Master Limited Partnership - MLP


DEFINITION of 'Master Limited Partnership - MLP'

A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP's cash flow, whereas the general partner is the party responsible for managing the MLP's affairs and receives compensation that is linked to the performance of the venture.


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BREAKING DOWN 'Master Limited Partnership - MLP'

One of the most crucial criteria that must be met in order for a partnership to be legally classified as an MLP is that the partnership must derive most (~90%) of its cash flows from real estate, natural resources and commodities.

The advantage of an MLP is that it combines the tax benefits of a limited partnership (the partnership does not pay taxes from the profit - the money is only taxed when unitholders receive distributions) with the liquidity of a publicly traded company.

  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Incentive Distribution Rights - ...

    These give a limited partnership's general partner an increasing ...
  3. Working Interests

    Refers to a form of investment in oil and gas drilling operations ...
  4. Limited Partnership - LP

    Two or more partners united to conduct a business jointly, and ...
  5. Partnership

    A business organization in which two or more individuals manage ...
  6. Public Company

    A company that has issued securities through an initial public ...
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  1. Can mutual funds invest in MLPs?

    Mutual funds invest in a wide variety of securities, including master limited partnerships, or MLPs. Because MLPs exhibit ... Read Full Answer >>
  2. What is the difference between a REIT and a master limited partnership

    Real estate investment trusts (REITs) and master limited partnerships (MLPs) are both considered pass-through entities under ... Read Full Answer >>
  3. What's the difference between publicly- and privately-held companies?

    Privately-held companies are - no surprise here - privately held. This means that, in most cases, the company is owned by ... Read Full Answer >>
  4. Should I sell my shares if a company suspends its dividend?

    Since 2008, when the Federal Reserve slashed interest rates to zero and then kept them there indefinitely, dividend-paying ... Read Full Answer >>
  5. How are joint ventures regulated in the United States?

    Joint ventures are a very specific type of business arrangement. They can be organized in several different legal structures, ... Read Full Answer >>
  6. What kind of companies in the utilities sector offer the most stable dividends for ...

    Among the companies that offer the most stable dividends for risk-averse investors are large, solidly established U.S.-based ... Read Full Answer >>

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