Throughout my travels around the world, there is one question I can count on getting from every audience, be it in the U.S., China, Europe, and even the Middle East: Where can I find some yield?
The favored answers are junk bonds, high-dividend equities, and emerging market sovereign debt issued by countries like double-digit yielding Brazil. In the U.S., yield-motivated investors have gravitated towards Master Limited Partnerships (MLPs) to focus their activities on the oil industry. The only problem is that over the last 14 years, crude has soared from $10 to $150, then back down to $90. It's enough price volatility to leave owners reaching for the Dramamine.
There is a way to capture these eye-popping returns without having to take an "E-ticket" ride. That is to focus on MLPs that only invest in the natural gas industry. Its 14-year price history saw it soar from $2 to $17, then back to $2. It now hovers around $3.70. The smart way to play here is to own securities that benefit from the increasing volume of natural gas production, and not the price.
The horrific downside risks that hang over oil investments are missing with that simplest of molecules, CH4. That means investors can lock these up in long-term portfolio's without fear of them vaporizing when they are not looking, and let the, sometimes, double-digit, generous cash flows roll in. The great thing about gas is that it has already crashed.
Until very recently, natural gas was...
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