Pipeline ETFs Ride AI-Driven Natural Gas Demand Boom
The demand for natural gas is expected to surge in the coming years due to the growth of AI data centers, which require massive amounts of power. To meet this demand, pipeline operators are signing multi-decade contracts with utilities and hyperscalers, locking in decades of revenue.
Three pipeline ETFs stand out as beneficiaries of this trend: AMLP (Alerian MLP ETF), MLPX (Global X MLP & Energy Infrastructure ETF), and ENFR (Alerian Energy Infrastructure ETF). These funds offer investors a way to tap into the growing demand for natural gas, with yields ranging from 4% to over 8%.
AMLP is the largest pure-play MLP fund on the market, tracking the Alerian MLP Infrastructure Index. It offers a yield of nearly 8%, but its C-corp structure means it's subject to corporate tax drag.
MLPX, on the other hand, has a tax-efficient structure, qualifying as a regulated investment company, which means no fund-level tax drag. It offers a lower yield than AMLP, but its efficiency means more of the underlying portfolio growth reaches shareholders.