WES - KYN: Decent But Maybe Not The Best Fund In The Sector
2024-04-11 17:54:22 ET
Summary
- Kayne Anderson Energy Infrastructure Fund offers investors a way to add midstream master limited partnerships and corporations to their retirement accounts without tax issues.
- Midstream companies provide stable cash flows and high yields. These yields could make these equities attractive alternatives to bonds right now.
- The KYN closed-end fund has outperformed the S&P 500 Index and the Alerian MLP Index recently, and its current yield is higher than most individual midstream companies.
- The fund has underperformed its peers over the past three years.
- The fund is trading at a very attractive valuation right now and is covering its distribution.
The Kayne Anderson Energy Infrastructure Fund ( KYN ) is a closed-end fund, or CEF, that investors can employ as a way of adding various midstream master limited partnerships and corporations to their retirement accounts without having the tax issues that accompany such a situation. This alone can be a rather attractive proposition, as many of these companies enjoy remarkably stable cash flows and pay out a significant portion of them directly to their shareholders. As such, these companies tend to have fairly high yields and can serve as a better source of income than bonds or similar assets.
In fact, for most of the past fifteen years, most midstream companies have had significantly higher distribution yields than bonds and they have the advantage of being able to produce growth over time. Thus, companies such as Enterprise Products Partners ( EPD ), MPLX ( MPLX ), and a few others have raised their distributions over time. An investor will not be able to get that with bonds, and this adds a certain amount of protection against inflation....
KYN: Decent, But Maybe Not The Best Fund In The Sector