Master Limited Partnerships are limited partnerships that are publicly traded on a securities exchange. They combine the tax benefits of a limited partnership (Pay no Corporate Taxes) with the liquidity of publicly traded securities. The modern day MLP got its start in the 1986-87, when Congress passed the Tax Reform Act of 1986 and the Revenue Act of 1987. The new laws stated that to qualify as a master limited partnership, an entity had to earn at least 90% of its income from qualified sources.
The majority of MLPs operate in the energy sector, particularly in energy infrastructure industries such as pipelines, which provide stable income streams. Some of the major benefits of owning MLPs in an investment portfolio are:
- Strong Operating Cash Flows
- High Cash Distributions
- Tax Efficiency
- Hedge Against Inflation
- Growth Potential
- Historical Performance
DeWitt Capital Management has a concentrated portfolio of energy infrastructure MLPs that provide long-term capital appreciation through distribution growth and an attractive level of current income.
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