Energy master limited partnerships had a subpar showing in 2012. But now that the benchmark 10-year Treasury is hovering around 1.73%, investors may be eyeballing the historically strong yields and potential tax benefits of MLPs.
Why MLPs? Consider that they were created to foster development in vital infrastructure assets. Congress passed legislation in 1986 exempting MLPs from paying federal and sometimes state income taxes while at least 90% of a business's revenue was being generated from certain qualifying activities. The majority of energy MLPs operate in slow-growth, but capital-intensive sectors of the energy industry, such as pipelines and storage terminalsoften referred to as the "midstream functions" of the oil and gas industry: processing, transporting and storing crude oil, natural gas and petrochemicals.
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