Eagle Rock Energy Partners, L.P.
For years now, US and Canadian oil and natural gas production not only helped reduce oil imports to the US, but also rewarded their investors. For all the headlines trumpeting increased production, not all energy companies benefit shareholders. Let’s look at three energy companies with different risk and reward profiles.
Limited partnerships (LPs) can be complicated to understand. One important feature is the payments that an LP must make to its general partner (GP). Some LPs, however, don't have those payments to make, and that can mean more money in your pocket.
What is a Limited Partnership?
Keeping things simple, a limited partnership is a special corporate structure that allows for the pass through of income to shareholders without more »
High yields can be found in MLPs (Master Limited Partnerships). Usually structured around a particular qualified business (often energy-related), MLPs do not pay a corporate income tax, as they pay pass profits on directly to the shareholders (technically unit-holders) on a quarterly basis. These payments, however, are not technically dividends--they are distributions, and as such have a special tax status. Unlike dividends, a large percentage of these distributions are considered more »
Oil and gas MLPs offer high yields and an interesting tax structure but do they provide good value? The MLPs listed below have some of the lowest PE ratios in the industry and they all have dividend rates over 7%. The differing debt ratios and returns on invested capital show that there is definitely variation within the industry. Going beyond simple PE ratios and yield rates develops a clearer understanding more »
Dividend Investing is very popular. One special area that became more and more interesting over the years is master limited partnerships (MLPs). Investors like MLPs for their high yields and tax deferment, but they don’t pay taxes at the corporate level, so the tax burden then gets passed to the investor. Without getting into too much detail, because of the structure of the partnerships and the distributions, investors are more »