The Alerian MLP Index (AMZ) has reached yet another record high at a time when the Dow & S&P 500, after extraordinary rises off their lows, are still below record highs. A five-year chart for AMZ shows a nice run in early 2009 before the index peaked at 342 in July. From there it fell for a year and then plunged in the fall of 2008, reaching a low of 152 on November 21. Since then, the index has gone virtually straight up. There was one setback in early 2009 when the markets sold off and a pullback in May of last year when the Greek debt crisis was intense. The rest of the time, the index has kept rising to new record highs.
Alerian MLP Index --- 5 years
(Click to enlarge)
Business for MLPs has been good. MLPs were able to secure financing during the financial meltdown, allowing their capital projects to move forward. Many MLPs continued to increase distributions. However, money raised from unit sales are commingled with funds from operations. That money is used for company business and paying distributions to unit holders. Raising distributions is a factor in bringing higher unit prices units at the same time MLPs are selling additional units to finance expansion.
Higher prices for MLPs reduce yields. The yield for AMZ fell to a shade above 6%. At 377 it will yield exactly 6%. The yield plunged to a record low of 5.37% when the index was at its prior record
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Chandra West Kasey Chambers Megan Ewing Kristanna Loken Aubrey ODay
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