TYG - CEM: A Good Midstream Fund If The Yield Is High Enough For You

2024-06-13 17:19:52 ET

Summary

• ClearBridge MLP and Midstream Fund Inc. offers exposure to energy infrastructure companies without K-1 forms, suitable for tax-advantaged accounts.
• The fund has a lower yield than its peers but has shown strong performance, outperforming the S&P 500 Index over one and three years.
• The fund employs leverage below the industry average, covers distributions with excess investment profits, and trades at a 4.30% discount to net asset value.
• The fund is holding an enormous cash position right now, but this seems to be the result of an upcoming repurchase tender offer.
• Midstream companies have performed very well despite today's high-interest rate environment, which might be a positive sign going forward.

The ClearBridge MLP and Midstream Fund Inc. ( CEM ) is a closed-end fund, or CEF, that investors can use to gain exposure to energy infrastructure companies, including those structured as master limited partnerships, without the hassle of dealing with K-1 income tax forms. This is something that can be very advantageous to investors who wish to use their retirement accounts or similar tax-advantaged accounts to make their investments. This is because the ClearBridge MLP and Midstream Fund can be included in such an account just like any other corporation.

Normally, including master limited partnerships in such an account exposes the investor to potential tax problems that they may not wish to deal with. Unfortunately, investors do have to give up some potential income with this fund, as the ClearBridge MLP and Midstream Fund only has a 6.44% yield at the current share price. This is lower than the 7.60% yield of the Alerian MLP Index ( AMLP ) and lower than the yield of many other closed-end funds that employ a similar investment strategy:

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