High-yield income from America’s energy infrastructure—if you know how to use them right.
If you’re a retiree looking for dependable income, you’ve probably seen the eye-catching yields offered by MLPs (Master Limited Partnerships) and pipeline companies—often 7%, 8%, or even 9% annually.
But what exactly are they? And more importantly, are they worth the quirks?
This blog post breaks down how MLPs and pipeline stocks work, why they can be an excellent source of retirement income, and what to watch out for before investing. With the right approach, pipelines can pump out more than oil and gas—they can deliver steady, inflation-resistant income for life.
✅ What Are MLPs and Pipeline Stocks?
Master Limited Partnerships (MLPs) are publicly traded partnerships—mostly in the energy sector—that own and operate pipelines, storage facilities, and other infrastructure.
Think of MLPs as the toll roads of the energy industry. They don’t explore for oil or gas—they simply transport it and collect steady fees along the way.
Pipeline stocks (like Enbridge or ONEOK) operate similarly but are structured as regular corporations rather than partnerships.
The result in both cases? Cash-rich, fee-based businesses that pay generous dividends to shareholders.
✅ Why Retirees Love MLPs and Pipelines
- High Yields: MLPs and pipelines often pay 6–9%+ annually in distributions.
- Fee-Based Income: Many earn money through long-term contracts—regardless of energy prices.
- Inflation Protection: Contracts often include built-in inflation escalators.
- Recession Resilience: People and businesses keep using energy—even in downturns.
- Steady Cash Flow: Essential infrastructure generates predictable revenue.
In a world where bonds barely keep up with inflation and stocks can be volatile, pipeline companies offer real assets, real income, and real staying power.
✅ But First—Know the Quirks
Before diving in, here are a few things to understand:
- Tax Complexity:
MLPs issue K-1 tax forms, not 1099s. These require extra steps at tax time and can complicate your return. Many retirees prefer to hold MLPs in taxable accounts instead of IRAs. - UBTI Risks in IRAs:
Holding MLPs in a tax-advantaged account can trigger something called unrelated business taxable income (UBTI), which may create unexpected tax bills. - Pipelines ≠ Commodity Prices:
MLPs earn money by transporting energy, not selling it. While oil prices can cause short-term volatility, pipeline cash flows tend to remain stable. - Not All MLPs Are Created Equal:
Stick with large, well-established MLPs and pipeline corporations with strong balance sheets and long-term contracts.
✅ Real-Life Example: Meet Carol, the Income Planner
Carol, a 66-year-old retiree, wanted to boost her monthly income without adding too much risk. She added two pipeline companies to her portfolio:
- Enterprise Products Partners (EPD), a blue-chip MLP with a 7.5% yield
- Enbridge (ENB), a Canadian pipeline stock with U.S. exposure and a 7% dividend
Carol holds EPD in her taxable account to avoid K-1 issues in her IRA, while ENB (which issues a simple 1099) sits in her Roth IRA.
Today, she earns steady income and sleeps well knowing her money is backed by real, recession-resistant assets.
✅ Top MLPs and Pipeline Stocks to Consider
Here are a few well-established names to start your research:
- Enterprise Products Partners (EPD) – A rock-solid MLP with a long history of reliable payouts.
- Magellan Midstream Partners (MMP) – Focused on refined products like gasoline and diesel.
- Enbridge (ENB) – A Canadian pipeline giant that pays a generous dividend in USD.
- ONEOK (OKE) – A natural gas pipeline operator structured as a corporation (no K-1).
- Kinder Morgan (KMI) – A large U.S. pipeline company with a steady dividend and simple tax form.
✅ The Bottom Line
MLPs and pipelines can be powerful tools for generating high, consistent retirement income—as long as you understand how they work.
They’re not for everyone. But for income-focused retirees who can handle a few tax quirks or choose corporation-style pipeline stocks, they offer:
- Attractive yields
- Asset-backed stability
- Inflation-linked income
- A proven track record of performance
And in an era of uncertain markets and rising prices, that combination is worth its weight in gold.
📘 This post is adapted from my book:
9% Retirement Paycheck: How to Generate Steady, Worry-Free Income for Life,
Available now on Amazon.com in paperback and eBook formats.
Inside, you’ll learn how to build a diversified portfolio of high-yield assets—like MLPs, REITs, BDCs, and more—designed to generate steady income without excessive risk.
⚠️ Disclaimer
This content is for informational and educational purposes only and should not be considered financial, investment, or tax advice. Investing involves risk, including the possible loss of principal. Always consult a qualified tax or financial advisor before making investment decisions. The author is not a licensed investment professional and does not provide personalized financial advice.