Many MLPs currently offer extremely high distribution yields. However, in several cases, the extreme yields have resulted from poor stock performance and the market’s concerns that a distribution cut is imminent. Therefore, investors should be particularly careful before purchasing high-yield MLPs. Nevertheless, in this article, I will analyze why investors should purchase Holly Energy Partners (HEP), which is offering a 9.0% distribution yield and is poised to continue to raise its distribution quarter after quarter for years.
As interest rates have been on a steady rise in the last two years, the yields of most