Adam Galas

Investing in MLPs, like stocks, requires buying great companies with long-term track records of growth. Quality management that has proven itself in both good times and bad is a requirement for investing success.

Upstream MLPs are some of the highest yielding assets in the entire investing universe. However, investors must be careful not to buy into poorly managed partnerships whose distributions are insecure and have little prospects for growth.

Sometimes investors are tempted to invest in lower quality companies because they are either reaching for yield or trying to achieve diversification. This article explains why diversification for its own sake can be hurtful to long-term investing success.

Recently some variable distribution MLPs have gone public that enticed investors with 20%-25% yields. These mouth-watering payouts come at a price, however, and investors need to know the pros and cons of investing in these kinds of MLPs.

Studies show that lower volatility companies that pay high and growing yields perform best over the long-term. Midstream MLPs allow investors to participate in America's recent natural gas bonanza while maintaining low volatility and high yields.

America's natural gas boom has resulted in domestic prices two to three times cheaper than overseas. Future LNG exports will make some companies billions of dollars in profits, and long-term investors can partake in the bounty.

American natural gas is experiencing a renaissance courtesy of fracking technology, and these three partnerships offer investors an excellent opportunity to cash in with both strong yields and capital appreciation.

These three exploration and production MLPs are trading at large discounts to the present day value of future net revenues of their oil and gas assets. In addition, each is aggressively growing its reserves, meaning there is a strong catalyst for future capital gains.

Buckeye Partners is a decent company that has moderate prospects for growth and pays a good yield. However, its recent run-up leaves the company trading at an unjustifiable premium to its competitors, which offer greater growth prospects, higher yields, and better operating results.

This oil and gas producer has a consistent long-term track record of growth through accretive acquisitions that allows it to provide one of the highest yields in its industry. Recent growth catalysts should allow it to accelerate its already good distribution growth rate.

This specialty oil refining MLP has a strong and consistent history of growth -- both in sales and distributions -- but due to industry cyclicality, it's trading at a deep discount.

Spectra Energy has a strong track record of growth through accretive acquisitions and growing its dividend, and management has a goal to double current assets by investing $25 billion over the next decade.