MLPs are not directly affected by oil prices since the sector acts more like an energy toll road and profits off crude oil flowing threw its pipelines. However, the recent selling pressure in the energy market spilled over to MLPs as traders feared the low prices would force producers to cutback on production, which would mean less volume going through MLPs.

“MLP’s yield gap over Treasuries is historically wide when you consider the benchmark 10-year Treasury note yields under 2%. MLPs also look cheap relative to other high-yielding stocks, such as real estate investment trusts (REITs) and utilities, which yield about 4% and 3.5% respectively,” reports Barron’s.

Alerian MLP ETF

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