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Friday January 27, 2012
A trio of favorite MLPs
by Stephen Leeb, editor The Complete Investor MLPs are probably the best source of protection against the assault of rising energy prices. Three of our favorites are Penn Virginia Resource Partners (PVR), ONEOK Partners (OKS), and Plains All American Pipeline (PAA). Of these, Penn Virginia is the standout. With a yield of 8 percent and growth above 5 percent, it presents an especially compelling value. Perhaps a slight risk with Penn Virginia is that a portion of its income stream is tied to royalties from the coal business. But while these royalties are dependent on coal prices, they are immune to regulatory changes. ONEOK gets high marks for its focus, in its pipelines and storage facilities, on natural gas liquids (NGL), which have become a critical aspect of shale gas production: capturing these liquids has become increasingly necessary to offset the growing costs of shale drilling. Thus NGL production is likely to grow rapidly over the next several years, boosting ONEOK’s business. Plains All American Pipeline is a winner because of its role in the oil market. Several projects promise to increase its oil pipeline capacity. In addition the company stores natural gas, an area that should benefit handsomely if natural gas prices, as we expect, rise over the next several years. Of course the most notable characteristic of these favorites is their average yield of 5.6 percent. That income along with projected average growth of more than 5 percent adds up to long-term total returns that could approach 11 percent. Even if you’re not particularly income-oriented, this kind of total return in an economy that promises to remain stressed (to say the least) should have tremendous appeal. Learn more about this financial newsletter at Stephen Leeb's The Complete Investor. 
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