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Here Are 3 Other Higher-Yielding Dividend Stocks He Likes Instead

Bill Gross, known as the “bond king,” has built a successful career in the investment management industry, particularly in fixed income. With an estimated fortune of $1.7 billion, Gross has recently been diversifying his portfolio by investing in master limited partnerships (MLPs). However, he recently decided to sell some of his MLP holdings, including Enterprise Products Partners (EPD), as he believes that pipeline MLPs have peaked for now.

Gross still holds Western Midstream (WES), Energy Transfer (ET), and MPLX (MPLX) in his portfolio, citing them as more attractive options for income-seekers. He believes that these MLPs offer higher relative dividend yields compared to Enterprise Products Partners.

Western Midstream is Gross’ favorite MLP, which he considers the “best of the bunch” with a tax-deferred yield of 10.25%. Energy Transfer and MPLX also offer attractive yields of 8.1% and 8.3%, respectively, due to their lower valuations compared to Enterprise Products Partners.

These MLPs all operate gathering and processing assets, but they have varying levels of diversification in their business models. While Western Midstream focuses on G&P assets, MPLX has a balanced split between G&P and logistics and storage. Energy Transfer is a diversified MLP similar to Enterprise Products Partners, offering less volatile cash flow.

Financially, all these MLPs maintain strong leverage ratios and generate excess free cash flow after paying distributions. This ensures that their high-yielding distributions are on solid footing.

While Gross may be selling his stake in Enterprise Products Partners in favor of other MLPs, investors should consider the tax implications of selling an MLP. Holding onto Enterprise or one of Gross’ favored MLPs could still be a viable option for generating passive income, as long as investors are comfortable with the tax complications that come with owning an MLP.

Ultimately, whether investors choose to invest in Enterprise Products Partners or Gross’ preferred MLPs, all options present solid opportunities in the MLP space.

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