Published Thu, 19 Nov 2020 14:28:17 -0500 on Seeking Alpha
Seeking AlphaETF Analysis | Basic MaterialsALPS Alerian MLP ETF: Attractive 11.7% Yield As Midstream Energy Gains MomentumNov. 19, 2020 2:28 PM ET|| About: ALPS Alerian MLP ETF (AMLP), Includes: MLPXby: BOOX ResearchBOOX Research Conviction DossierOutside-the-box trade ideas through a powerful multi-sector strategy.SummaryThe AMLP ETF has been pressured this year from the collapse of energy prices and distribution cuts from its underlying holdings.
Improving macro conditions and climbing prices for oil and gas support more positive sentiment towards the energy infrastructure segment.
We are bullish on AMLP and like the value in the fund which offers an attractive 11.7% yield.
ALPS Alerian MLP ETF (AMLP) invests in Master Limited Partnerships "MLPs" involved primarily in energy infrastructure. This is a market segment that has been under significant pressure over the last decade going back to the collapse in energy prices in 2014 and again from this years' COVID-19 pandemic. Indeed, many MLPs that were highly leveraged faced significant losses with a reset of long-term earnings expectations and questions regarding the sustainability of the operating model. AMLP is down by nearly 34% in 2020, representing a significant underperformance to the broader market. Still, we believe the fund offers compelling value with an 11.7% yield with the environment supported by an improving macro outlook. The MLPs within the AMLP portfolio can be viewed as survivors well-positioned to emerge stronger and generate positive returns going forward.
Companies structured as MLPs receive a tax benefit as their profits are not taxed at the entity level but instead passed on to investors known as the unitholders who are subject to their share of the partnership income liability. Unitholders enjoy the typically high-income potential as there is an incentive for the MLPs to distribute as much of their cash flow as possible. Likewise, the advantage for the MLP entity... Read more
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