3 High-Yield MLPs To Buy In April

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Master Limited Partnerships (MLPs) are a hybrid of limited partnerships and public corporations. These companies have a business structure that resembles a limited partnership company, but their shares are traded on stock exchanges. General partners of an MLP are typically the founders and CEOs of a company responsible for its day-to-day operations, while limited partners are generally the shareholders who purchase stocks in the MLP.

While MLPs usually operate as public limited companies, they are taxed as partnerships. This is beneficial because MLPs are not required to pay corporate taxes on their operating profits. The limited partners’ earnings are taxed as personal income per their respective tax brackets. However, for a business to qualify as an MLP, 90% of its revenues must be generated from natural resources and/or real estate businesses.

MLPs represent a profitable investment opportunity given President Biden’s desire to increase the corporate tax rate by seven percentage points to help fund his $2 trillion infrastructure spending proposal. Though most MLPs are a slow growth opportunity due to their capital-intensive operations, they generally offer a stable ROI on operations. With Treasury yields currently trailing recent highs, MLPs form an ideal alternative for fixed-income investors, given their high yields on earnings.

Companies such as Teekay LNG Partners L.P. (TGP), Höegh LNG Partners LP (HMLP), and Golar LNG Partners LP (GMLP) are among the most profitable MLPs, given their higher-than-industry earnings yields. And because benchmark Treasury yields remain volatile, investing in these stocks is expected to provide stable returns on investment.

Teekay LNG Partners L.P. (TGP)

TGP is a marine transporter of crude oil, liquified natural gas, and liquified petroleum gas. It operates through long-term contracts with fixed-rate charters and energy and utility companies worldwide. As of April 15, TGP’s total transport and cargo ships include 47 LNG carriers, 23 mid-size LPG carriers, and seven multi gas carriers. The company also owns a 30% stake at a regasification terminal.

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