Bill Gross, also known as the 'bond king,' has revealed that his top investment right now is in oil and gas pipelines, which trade as master limited partnerships (MLPs) [26b9ecbd]. He believes that MLPs offer strong returns with additional tax advantages. Gross highlights that MLPs have many of the yield attributes of bonds and are attractive due to limited risk, good tax benefits, and liquidity [26b9ecbd].
Gross mentions that MLP dividends are deferred until sold, and mutual funds cannot buy partnerships, creating a large base of potential buyers. He cites tax-deferred yields of 8% to 9% and mentions that MLPs have climbed as much as 35% in the last 12 to 18 months [26b9ecbd].
Despite the growing interest in artificial intelligence (AI), Gross remains cautious about pushing into the AI sector. He has been investing in 'conservative' AI names like Microsoft and IBM but has never owned Nvidia. Instead, he is focusing on the utilities sector due to AI developments boosting energy demand [26b9ecbd].
Gross specifically mentions two MLP companies worth paying attention to: Energy Transfer and Western Pipeline [26b9ecbd].
It's important to note that there are tax implications for selling an MLP, and holding MLPs like Energy Transfer and Western Pipeline can still be a great way to generate passive income [77a68140].
Enterprise Products Partners, Western Midstream, Energy Transfer, and MPLX all have similar business models and financial profiles, with varying degrees of diversification. They generate significant excess free cash flow and have strong balance sheets [77a68140]. While the current distribution yield of EPD is lower compared to Western Midstream, Energy Transfer, and MPLX, Gross considers Western Midstream to be the 'best of the bunch' with a tax deferral yield of 10.25% [77a68140].
It's important for investors to consider the additional tax complications that come with owning an MLP. However, The Motley Fool recommends Enterprise Products Partners and has identified other stocks as potential investments [77a68140]. Matt DiLallo, a writer for The Motley Fool, has positions in Energy Transfer and Enterprise Products Partners [77a68140].
Alliant Energy Corporation (NASDAQ:LNT) is a utility holding company that provides regulated electricity and natural gas services. In Q1 2024, the Artisan Value Income Fund added Alliant Energy and Evergy to its portfolio. The interest rate environment and higher inflation have made utilities out of favor, but the fund sees opportunity in the sector. Alliant Energy Corporation's one-month return was -1.03%, and its shares lost 4.30% of their value over the last 52 weeks. The stock closed at $51.11 per share on June 5, 2024, with a market capitalization of $13.12 billion. The fund's Investor Class APFWX, Advisor Class APDWX, and Institutional Class APHWX returned 4.87%, 4.87%, and 4.98% respectively in Q1 2024, compared to a 10.56% return for the S&P 500 Index. Alliant Energy Corporation is not on the list of 31 Most Popular Stocks Among Hedge Funds. The company reported first-quarter 2024 earnings of $0.62 per share. The fund believes that AI stocks hold greater promise for delivering higher returns within a shorter timeframe.