Master Limited Partnership - MLP

AAA

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.

INVESTOPEDIA EXPLAINS '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.

VIDEO

Loading the player...
RELATED TERMS
  1. Incentive Distribution Rights - ...

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

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

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

    1. The degree to which an asset or security can be bought or ...
  5. Public Company

    A company that has issued securities through an initial public ...
  6. Partnership

    A business organization in which two or more individuals manage ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>
  5. What are the benefits for a company investing in a greenfield investment?

    Advantages of greenfield investments include increased control, the ability to form marketing partnerships and the avoidance ... Read Full Answer >>
  6. What are the most popular mutual funds that give exposure to the utilities sector?

    Some of the most popular mutual funds that provide exposure to the utilities sector include American Century Utilities, Prudential ... Read Full Answer >>
Related Articles
  1. Stock Analysis

    The Best Buy-and-Hold Stocks for Your Retirement Portfolio

    These stocks offer stability while exhibiting strong indicators of future growth.
  2. Professionals

    Master Limited Partnership (MLP)

    A master limited partnership, also referred to as an MLP, is a publicly traded partnership, where the limited partnership interests are traded much like shares in a corporation.
  3. Retirement

    Discover Master Limited Partnerships

    These unique investments provide significant tax advantages.
  4. Entrepreneurship

    Netflix's New Strategy: Penetrate Your Hotel Room

    Will Netflix’s new venture—to offer its media content in hotels—pay dividends? Investopedia explores the business potential and related developments.
  5. Entrepreneurship

    Nike and the NBA, a Perfect Duo?

    What does Nike's recent eight-year contract partnership with the NBA entail for its largest competitor Under Armor?
  6. Investing

    Looking for Alternatives to Invest in Real Estate?

    There are several ways to invest in “real estate” via the stock market, buying stocks and hold them for years. We give you 5 ways to invest in real estate.
  7. Investing Basics

    What is the Shadow Banking System?

    The shadow banking system is composed of financial institutions that do not take deposits in the tradition sense.
  8. Stock Analysis

    Is PayPal Worth More Than eBay?

    Examine the online payment processor, PayPal, and discover its projected value increase as a standalone company, separate from eBay.
  9. Professionals

    Tops Tips to Prep Your Advisory Practice for Sale

    Here are three tips financial advisors should follow when prepping their practice for a sale to help with a smooth transaction and transition.
  10. Entrepreneurship

    MLPs: Is Now the Right Time to Invest?

    Here's what you need to know about MLPs, those under-the-radar investment vehicles.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!