With many investors trying to beat inflation, the 8% yielding Allerian MLP ETF (NY SEARCA: AMLP) helps you do just that. Not only is this lower than the rate of inflation (currently 6%), but it’s about five times the US average yield. S&P 500 That’s more than double what an investor could get from a 10-year Treasury bond. So let’s take a look at this ETF and see if it’s a good way to add yield to your portfolio.
What is the Allerian MLP ETF?
AMLP is the Alps Fund’s $6.45 billion ETF. AMLP seeks investment results that correspond to the price and yield performance of the underlying index, the Allerian MLP Infrastructure Index (AMZI), before fees and expenses. The fund invests in MLPs that derive the majority of their cash flow from midstream activities in the energy industry.
What are MLPs?
A Master Limited Partnership, commonly referred to as an MLP, is a publicly traded US company taxed as a partnership, with income from the MLP flowing to investors. These vehicles must derive at least 90% of their revenues from activities such as the production, processing, storage and transportation of natural resources such as oil, natural gas and minerals.
As for AMLPs, most of these MLPs are pipeline companies engaged in the storage and transportation of oil and natural gas. The investment attractiveness of these companies is that they essentially act as a “toll road” for the energy industry, charging a volume-based fee to move or store oil using pipelines. This makes MLPs less volatile and less exposed to the price of the underlying asset than a typical oil company. This is why MLPs are often reliable. Dividend stock.
One of the drawbacks of investing in an MLP is that due to its tax structure, investors must file K-1 in taxes. This can be a headache for retail investors. tax process.
This is where AMLP’s charm lies. It offers the same high yields as a typical MLP but without the K-1 headaches as it is structured as 1099 in taxes. In addition, AMLP pays qualifying dividends and a portion of these distributions are tax deferred.
AMLP Top Holdings
As can be inferred from the above description, AMLPs primarily invest in energy MLPs. This is a very concentrated fund with very little variance, holding 17 stocks, with the top 10 stocks accounting for over 90% of the fund’s share.
Stocks of MPLX LP, Enterprise Product Partners, Magellan Midstream Partners, Plains All American, Energy Transfer, and Western Midstream Partners all represent more than 10% of the ETF’s assets.
Below is an overview AMLP TOP 10 HOLDINGS Use TipRanks proprietary tools.
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Top tier Energy Transfer, Enterprise Products Partners, Magellan Midstream Partners, Western Midstream Partners, and EnLink Midstream all have Tipranks. smart score 9 out of 10 or better.
Smart Score, TipRank’s proprietary quantitative equity scoring system, evaluates stocks on eight different market factors, including analyst valuations, corporate insider trading and hedge fund activity. Stocks with a Smart Score of 8 or higher receive an “Outperform” rating.
What is your target price for AMLP shares?
Wall Street analysts are relatively bullish on AMLP, with the ETF’s consensus rating of mid-buy.of Average AMLP Price Target $46.07 means up to 20% upside potential.
Of AMLP’s 86 analyst ratings, 65.12% are buys, 27.91% are holds and 6.98% are sells.
![](https://tipranksblog.wpenginepowered.com/wp-content/uploads/2023/03/image-327-1024x353.png)
TipRanks uses proprietary technology to compile analyst forecasts and ETF price targets based on individual performance combinations of underlying assets. Using the Analyst Forecast Tool, investors can see her ETF’s consensus price target and rating, as well as the highest and lowest price targets.
TipRanks calculates a weighted average based on a combination of all ETF holdings. An ETF’s average price projection is calculated by multiplying the individual holding’s price target by its weight within the ETF and adding them all together.
Additionally, AMLP’s ETF Smart Score is 8 out of 10, giving it an outperforming rating. Additionally, blogger sentiment towards AMLP is bullish and public wisdom is positive, but hedge fund involvement is declining.
![](https://tipranksblog.wpenginepowered.com/wp-content/uploads/2023/03/image-328.png)
AMLP Past Performance
Thanks to skyrocketing energy prices last year, the AMLP beat the broader market with a 25.3% gain, while the S&P 500 fell nearly 20% over the year. However, his AMLP this year is down about 1% year-to-date against his 1.4% rise in the S&P 500.
Looking over longer timeframes, the picture doesn’t look rosy. Dividend-adjusted, AMLP has underperformed the S&P 500 over the past five years, up 16% over the past five years compared to a 53% return for the overall market.
Tips for investors
For investors looking to generate some income or add some yield to their portfolio to beat inflation, AMLP is a convenient option to do just that. is to provide the benefits of owning an MLP while eliminating the need for a taxable K-1.
While AMLP has performed well over the past year or so thanks to rising oil prices, it’s important to note that ETFs have significantly underperformed the overall market on longer timeframes. It’s also not a very diverse ETF, with over 90% of its assets in the top 10 stocks.
Another caveat about AMLP is that while it plans to increase its dividend in 2021-2022 and again in 2023, the ETF’s annual dividend had fallen for several years in a row prior to that. The final downside to AMLP is that it has a relatively high expense ratio of 0.87% and these charges can add up over time.
But overall, this could be an ETF that helps boost yields in a balanced portfolio.