The Market is Going Wild for Pipelines

Investors are going wild for MLP stocks… just have a look at Kinder Morgan Energy Partners (KMP).
 
Back in early 2009 – near the bottom of the great credit crash – we noted how income-seeking investors should consider a position in Master Limited Partnerships (MLPs). This sector consists of firms that own and operate energy transportation assets, like pipelines. To entice people to invest in America’s energy infrastructure, the government has granted MLPs special tax breaks, which require them to pay out most of their income to investors.
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In our original note, we pointed out how this beaten-up sector had carved out a bottom… and offered 10% yields. And as you can see from our chart of blue-chip pipeline operator Kinder Morgan, the market is now going wild for this idea.
 
With a $30 billion market cap, KMP is a giant in the pipeline industry. It’s one of the largest and most liquid ways to buy American pipelines. In just the past five months, the stock has ripped 30% higher… which is an extraordinary move for a “boring” pipeline firm. Many other pipeline firms are surging as well. The performance-chasing momentum crowd is piling into MLPs