Investors seeking truly high yields have no doubt crossed paths with Master Limited Partnerships, or MLPs. MLPs are structured like limited partnerships, yet they trade publicly and enjoy favorable tax treatments. They're typically required to shell out a significant portion of their earnings to shareholders as a distribution, so the dividends are usually worth bragging about.

Kinder Morgan Energy Partners (NYSE: KMP) is the largest oil and gas MLP in the U.S., and because of its excellent returns over the last decade, it's been considered a darling stock by most investors.

Last year, Kinder Morgan completed construction of a new natural gas pipeline in Louisiana, of which 100% of the capacity has been subscribed to Chevron (NYSE: CVX) and Total (NYSE: TOT) under 20-year contracts. These situations are not atypical -- Kinder Morgan frequently engages in take-or-pay contracts where customers are under obligation to accept product or pay an appropriate fee. This had made Kinder Morgan quite profitable and helps to stabilize cash flow.

However, the field of MLPs is getting crowded, so it's worth taking a closer look at Kinder Morgan to see if it's still as hot a commodity as it once was.

Buy:

  • Staying Active: It's easy to point out KMP's 6.4% dividend yield, their 20% compound annual growth rate, or their ability to increase net income year after year. But a great company is only great if it can sustain success, and KMP is continuing to do so. In April of this year, the company announced it would acquire 50% of Petrohawk Energy's (NYSE: HK) natural gas business in the Haynesville shale -- a project that is expected to produce about 375 miles of pipeline. Just last week they announced a joint venture with Copano Energy (Nasdaq: CPNO) to transport as much as 200 million cubic feet per day of natural gas from SM Energy's Eagle Ford Shale production. These projects, along with KMP's other asset footprints, should be enough to ensure strong and steady growth in the future.
  • Latest Quarter: KMP reported an increase in all three of its operating segments -- natural gas, services, and products -- as revenues got a 20% boost compared to last year's quarter. In particular, the rebound in commodity prices helped uplift the CO2 transport business, which saw a nice 41% increase in sales. Additionally, KMP saw a 14% increase in cash from operations, bringing the total to $514.8 million.

Sell:

  • Decreasing Distributions: KMP has been able to increase its dividend for the last 13 years, but that torrent growth may not always continue. Kinder Morgan has an obligation to its general partner, and that obligation increases as its distribution to limited partners tops out at a certain point. Some analysts fear that as this point has already been passed, the company may ultimately have to decelerate its per-unit distribution growth. That's bad news for new or existing limited partners.
  • Competition: There's no shortage of oil and gas MLPs, so investors have plenty of options to choose from. For instance, Enterprise Products Partners (NYSE: EPD) also announced last week that it would expand its presence in the Eagle Ford Shale, of which it plans to construct about 350 miles of pipeline. In addition, Enterprise recently increased its distribution per-unit (which sits nicely at 6.4%), which represents its 24th consecutive increase. On the other end of the spectrum are companies like Linn Energy (NYSE: LINE), which does more oil and gas acquisition and development.┬áIt recently spent about $90 million on natural gas and oil properties in the Permian Basin, of which it hopes will add 950 barrels of oil equivalent per day to is production levels. Linn also pays a forward dividend of 9.10%, which is almost a good three points above that of Kinder Morgan's.

Hold:

  • The U.S. Energy Information Administration expects natural gas to average $4.70 per million BTU, which represents a $0.75 increase from last year. Furthermore, the threat of hurricanes here at home should boost prices, so companies like KMP that transport and store natural gas have a positive outlook on the horizon. Although there are other MLPs that offer similar exposure, if you're already holding shares of KMP, you might be inclined to wait for a natural gas recovery.

The foolish bottom line
There's no doubt that Kinder Morgan will continue to generate cash, and led by its founder Rich Kinder, the company should be able to execute on its strategies and treat limited partners well. However, with KMP trading at $68 a share, close to its all-time high, it may be a good time to sell some of your shares and hold on to the rest for the ride.

What do you think about Kinder Morgan? Are there better MLPs out there today, or is Kinder Morgan still the cream of the crop? Sound off in the comments box below!