Pipeline stocks are still acting "like they should."Last March, Tom Dyson introduced the idea of toll bridge income investing. The idea is that a great income investment has the attributes of a toll bridge: It's unique, it's hard to replicate, it collects regular fees, and it requires little ongoing investment.
Companies that store and transport crude oil, natural gas, and petrochemicals are some of our favorite "toll bridge" investments. There's nothing exciting about these companies (called "MLPs")... They simply operate pipes in the ground, provide a vital service, and distribute cash to shareholders.
Last year's credit crisis was rough on MLPs. The benchmark Alerian Index fell over 40%. Investors have flocked back to this sector, however, and pushed the Alerian Index up 36% since Tom's essay.
Back in March, MLPs yielded between 10% and 15%. Now, the average yield is just under 8%. MLPs aren't a screaming deal like they were in March... but should be bought for the long term on a market correction.
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