Income investors and MLPs go together like peanut butter and jelly. A company receiving tax benefits in exchange for distributing the lion’s share of earnings as a dividend sounds like a good deal to me. Master limited partnerships provide some of the healthiest and most stable dividends north of 5%. When I see MLPs that are highly rated on CAPS and are trading in a range well removed from 52-week highs, I know I might be looking at a great investment.
A couple of companies currently fitting that description are Linn Energy LLC (NASDAQ:LINE), LinnCo LLC (NASDAQ:LNCO), and BreitBurn Energy Partners L.P. (NASDAQ:BBEP). As is the case with the majority of companies allowed to structure themselves as MLPs, these three companies are in the business of oil and natural gas. Let’s stack these three enterprises up side by side, look at them closely, and see if any of them are in a place we should be deploying our hard-earned capital.
1) LinnCo LLC (NASDAQ:LNCO): As of March 31, the only significant operations performed by LinnCo LLC (NASDAQ:LNCO) were the acquisition of shares of Linn Energy LLC (NASDAQ:LINE). However in their latest quarterly report, LinnCo LLC (NASDAQ:LNCO) has expressed an intent to expand its activities. LinnCo LLC (NASDAQ:LNCO) intends to serve as a vehicle through which Linn Energy LLC (NASDAQ:LINE) can make acquisitions.
For the time being LinnCo LLC (NASDAQ:LNCO) is first and foremost a shareholder in Linn Energy LLC (NASDAQ:LINE). According to their latest 10-Q (which is up to date only as of March 31) Linn Co controls approximately 15% of the stock of Linn Energy LLC (NASDAQ:LINE). With Linn Energy LLC (NASDAQ:LINE)’s $7.9 billion dollar market cap, a 15% stake ought to cost you $1.185 billion. Linn Co currently has a market cap of $1.3 billion, making them slightly more expensive than Linn Energy on a relative basis.
2) Linn Energy – Linn Energy is an oil and natural gas company based in Houston Texas. The company’s reserves break down like this: 55% natural gas, 20% natural gas liquids, and 25% oil. Definitely the bulk of focus is on nat gas here, but a decent amount of diversification into oil ensures your eggs aren’t all going into one fuel.
LINE operates solely in the United States, but they are spread out fairly well geographically. Areas of operation include: The Permian Basin in west Texas, The Hugoton Basin in Kansas, and the states of Oklahoma, California, and Michigan.