2023-05-03 21:27:26 ET
Summary
- As anticipated, the past year has been markedly stable for oil and gas infrastructure companies as fuel commodities remain at profitable prices.
- The sharp rise in risk-free interest rates increases the "fair value" dividend rate for riskier investments such as energy infrastructure MLPs.
- The popular infrastructure ETF AMLP could face some difficulties this year as the oil and gas rig counts decline in response to oil and gas prices falling below breakeven levels.
- A recessionary decline in crude oil demand could exacerbate strains, although I expect this to be met with an overreaction through reduced oil drilling activity.
- For now, I believe AMLP is best avoided and is likelier to decline. However, it still may be a superior long-term high-dividend investment due to its physical asset ownership (inflation hedge).
For further details see:
AMLP: Declining Oil And Gas Demand, Production May Soon Hamper Dividends