Buy This Growing MLP and Watch Your Income Roll In

When it comes to income investing, energy master limited partnerships (MLPs) pretty much have it all: a chance to participate in the domestic energy boom, which offers substantial growth, while earning great yields as well. What’s more, they also make a solid inflation hedge, since any spike in energy prices (or consumer prices in general) will send money rotating into energy all day long. And perhaps best of all, the income is tax-advantaged — as an MLP investor, you avoid paying taxes on the majority of your holding for as long as you own it.

One of my favorite MLPs is BreitBurn Energy Partners LP (BBEP), a 9.4% yielder that pays monthly distributions. BreitBurn Energy is a privately held company that spun off a portion of its assets to create BBEP as a way to realize more value. BreitBurn then occasionally drops in new assets, which continues to feed the reserve life and grow the business well into the future. This setup makes BBEP an outstanding fit for those seeking high yield and strong fundamentals … and I expect the company to continue to kick out very strong income going forward. BBEP has also made some rather bold moves recently in terms of acquisitions. In July, BreitBurn Energy Partners LP announced the acquisition of QR Energy Partners LP (QRE) in a one-for-one unit exchange with a value of $3 billion. BBEP was already one of the largest upstream oil and gas MLPs, and this deal will push it firmly into No. 1 territory, allowing it to control 57,300 barrels of daily production and giving it a total value of around $7.8 billion.

Source: InvestorPlace

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