Cash yields keep slipping further this year. The Fed has cut the funds rate by 75 basis points over the past year to 3.75%, the average 12-month CD pays just 1.65%, and the 10-year Treasury sits at 4.51%. That backdrop is why the Alerian MLP ETF (NYSEARCA:AMLP) keeps drawing buyers chasing income. AMLP yields 7.78% on a portfolio of pipeline partnerships, pays quarterly, and issues a 1099 instead of the K-1 forms that scare retail investors away from owning MLPs directly. The yield case is real. The vehicle case is weaker than most AMLP holders realize.
Why income investors keep buying AMLP
This particular fund holds the largest U.S. midstream master limited partnerships in roughly equal weights, with top positions including MPLX at 12.76%, Sunoco at 12.26%, Western Midstream at 12.24%, Enterprise Products Partners at 12.23%, and Energy Transfer at 11.39%. These businesses collect fees for moving oil, gas, and natural gas liquids through pipelines and terminals, which helps insulate their cash flow from short-term swings in commodity prices. The fund’s most recent distributions were $1.03 in May 2026 and $1.01 in February 2026, putting the trailing annual payout near $4.02 per share. If you put $100,000 into this fund at the low end of its recent yield band, you would be looking at roughly $7,000 in annual cash income, which is well above anything you would get from a mainstream cash equivalent right now.
The hidden cost inside the wrapper
This fund offers the convenience of a 1099 by registering as a C corporation rather than as a regulated investment company. The fund itself owes corporate income tax on the partnership cash flows it receives, and it accrues a deferred tax liability against its net asset value as those obligations build over time.
That accrual is a permanent drag on NAV, not a one-time fee you just pay and move on from. The expense ratio of 0.84% is only part of the total cost picture, because the tax accrual sits right on top of it. There is also tax friction on the distributions themselves. Roughly 95% of the fund’s payout gets taxed as ordinary income at the investor level, and the current payout ratio of 120.33% signals that distributions are funded in part by return of capital. They also move with midstream cash flows rather than staying fixed as a CD coupon would.
A RIC-structured midstream fund
The Global X MLP & Energy Infrastructure ETF (NYSEARCA:MLPX) solves the structural problem. It caps direct MLP exposure at under 25% and fills the remainder with midstream C-corps such as TC Energy, Enbridge, Williams, Kinder Morgan, and ONEOK, thereby qualifying it as a regulated investment company. No fund-level corporate tax accrues against NAV. The expense ratio is 0.45%, about half of AMLP’s. The 30-day SEC yield is lower at 4.18%, but the tax drag and the broader midstream tilt explain the structural difference between the two wrappers.
The tradeoffs are not trivial
An MLPX investor on the same $100,000 collects closer to $4,180 in annual distributions at the current SEC yield, roughly $2,800 less in cash than AMLP at 7.78%. A retiree drawing the dividend to live on may prefer the higher current payout. MLPX also leans more on Canadian midstream names like Enbridge and TC Energy, which carry currency and cross-border tax considerations AMLP avoids. And selling AMLP in a taxable account can trigger capital gains and recapture the deferred tax that has been suppressing NAV. The Alerian Energy Infrastructure ETF (NYSEARCA:ENFR) is the cheaper RIC alternative, with a 0.35% expense ratio and a 4.45% 30-day SEC yield, for investors who want a closer index-style midstream basket.
Sizing the swap
Holders with AMLP in an IRA can rotate without a tax bill. In a taxable account, partial rotation, or directing new contributions to MLPX or ENFR rather than adding to AMLP, sidesteps a lump-sum gain event. The dollar-income gap shrinks meaningfully if a portion of the position stays in AMLP for the yield while new capital builds a RIC-structured sleeve underneath it.
What it suggests right now
This fund still does the one job that income buyers ask of it: converting pipeline cash flow into a 7%+ quarterly check that arrives on a 1099. For investors whose primary goal is total return on midstream exposure, the C corporation wrapper does carry some structural costs compared with an RIC-structured alternative. The case for at least a partial switch can be weighed against their personal tax situation and overall income picture.
Top Gaining Stocks
Top Losing Stocks