Here is what I said a year ago about the long-term trend on natural gas: I think there is a huge opportunity for investing in companies involved in natural gas. But it is a long-term trend. In addition to companies which are directly involved in exploring and distributing natural gas, there are many other compnies so-called Master limited partnership (MLP) that engage in certain businesses, mostly pertaining to the use of natural resources, such as petroleum and natural gas extraction and transportation. Since MLPs do not pay corporate tax, they have to pass most of the profits to its partners (the share holders). So MLPs usually pay quite a high dividend yield, often 7-10%. However, the headache for investing in MLPs is tax filing. Each MLP will issue a special form called K-1 form, which can be complicated, especially if you buy multiple MLPs. This has deterred me from investing MLPs although there is actually significant tax benefit with MLPs.
Well, I have found one company which will solve this problem for me. It is called ClearBridge Energy MLP Total Return Fund Inc (CEM). This closed-end fund is primarily investing in energy MLPs and as such it returns high yield of dividends to share holders, currently at around 6%. The beauty of CEM is that, while it is a MLPs investment fund with high dividend yield, it has been structured for a simplified tax reporting. Investors in the Fund, while gaining exposure to multiple MLPs, will receive a single Form 1099, instead of individual Schedule K-1 forms. I really love this. CEM is relatively new and is currently trading at its highest level. I will take any pullback to add it to my long-term portfolio to ride the huge long-term uptrend for natural gas.
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