3 Overlooked Energy ETFs Delivering Strong Returns and Income

Summary

Midstream energy firms—those companies overseeing the transportation, storage, and some processing of oil and gas—remain an essential but often overlooked part of the energy ecosystem. Because these companies often operate like toll roads, in that they get paid whenever energy moves through their system, they can be vital sources of stability for investors. At the same time, their essential nature (oil and gas wouldn't reach refineries without them) means this category of company is likely to weather any number of market storms. The other benefits of midstream firms, including their propensity for strong dividends, stable cash flow, ability to protect against inflation, and high barriers to entry that help ensure controlled competition, make these companies attractive for many different types of portfolios. Investors can build exposure to midstream firms easily with the exchange-traded funds (ETFs) below.Get Alerian MLP ETF alerts:Sign Up A Narrow MLP Fund With Impressive ResultsThe Alerian MLP ETF NYSEARCA: AMLP offers exposure to an index of energy infrastructure Master Limited Partnerships (MLPs) operating within the midstream segment of the sector. The index is a capped, float-adjusted, market cap-weighted group of MLPs, and it yields a fund with just 16 positions. The largest names in AMLP's portfolio, including major firms like Sunoco NYSE: SUN and Energy Transfer NYSE: ET, have sizable allocations of about 13% or more. Alerian MLP ETF Today$53.76 +0.07 (+0.13%) As of 01:59 PM Eastern52-Week Range$44.64▼$55.22Dividend Yield7.48%Assets Under Management$12.66 billion MLPs are partnerships that require regular distributions and may come with some tax advantages compared to other corporate structures. If these companies avoid corporate-level taxes due to their pass-through entity status, it's a benefit to investors as well. This has played out so far this year, as AMLP has provided market-beating returns of 14% while also paying a sizable dividend yield of 7.5%. F...