NEW YORK ( TheStreet) -- With interest rates at record lows and the Federal Reserve unwilling to lift them any time soon, it's no easy feat finding steady and safe yield in today's bond market. So why not try the stock market in the form of a master limited partnership, suggests fund manager Jerry Swank.
"With interest rates at paltry levels, investors looking for high levels of income, plus an added benefit of growth, will move into the MLP asset class," says Swank, portfolio manager of the Cushing MLP Premier Fund (CSHZX).
MLPs generally provide transportation, storage, processing, refining, marketing, exploration, production or mining of any mineral or natural resource. Interests, or units, trade on public exchanges like any other stock. Unlike owning oil futures or shares of an oil company, however, MLPs typically operate "toll road" business models that enable them to generate a tremendous amount of cash they can distribute to unit holders. In other words, they pocket fees for the services they provide, often without taking ownership of the physical commodities they transport and store.There is another difference between MLPs and ordinary shares when it comes to taxes: MLPs are generally not subject to corporate-level taxes. They distribute the majority of their cash flow to investors in the form of quarterly distributions, which are largely treated as return of capital, making investing in MLPs highly tax efficient. Swank recently chatted with TheStreet about his five favorite MLPs.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV