC not producing as much as expected Recently, the United States accelerated their deadline for crude oil purchasers to stop buying Iranian crude oil. This announcement sent oil prices up, WTI by 3% and Brent by 2%, not because the sanctions were unexpected, but instead because the timeline had dramatically shortened. This increased the pressure on other oil exporters, mainly Saudi Arabia, to pump more oil ahead of schedule to make up for the soon lack of Iranian crude.
Additionally, OPEC announced that their planned oil production increases were not going to be as much as many countries were expecting or wanting. OPEC does not want another supply glut like we saw a few years ago. Upon announcement, Brent prices rose just over 2%.
American MLP Companies MLPs, master limited partnerships, are tax-advantaged structures This is a great way to profit off of the increase in oil prices while remaining somewhat insulated from a huge price decline. They are designed to encourage investment in industries with high CAPEX that is a barrier to entry. In this case, midstream oil and gas companies.
These companies pay hefty dividends, anywhere from 5% to 10%, at a very consistent rate. That being said, the downside to their large dividends, however, is there is very little to no actual growth of the original... Read more