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High Yield from InfraCap MLP

09/08/2015 9:00 am EST


Tim Plaehn

Investment Research Analyst, Investors Alley

The 60% decline in the price of crude oil has been followed by big share price declines in energy-related income stocks, observes Tim Plaehn of Investors Alley.

The investing public has a very hard time resisting the fear and desire to sell when prices are falling.

Income-focused investors can buy with confidence when prices are down, increasing their yields and earning double benefits when this correction or bear market—like all before this—turns upward and the next multi-year bull market begins.

So what would I buy the current market environment? At or near the top of my list to accumulate now is the InfraCap MLP ETF (AMZA); this actively managed ETF holds only the largest, most financially secure energy infrastructure MLPs and related companies.

This group of companies owned by the fund will continue to pay their regular dividends, even if the market continues to drive down share and unit prices.

Currently, AMZA yields 13.6% and has been increasing the dividend by 1% every quarter.

As well, entering a position into this ETF is a great way to gain exposure to the unparalleled growth structure of MLPs without the tax-reporting issue as this ETF reports as a 1099.

Historically, the MLP sector has come out of energy price declines and stock bear markets with 30% or better annual total returns for the next several years and I believe that this is what will happen again with this most recent decline.

That is why I am adding to my stake of AMZA as much as I can as the stable high-yield and future growth potential make it one of the easiest stock market decisions for me right now.

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