4 favorites among energy MLPs
Investors seeking high yields should look to these partnerships.
Investors breathed a collective sigh of relief after the compromise between the president and Congress ended months of fear-mongering headlines about the impending fiscal cliff.
With taxes on dividend income topping out at 23.8%, stocks that return cash to shareholders via regular disbursements will retain much of their appeal. (Absent a compromise, the highest tax rate on these payouts would have jumped to 43.4%.)
Meanwhile, we expect the Federal Reserve to keep interest rates near zero for the foreseeable future, especially with economic growth likely to weaken in the first half of the year. In this environment, investors will continue to flock to higher-yielding equities.
As expected, the compromise didn't affect the tax-deferral advantages associated with master limited partnerships (MLP).
Investors looking to build positions in lower-risk MLPs should consider Energy Transfer Partners LP (ETP) and Western Gas Partners LP (WES).
Meanwhile, Linn Energy LLC (LINE) and Vanguard Natural Resources LLC (VNR) have pulled back in recent weeks, reflecting concerns that the decline in the price of natural gas liquids (NGL) will weigh on distributable cash flow. (Hedging NGL production is a challenge.)
Nevertheless, both names trade at attractive valuations and stand to benefit from the recent improvement in the price of natural gas and a steady pipeline of low-risk resource acquisitions.
More from TheStockAdvisors.com
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Inexpensive small caps are a time-tested group of performers. Here are several that could rank among next year's biggest winners.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.