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Dear Mr. Berko:

Dear F.W:

You have selected an intriguing industry. Because pipeline master limited partnerships (MLPs) do not become involved in the sale of oil, natural gas or liquids, management is not concerned that oil may fall to $25 a barrel or explode back to $147. MLPs, like shipping companies, get paid for moving the product to refiners and large-capacity users. Obsolescence isn’t a problem because new technologies won’t put pipelines out of style. Competition is rare because most MLPs have recognizable and respected territories. Maintenance is not much of a concern (hurricanes in the Gulf of Mexico are an exception), so there is little in the way of ongoing capital expenditures.

So I’m comfortable recommending the following three MLPs that I’ve culled from a list of 23 publicly traded companies.

Enterprise Products Partners LP (EPD-$20.95) is a $25 billion revenues company and a leading integrated provider of natural gas, natural gas liquids, processing, transporting and storage services via 32,000 miles of pipeline. The $2.12 dividend, which has been raised in each of the last dozen years, yields a nice 10.1 percent. In 2008, EPD’s offshore pipeline and services segments posted weak numbers, a result of hurricane damage to these properties. EPD’s petrochemical services division also posted weak profits due to reduced demand for fuel. However, EPD’s natural gas liquids pipelines and onshore natural gas pipelines posted a dramatic rise in income, higher margins and increased volumes.

Buy 100 shares at the current price and place a good till cancel/do not reduce order to buy another 100 shares at $16.70. A big portion of the dividend income (about 80 percent) is considered return of capital and not currently taxable.

Energy Transfer Partners LP (ETP-$35.89) is a $10 billion revenue master limited partnership that gathers, processes, stores and transports products via its 16,000-mile pipeline primarily to users in Texas. EPD also owns Heritage Propane, the third-largest marketer in the United States, with 1.1 million customers in 40 states. The $3.58 dividend provides a current yield of 10 percent and has been raised every year since EPT went public in 2004. Most analysts expect solid gains in 2009, 2010 and 2011 from earnings as well as attractive dividend increases in each of those years. Buy 100 shares now and place a good till cancel/do not reduce order for another 100 shares at $25.40.

Plains All American Pipeline LP (PAA-$37.76) is a $32 billion master limited partnership with a $3.57 dividend yielding 9.5 percent. PAA’s dividend growth rate since going public in 1999 at $20 is a good 9.7 percent. The company owns 15,000 miles of pipeline and leases another 5,000 through which it stores, ships and markets crude oil, refined products and liquid petroleum gas. Several recent ventures should double PAA’s daily crude capacity to 3 million barrels a day, and its recent acquisition of Pacific Energy Ltd. should add about $70 million to earnings by 2010 or 2011. Buy 100 shares at the current price and place a good till cancel/do not reduce order for another 100 shares at $28.25.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service