Better Buy: Enbridge vs. Magellan Midstream Partners

The midstream sector was a casualty of the drop in oil demand in 2020, facing long-term financial implications as exploration and production companies dialed back on drilling. The share price declines that resulted have left some of the best-run names in the sector with incredibly high yields, including Magellan Midstream Partners (NYSE: MMP) and Enbridge (NYSE: ENB), with yields of 9.6% and 7.1%, respectively. Before you jump at the prospect of those higher yields, however, you should dig a little bit deeper. Here are a few key things to consider as you weigh an investment in either of these two midstream options. 

Clearly, if all you care about is getting the higher yield, then Magellan has the edge here. But there's more to this story. For example, as a master limited partnership (MLP), Magellan unitholders have to deal with the complications of a K-1 at tax time, and the MLP structure doesn't play well with tax-advantaged retirement accounts. Enbridge, meanwhile, pays its dividend in Canadian dollars, so the actual cash that U.S. investors see will vary along with exchange rates. But these are just surface issues.

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Source Fool.com