The largest MLP ETF available to investors saw strong flows in January, demonstrating continued interest in the midstream space.
The Alerian MLP ETF (AMLP ) has hauled in $69 million in net flows year to date through January 30. The ETF is a composite of energy infrastructure MLPs that earn most of their cash flow from midstream activities.
Many investors are attracted to AMLP for its history of providing compelling income and returns.
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MLPs are currently providing more generous yields than other segments of the energy sector and other income-oriented investments. AMLP’s underlying index, the Alerian MLP Infrastructure Index (AMZI), is yielding 7.38% as of January 30.
Furthermore, many midstream names have already announced quarter-over-quarter growth in their dividends for the fourth quarter of 2023.
See more: 2024 Outlook: Macro Uncertainty Favors Midstream/MLPs
Performance: MLPs and Broader Energy
Total return is another reason why investors are using the MLP ETF in portfolios. MLPs have outpaced broader energy in 2024 to date, strengthened by M&A activity and positive dividend growth.
AMLP advanced 6.0% year to date through January 30, while broader energy, measured by the Energy Select Sector SPDR Fund (XLE ), is up 1.4%, each on a total return basis. Over one year, AMLP is up 22.1% while XLE has declined 1.2%.
Despite AMLP’s strong recent performance and significant inflows, the MLP ETF remains a compelling investment opportunity in the current environment. AMLP’s underlying index is trading with a forward EV/EBITDA multiple below its three-year average.
The index’s weighted average forward EV/EBITDA multiple (using Bloomberg 2025 consensus EBITDA) is 8.55x, compared to the three-year average of 8.84x as of December 31.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
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