An MLP is a business structure that the company chooses to have, usually for legal and/or tax reasons. They have to pay out the vast majority of their revenue similar to a REIT and there is some overlap between the two.
Examples include well-known names like Kinder Morgan Pipeline on the commercial side and Amerigas and Suburban Propane on the residential side. I'm not meaning to single those companies out as there are plenty of well-run competitors.
They are generally far safer than they were 30 years ago and require "just" the due diligence of any other investment. The primary annoyance people have with owning MLPs is that the income does not come in on a 1099 like everything else that is interest or dividend. Your income is reported to you on an IRS K-1 form, because of your status. (Boring stuff alert: with stocks you are a part owner of the company, with MLPs you are an employee. Really.)
What's annoying is that there is no hard and fast rule about when the company delivers your K-1, and it is not necessarily in time for you to file on April 15th. That probably means you file an extension right up front, but I'm not your tax person.
I think they can be a very good part of a portfolio. Not a dominant piece, but certain ones from time-to-time can be a nice part of the bigger picture.
If you're interested, we should talk a bit (for free). I specialize in education and collaboration that includes the professional financial stuff done without the high cost. And I give customers the same professional tools that are usually limited to the yacht-owner crowd. Let me know!
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