Investopedia: Can Tortoise Energy Win The Race?

Investors don't suffer for lack of choice in the energy investment space. In addition to a host of master limited partnerships (MLPs), investors can select from a range of mutual funds, exchange-traded funds (ETFs) and closed-end funds.

Investors may want to pause and give a little time and attention to Tortoise Energy (NYSE:TYY). With management on the look-out for quality dividend-paying MLP companies and holding the freedom to adjust the portfolio (and add or subtract leverage) as they see fit, investors may be able to outperform investment options more committed to follow indexes. For related reading, see The History Of The Modern Portfolio.

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Investopedia: Prefer Dividends? Why Not Look At Preferred Stock?

Everybody assumes that there is a lot of demand for, and interest in, articles and columns detailing growth stock ideas. While that is true to a point, it is also true that there is a strong interest in income ideas as well. What is interesting, though, is how relatively little there is out there about preferred stocks and their close cousin, trust preferred securities. While these are not flawless investment options, they should be a serious consideration for many income-oriented investors. 

Preferreds - Some Good, Some Bad
In brief, preferred stock is something of a hybrid security that combines features of fixed income and common equity. Preferred stock is higher up in the credit structure than common equity and preferred shareholders are almost always entitled to dividends before common shareholders get any. On the other hand, preferred stock does not grant voting rights and investors often see significantly limited upside when the company thrives, as preferred stock dividends are usually locked in while common stock dividends can be whatever management can afford to pay. (For more, see A Primer On Preferred Stocks.)

Investors should also realize that their choices are quite a bit more limited when it comes to the companies and industries that issue preferred stock. Look at the rolls and investors will see a lot of banks and real estate companies, as well as some insurance and utility companies. By and large, industrial, health care and tech companies have no need to issue these securities.


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Investopedia: Can Pipelines Still Deliver The Goods?

In many respects, pipelines are great businesses for patient investors who like collect to dividends. They allow investors to leverage the growing demand for energy with far less exposure to commodity prices than is the case for integrated energy companies or exploration and production companies. Instead, they act as toll collectors with very little operating risk on a week to week basis.

The nature of the business also gives certain inherent advantage to these companies. It takes a great deal of capital to build networks of pipelines, terminals, storage facilities and the like, but once they are in place there is seldom much competition for their services. What's more, because the tax-advantaged MLP structure is so common in the space, these companies often pay substantial dividends (technically called distributions in most cases). (For more, see Power In Pipelines.)

The Downside
It is not all perfect in the industry, though. Because companies that opt for the MLP structure cannot retain any significant amount of their earnings, these companies must borrow extensively to meet their capital needs. So while these companies have clearly benefited from the low interest rate environment (which has also made the yields on these stocks quite attractive), the risk of higher rates is particularly significant here. That is all the more relevant when considering the fact that many companies are looking to expand their networks to better access areas like the Bakken and Marcellus Shales.

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