Master limit partnerships and related exchange traded funds have been hit along with the broader energy market in response to the plunge in crude oil prices, but the sector is turning around.
For instance, Goldman Sachs recently upgraded Williams Companies (NYSE: WMB) to “buy”, citing visible gas pipeline growth, valuations, M&A and a dividend cut that’s priced in, reports Kate Rooney for CNBC.
Related: Master Limited Partnership ETFs Are Back on Trend
“We believe WMB shares present a compelling opportunity given strong fundamentals and relatively inexpensive valuation,” according to Goldman Sachs analysts.
Kinder Morgan (NYSE: KMI) is also seen as another company ripe for a rebound. KMI shares bounced earlier this week after the company sold a 50% stake in its southeastern natural gas pipe line system.
“Fitch believes the sale to be a positive step in KMI’s commitment towards focusing on the balance sheet and decreasing overall leverage,” Fitch Ratings analyst Peter Molica said, according to Barron’s. “Selling a stake in SNG allows KMI to monetize an asset and pay down debt while continuing to maintain an interest in a strong cash flow providing asset with decent growth prospects.”
[related_stories]Investors can also gain exposure to these MLPs and the broader industry through a number of diversified ETF options.
For instance, WMB makes up 7.0% of Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX), 6.6% of InfraCap MLP ETF (NYSEArca: AMZA) and 5.0% of Tortoise North American Pipeline Fund (NYSEArca: TPYP).
Related: MLP ETFs are Showing Signs of Life
KMI makes up 9.6% of MLPX, 8.4% of TPYP and 5.6% of Guggenheim High Income Infrastructure ETF (NYSEArca: GHII).
Year-to-date, MLPX rose 25.0%, AMZA gained 17.8%, TPYP increased 30.7% and GHII advanced 23.4%.
The MLP-related ETFs also come with attractive yield generating opportunities. MLPX comes with a 4.47% 12-month yield. AMZA shows a 10.59% 12-month yield. TPYP has a 4.04% 12-month yield. GHII has a 4.42% 12-month yield.
Global X MLP & Energy Infrastructure ETF