Alerian MLP's 8%+ Dividend Yield Makes Retirement Income Easy | AMLP

"The Alerian MLP ETF ( NYSEARCA:AMLP) offers retirees an 8.75% dividend yield by investing in master limited partnerships that own energy infrastructure assets like pipelines, storage facilities, and processing plants. These MLPs generate cash flow from long-term contracts to transport oil, natural gas, and refined products, then pass distributions to unitholders. AMLP packages these partnerships into a single ETF, providing diversified midstream energy exposure without the tax complexity of owning MLPs directly."

"AMLP's income derives from quarterly distributions paid by its underlying MLP holdings. The ETF holds $10.6 billion in assets concentrated in energy infrastructure, with 102.5% sector allocation to energy. The top six holdings represent 76.5% of the portfolio, led by MPLX ( NYSE:MPLX) at 13.74%, Plains All American Pipeline ( NASDAQ:PAA) at 12.85%, and Western Midstream Partners ( NYSE:WES) at 12.82%."

"The largest holding, MPLX, generated $5.946 billion in operating cash flow in 2024 while paying $3.603 billion in distributions, maintaining a healthy 1.4x coverage ratio after capital expenditures. This means the company produced 36% more free cash flow than it distributed. MPLX's 41.4% profit margin and 7.24% dividend yield demonstrate robust fundamentals. Enterprise Products Partners ( NYSE:EPD), the second-largest holding at 12.77%, maintains a $69.3 billion market capitalization with a 6.75% yield, though recent quarterly revenue declined 12.7% year-over-year."

The Alerian MLP ETF (AMLP) yields 8.75% by investing in master limited partnerships that own midstream energy infrastructure such as pipelines, storage, and processing plants. Underlying MLPs earn cash flow from long-term transportation and processing contracts and distribute that cash to unitholders. AMLP aggregates those partnerships into a single ETF to offer diversified midstream exposure while simplifying tax treatment. The fund holds $10.6 billion, is heavily concentrated in energy, and has top-six holdings comprising 76.5% led by MPLX, Plains All American, and Western Midstream. Distribution sustainability varies across holdings and the ETF faces sector concentration and historical distribution-cut risk.

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