One of the best ways to make money in the stock market is to do nothing. You know… buy a solid growth play and wait for it to pay off. Well, the same can be said about making money elsewhere too.
Take a look at Internet service providers. Once they have their infrastructure in place, and they sign up enough subscribers, all they have to do is collect subscription money. Once their investment capital is recouped, this income becomes a virtually 100% profit.
The same can be said about toll roads. Once you build and pave the road, only the occasional upkeep is required. Every car and truck pays you a toll. Eventually, the road will pay for itself.
This is the philosophy of thousands of businesses. And if you do it right, it can be extremely lucrative.
One of the most obvious examples that come to mind is a pipeline business. Sure, it costs plenty of upfront cash to buy the pipes to connect anything from oil fields to refineries or freshwater lakes to water treatment plants. It can also be a hassle securing the land rights to put a couple hundred miles of pipeline into – or onto – the ground.
But when this money is spent, and the pipelines are connected where they need to be, the work is done… and whoever put in that effort gets paid.
It’s because of this expensive, tedious upfront effort that makes pipeline businesses so lucrative.
You see, this creates something my colleague, Greg Guenthner, calls a “Profit Fortress”. It just means that the barriers any potential competition has to go through are difficult. Many on Wall Street call this the company’s economic moat.
Pipelines use their wide economic moats to rake in massive profits. To really take advantage of all that free cash flow that comes with a pipeline business, oftentimes the owners will set up something called a master limited partnership.
We’ve discussed these before. These are special kinds of companies that allow investors to avoid the much-hated double tax. Ordinarily, corporations must pay taxes on income. And then when they pay shareholders a dividend from whatever is left over, it’s taxed again. MLPs fit into a special category of businesses that can avoid this double tax, which is why dividends are normally so high.
We’ve talked about this kind of opportunity in the past. In fact, I listed five small cap MLPs I was interested in back in Dec. 2008. Back then, it seemed like the market would never recover. Fortunately, it did find a bottom a few months later. And MLPs took advantage. These partnerships were some of the best performers during the past 12-month rally.
I recommended you take a look at five MLPs back then. Each of the five had a tremendous run. The worst performer of the group returned investors 63%, plus another 12% in dividend payments.
While this trend might not continue in the next 12-to-15 months with the same gusto, I do expect MLPs to continue outperforming the rest of the market. And the dividends sure don’t hurt either.
There are plenty of ways to take advantage of this continued rally. Two of the easiest ways are JPMorgan Alerian MLP Index ETN (AMJ, Financial) and BearLinx Alerian MLP Select Index ETN (BSR, Financial). These two are linked to the Alerian MLP Index — an S&P creation that tracks the performance of MLPs.
Of course, you can clearly see in the above charts that you can double or triple the performance of the MLP Index if you pick and choose the best small cap MLPs. But that takes plenty of work.
I’m actually working on this project myself for my Lifetime Income Report readers. Now, to be fair, most of myLIR recommendations aren’t small caps. But I certainly don’t exclude them. I have one that just went ex-dividend yesterday and is paying a massive 14.5% dividend yield.
If these kinds of income plays — even the occasional penny income play — appeal to you, I urge you to check this out. It’ll tell you everything you need to know about these insanely profitable income opportunities.
Sincerely,
Jim Nelson
Penny Sleuth
Take a look at Internet service providers. Once they have their infrastructure in place, and they sign up enough subscribers, all they have to do is collect subscription money. Once their investment capital is recouped, this income becomes a virtually 100% profit.
The same can be said about toll roads. Once you build and pave the road, only the occasional upkeep is required. Every car and truck pays you a toll. Eventually, the road will pay for itself.
This is the philosophy of thousands of businesses. And if you do it right, it can be extremely lucrative.
One of the most obvious examples that come to mind is a pipeline business. Sure, it costs plenty of upfront cash to buy the pipes to connect anything from oil fields to refineries or freshwater lakes to water treatment plants. It can also be a hassle securing the land rights to put a couple hundred miles of pipeline into – or onto – the ground.
But when this money is spent, and the pipelines are connected where they need to be, the work is done… and whoever put in that effort gets paid.
It’s because of this expensive, tedious upfront effort that makes pipeline businesses so lucrative.
You see, this creates something my colleague, Greg Guenthner, calls a “Profit Fortress”. It just means that the barriers any potential competition has to go through are difficult. Many on Wall Street call this the company’s economic moat.
Pipelines use their wide economic moats to rake in massive profits. To really take advantage of all that free cash flow that comes with a pipeline business, oftentimes the owners will set up something called a master limited partnership.
We’ve discussed these before. These are special kinds of companies that allow investors to avoid the much-hated double tax. Ordinarily, corporations must pay taxes on income. And then when they pay shareholders a dividend from whatever is left over, it’s taxed again. MLPs fit into a special category of businesses that can avoid this double tax, which is why dividends are normally so high.
We’ve talked about this kind of opportunity in the past. In fact, I listed five small cap MLPs I was interested in back in Dec. 2008. Back then, it seemed like the market would never recover. Fortunately, it did find a bottom a few months later. And MLPs took advantage. These partnerships were some of the best performers during the past 12-month rally.
I recommended you take a look at five MLPs back then. Each of the five had a tremendous run. The worst performer of the group returned investors 63%, plus another 12% in dividend payments.
While this trend might not continue in the next 12-to-15 months with the same gusto, I do expect MLPs to continue outperforming the rest of the market. And the dividends sure don’t hurt either.
There are plenty of ways to take advantage of this continued rally. Two of the easiest ways are JPMorgan Alerian MLP Index ETN (AMJ, Financial) and BearLinx Alerian MLP Select Index ETN (BSR, Financial). These two are linked to the Alerian MLP Index — an S&P creation that tracks the performance of MLPs.
Of course, you can clearly see in the above charts that you can double or triple the performance of the MLP Index if you pick and choose the best small cap MLPs. But that takes plenty of work.
I’m actually working on this project myself for my Lifetime Income Report readers. Now, to be fair, most of myLIR recommendations aren’t small caps. But I certainly don’t exclude them. I have one that just went ex-dividend yesterday and is paying a massive 14.5% dividend yield.
If these kinds of income plays — even the occasional penny income play — appeal to you, I urge you to check this out. It’ll tell you everything you need to know about these insanely profitable income opportunities.
Sincerely,
Jim Nelson
Penny Sleuth
