Earn a 6.3% Yield From This Oil “Toll Booth”

Today, we look at a leading energy “toll-booth operator.” U.S. oil production has surged over the past few years. That has required a vast buildout of energy infrastructure, like pipelines, storage tanks, and processing terminals. Drillers have to use these facilities to get their product from wellhead to market. It works like a toll booth every oil producer must pass through. Meanwhile, the folks who run the toll booth get to collect the cash.

Today, we can see this model pay off with another energy leader: Magellan Midstream Partners, L.P. (NYSE:MMP). This $14.0-billion company owns 13,000 miles of pipelines nationwide, shipping oil, natural gas, diesel, and heating fuel. So whenever someone needs to move a barrel of crude, Magellan collects a commission. Traffic on these energy toll roads has soared in recent years. U.S. oil production soared to a new record high in August of 11.346 million barrel per day, thanks in large part to new share drilling technology. The boom has overwhelmed existing pipeline infrastructure, resulting in barrels piling up outside of terminals.

Source: Income Investors

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