In review of 2016 market returns, some of the best returns occurred in master limited partnerships (MLPs).  Better yet, this happened in closed-end funds (CEF) setup to invest in MLPs.  Some of these CEFs produced price returns above 70% in 2016 while offering monthly dividends with annual dividend yields greater than 6%.  In 2016, the S&P 500 had a price return of 9.84% and 12.25% including dividends.  The CEFs we have identified were a significantly better investment than the general market in 2016.

Would you be interested in having the opportunity of buying the best performing CEFs at a discount price to net asset value (NAV).  As an investor, you should know that a CEF trades like a stock in the market with price action from market trades.  The CEF also has a valuation of the asset it has in the fund which are priced as a net asset valuation.  The NAV is the actual valuation of the CEF but the market price of the CEF will be different.  This variation between the NAV and market price creates a premium or discount market price for a CEF.  A prudent investor will look to purchase CEF share when they are trading at a discount.

In 2016, two CEFs with the best returns include Neuberger Berman MLP Income Fund (NML) and the First Trust New Opportunities MLP and Energy Fund (FPL).  Here is a profile of each CEF:

FPL is to seek a high level of total return and will seek to provide its Common Shareholders with a vehicle to invest in a portfolio of cash-generating securities, with a focus on investing in MLPs and MLP-related entities in the energy sector and energy utilities industries that are weighted towards non-cyclical, fee-for-service revenues, The Fund will invest at least 65% of its Managed Assets in equity securities issued by energy sector MLPs and energy sector and energy utilities MLP-related entities.

In the past year, FPL had a price return of 75.72% which is an outstanding return.  It currently trades at $13.46 which is a 3.6% discount to its NAV.  For income investors, it pays monthly dividends with an annual yield of 9.36%.  It has declared a dividend distribution of $0.105 per share in February.

NML seeks total return with an emphasis on cash distributions by investing in master limited partnerships ("MLPs"). Under normal market conditions, the Fund invests at least 80% of its Managed Assets in MLPs. The Fund also may invest up to 20% of its Managed Assets in income-producing securities of non-MLP issuers, such as common and preferred equity securities. The Fund's investments in MLPs are currently expected to emphasize companies that the portfolio managers believe have growth potential and operate in the midstream natural resources sector.

In the past year, NML had a price return of 96.56% which is nearly a double in price.  It currently trades at $9.71 which is a 12.2% discount to its NAV.  For income investors, it pays monthly dividends with an annual yield of 6.8%.  It has declared a dividend distribution of $0.055 per share.

Bottom line: If you are an income investor looking for monthly dividends, these CEFs are worth evaluation as additions to your portfolio.  Energy prices have rebounded from their lows in 2016 but should remain stable in 2017.  While the price advance will likely level off in 2017, the monthly income will keep pace with above market returns.