What is a MLP?

June 16, 2024

A MLP is master limited partnership. In a MLP, shareholders are referred to unitholders and investors hold units instead of stocks. Businesses adopting such a structure usually do it because of tax benefits, most of the company's earnings are paid out to unitholders. MLPs also have other conditions e.g. most of the revenue most come from real estate or natural resource activities, and the company must be domiciled in the US.

Because of the reasons above, most MLPs are energy companies. In general, MLPs can be quite a good investment in tough times because of the high dividend yield and the fact that a lot of them are involved in midstream activities. Midstream energy companies own pipelines and make money by transporting/storing oil which is less dependent on oil prices.


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