Master Limited Partnership - MLP

Loading the player...

What is a 'Master Limited Partnership - MLP'

A master limited partnership (MLP) is 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.

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.

RELATED TERMS
  1. Limited Partnership Unit

    An ownership unit in a publicly traded limited partnership, or ...
  2. Publicly Traded Partnership - PTP

    A business organization owned by two or more co-owners, that ...
  3. Limited Partnership - LP

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

    A business organization in which two or more individuals manage ...
  5. Limited Partner

    A partner in a partnership whose liability is limited to the ...
  6. General Partner

    Owners of a partnership who have unlimited liability. A general ...
Related Articles
  1. Entrepreneurship

    MLPs: How They Are Taxed

    The advantages of MLPs outweigh the disadvantages, especially if you play your cards right.
  2. Products and Investments

    Why MLPs May Be a Thing of the Past

    Do rising rates as well as lower oil prices mean a bleak future for master limited partnerships?
  3. Mutual Funds & ETFs

    Pros and Cons of Master Limited Partnerships

    Want steady income? Consider looking into MLPs.
  4. Economics

    What is a Partnership?

    A partnership is an organization where two or more owners operate a business.
  5. Retirement

    Does it Make Sense to Have an MLP in an IRA?

    Here's why MLPs should — and shouldn't — be considered for an IRA.
  6. Stock Analysis

    MLP ETPs: 3 Things To Consider

    With well over $1 trillion in assets, both institutional and retail investors continue to flock to exchange traded vehicles as a way to build portfolios. Not only do these funds offer low costs ...
  7. Investing

    One Key To Finding The Size “Sweet Spot” For MLPs

    Stock investors are no stranger to the concept of size. The evidence is well-documented that small companies tend to outperform their larger rivals. Since the bottom of the recession in 2009, ...
  8. Retirement

    Discover Master Limited Partnerships

    These unique investments provide significant tax advantages.
  9. Stock Analysis

    Playing MLPs Via ETPs

    Master limited partnerships (MLPs) have exploded in popularity because of their high yields. But MLPs aren’t without tax headaches.
  10. Stock Analysis

    Want Income? MLP ETFs Still Offer Value

    High income and growth potential minus the tax headaches associated with MLPs makes ETFs the top choice to play the sector.
RELATED FAQS
  1. How does a master limited partnership (MLP) differ from other business structures?

    Learn how master limited partnerships are unique hybrid legal structures combining the liquidity of shares in a company with ... Read Answer >>
  2. What are the tax implications of owning a master limited partnership (MLP)?

    Learn about the tax benefits of owning units in a master limited partnership, and understand how distributions are treated ... Read Answer >>
  3. Why are MLP ETFs so expensive?

    Discover master limited partnership (MLP) ETFs and the legal characteristics that make them so expensive as well as the structure ... Read Answer >>
  4. What are the advantages to structuring a business as a master limited partnership ...

    Learn about master limited partnerships (MLPs) and their unique tax treatment, which may make them beneficial for certain ... Read Answer >>
  5. What are the differences between an MLP exchange traded fund (ETF) and an MLP exchange ...

    Learn about the tax differences between master limited partnership ETFs and ETNs, and understand the tax advantages of owning ... Read Answer >>
  6. Can mutual funds invest in MLPs?

    Learn about mutual funds that invest in master limited partnerships that specialize in real estate, natural resources or ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center