"The operations of many energy partnerships have nothing to do with the price of crude and natural gas; they only need to have demand," explains Neil George.
In his specialized advisory services, The Partnership, he looks at Kinder Morgan Energy Partners (NYSE: KMP) and Kinder Morgan Management (NYSE: KMR).
"Midstream partnerships--those that operate pipelines or storage and processing facilities segments as well as those that invest in these segments--are among the most stable distribution payers.
"And, more importantly right now, they’re among the most stable investments in what’s become a treacherous stock market.
These middlemen, in between the producers and the consumers, are perhaps the best hedge for your portfolio as they continue to generate hefty cash flows for investors.
"Whether the broad energy market is up or down, these partnerships continue to be all-around successes. Kinder Morgan Energy Partners and Kinder Morgan Management, are Foundation holdings in our portfolio.
"The big runs up and now the big slides in both crude and natural gas haven’t meant much to either partnership. And, while the stock prices have inched higher, each has been paying out nice pieces of their respective profits.
"Kinder Morgan Energy is currently yielding more than 7%, and its payout is rising by more than 8% on an average annual basis. Kinder Morgan Management, a primary investor in Kinder Morgan Energy and the manager of its business operations and investments, pays its dividend in the form of additional shares, not in cash.
"This makes it a particularly desirable investment for those who want to avoid dealing with K-1 forms and those seeking assets for qualified investment accounts such as IRAs. The share dividend builds our stake in the underlying assets. The current rate equate to more than 7% on a cash-equivalent basis.
"Kinder Morgan Energy’s trailing one-year overall return exceeds 15 percent, and Kinder Morgan Management has returned about 10 percent--all while petrol prices have been on a rollercoaster. Those who have followed our call have enjoyed steady gains while the general stock market has been on the slip and slide."
