Terra Nitrogen Company, L.P. (TNH), StoneMor Partners L.P. (STON): These Under the Radar MLPs May Be Hidden Gems

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Income-seeking investors have few suitable places to put their money these days. Sure, there are dividend stocks and bonds, but with markets rising, yields remain punishingly low. There’s been talk of Fed tapering off its long-held policy of historically low interest rates and aggressive bond buying, but interest rates won’t skyrocket overnight.

All of this means that investors need to find new places to produce yield. One corner of the market that can satisfy an investor’s need for income are Master Limited Partnerships, which often operate in natural resources such as oil and gas and enjoy a favorable tax treatment in exchange for paying the vast majority of their profits to unit holders as distributions.

While you’ve likely read about MLPs before, you may not have heard of all of the market’s MLPs. These few in particular have small market capitalization and don’t operate in the oil and gas industries that many investors are accustomed to.

Terra Nitrogen Company, L.P. (NYSE:TNH)

Under the radar MLPs to consider

Terra Nitrogen Company, L.P. (NYSE:TNH) is a chemical company engaged in nitrogen fertilizer products. Terra Nitrogen Company, L.P. (NYSE:TNH) is a $4 billion company by market capitalization and pays a huge distribution, which, at recent prices yields more than 9% annualized.

Investors should take notice that unlike most MLPs, Terra Nitrogen’s distribution can be more volatile than some would likely prefer. Using Yahoo! Finance data, Terra Nitrogen Company, L.P. (NYSE:TNH) paid $16.86 per unit in 2012 and has paid $8.31 per unit to begin 2013. However, the company paid just $5.01 in 2010. Investors need to understand that Terra Nitrogen Company, L.P. (NYSE:TNH) operates in an industry that can be unstable, and as a result, the company’s distribution levels are subject to fluctuate.

StoneMor Partners L.P. (NYSE:STON) is an owner and operator of cemeteries and funeral homes in the United States, with 276 cemeteries and 92 funeral homes in 28 states and Puerto Rico.

Investors may be tempted to overlook StoneMor Partners L.P. (NYSE:STON), because it holds a market value of just $540 million. However, that would be a mistake. StoneMor Partners L.P. (NYSE:STON) generously rewards its investors with a huge distribution. The company’s current annualized distribution amounts to a 9.3% yield at recent prices. The company’s payout isn’t standing still, either; StoneMor Partners L.P. (NYSE:STON) recently raised its quarterly distribution, and has actually raised it twice over the course of the last four quarterly payments.

Last but not least, Icahn Enterprises LP (NASDAQ:IEP) is the investing vehicle of legendary money manager Carl Icahn. With this company, you’re essentially making a bet on the investing prowess of Icahn Enterprises LP (NASDAQ:IEP) and his team.

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