Master limited partnerships (MLPs) are a vital cog in the energy sector. Many of these companies operate essential infrastructure assets that collect, transport, separate, and store oil and gas -- taking it from the wellhead to end users -- typically earning a fee for each step along the way. Those payments enable these companies to generate relatively predictable cash flow, giving them the money to pay lucrative distributions to investors.
Not all MLPs are the same, though the best ones share the following characteristics:
While many MLPs meet some of those criteria, five stand out as either currently meeting them all or well on their way toward achieving each goal:
Source: Fool.com