Photo credit: LINN Energy

LINN Energy (LINEQ) has become a battleground stock this year. That's what happens when a high-yielding company with a large retail investor base comes under attack from those that don't see the company the same way. At some point all that noise will fade and investors will be left with ... what exactly?

Let's ignore the noise from dissenting opinions on LINN's accounting practices, and let's also forget the company is still in the midst of an informal SEC inquiry. What are the basic reasons why an investor would own units of LINN Energy or shares of its affiliate LinnCo (NASDAQ: LNCO)?

Reason No. 1: Double-digit distribution
Let's face it, reason numero uno why someone would invest in LINN Energy is the yield. The company throws off some serious coin every single month. Investors buying today could lock in an 11% yield with LINN and about 10% with LinnCo. For investors looking for a hefty supply of monthly income, there aren't very many options. Investors could choose Vanguard Natural Resources (NASDAQ: VNR) monthly payout, but at 9% it's quite a bit less. Not only that but Vanguard Natural Resources is nowhere near the size of LINN, which is the tops in the sector.  

Reason No. 2: Secured cash flows
LINN's secret sauce is its hedging program. LINN hedges 100% of its production for four to six years with a combination of 70% swaps and 30% puts. The swaps lock in margins while the puts provide some upside if commodity prices rise. No other producer hedges as much production for as long as LINN does. Using Vanguard Natural Resources again as an example, it only hedges 85% of its production. 

Those with a negative opinion of LINN have pointed to how LINN accounts for its hedging practices as a reason to sell. Yet I think its important to look past this to see what LINN is hedging in the first place. LINN is producing oil and gas from more than 19,000 oil and gas wells. These producing wells are the core of LINN Energy.

Provided it closes its deal for Berry Petroleum (NYSE: BRY), LINN is a company that will hold 6.6 trillion feet of natural gas equivalent reserves. It's also expected to produce from those reserves for the next 17 years. To put that in rough context, 5 trillion cubic feet of natural gas is enough to meet the needs of 5 million households for 15 years. Put another way, LINN Energy itself could supply the energy needs for an area the size of my current home state of South Carolina for nearly two decades. LINN hedges to simply ensure it has stable cash flows as it meets America's energy needs. 

Reason No. 3: Great growth prospects
LINN is an acquisition machine with more than 50 deals under its belt at an announced value of nearly $15 billion. In addition to the transformative Berry transaction that it's still trying to close, the company just recently announced another $525 million deal to lock up more oil and gas assets in the Permian Basin.

The company sees a very robust market over the next few years as an increasing number of exploration and production companies shed mature assets to rebuild balance sheets or fund growth projects. For example, LINN played a role in helping the beleaguered oil giant BP (BP 0.98%) repair its balance sheet last year. The company engaged in two separate transactions with BP that saw LINN acquiring over $2.2 billion dollars in assets. BP needed the money to help repair a hole in its balance sheet that sprung after its disaster in the Gulf of Mexico. Further, with so many oil and gas exploration companies in need of cash to fund aggressive drilling programs, LINN should continue to have its hands full in its quest to consolidate the mature oil and gas wells these companies no longer want.

Investor takeaway
LINN might be in the spotlight these days for its bookkeeping, but at its core it's an income-focused oil-and-gas company. Investors with a long-term mindset should remember that. This is a real company that owns real oil and gas wells and really does produce income. Bottom line: Investors looking for income that's secured by oil and gas production that will grow by acquisition should consider buying LINN.