Master Limited Partnerships - Barron's Cover
Master Limited Partnerships made the cover of this week's Barron's.
The New MLP Landscape (probably requires a subscription)
The article is an interview with two MLP investment managers, Chris Eades and Kyri Loupis. The article had a generally bullish outlook - not unexpected since the two folks are MLP investors - and gives a good rundown of recent history. Also has a few favorite picks from Chris and Kyri.
I thought the best answers in the article were to a question about yield:
Eades: Yes, most MLP investors are maniacally focused on yield, yield, yield as the only valuation metric. But they should also consider the yield's growth. The total return of an MLP is the yield plus the growth rate of that yield over time. In the past three years, stocks in the Alerian MLP Index that grew distributions up to 3% annually generated an annualized total return of 8.5%. Those that grew distributions by more than 10% every year generated a 27.7% annualized return. Yield by itself? Not so interesting.
Loupis: Our bias is toward consistent and above-average distribution growth -- at least 8% growth. Safety of distributions, the coverage ratio, is important to us.
The article is a good read for anyone who wants to learn a little more about Master Limited Partnerships and get insights from a couple of pros.
Fool on! Russ