TRGP - CTR: This Midstream CEF Has Been Outperforming The Index And Is Available At A Discount

2024-01-28 11:32:24 ET

Summary

• The ClearBridge MLP and Midstream Total Return Fund aims to provide investors with high current income and total returns.
• The fund has a respectable 7.47% yield, higher than the S&P 500 Index but slightly lower than the Alerian MLP Index.
• The fund's recent performance has been impressive, outperforming both the S&P 500 Index and the Alerian MLP Index.
• The fund easily covered its distribution over the past year, and had quite a bit of money left over.
• The fund is trading at a discount on net asset value.

The ClearBridge MLP and Midstream Total Return Fund ( CTR ) is a closed-end fund that aims to provide investors with a very high level of current income and total returns. Midstream companies and especially master limited partnerships generally deliver a very high percentage of their total returns to investors in the form of direct payments made to their owners. This, combined with the generally low growth and low earnings multiples of most midstream typically results in these companies having higher yields than many other things in the market. As this fund distributes its income to its shareholders, this results in it having a respectable 7.47% yield at the current price. This is clearly higher than the 1.36% current yield of the S&P 500 Index ( SPY ), although it is not as impressive as the 7.87% trailing yield of the Alerian MLP Index ( AMLP ). Thus, we see the same problem here that we see with many of the midstream closed-end funds – their yields are worse than a comparable market index. With that said, this fund is able to invest in things other than midstream partnerships, so it does have a bit more flexibility than the comparable indices. The ClearBridge MLP and Midstream Total Return Fund is also one of the few ways to easily add midstream partnerships to a retirement or other tax-advantaged account, so it has that going for it....

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