Master limited partnerships (MLPs) own facilities for oil products or natural gas in one or more of the following areas: transportation, gathering, storage, and production. That gives them stability and — along with their MLP structure — allows them to pay out large dividends, more than 6 percent in many cases. Kinder Morgan Energy Partners (KMP), the second-largest U.S. pipeline partnership after Enterprise Product Partners (EPD), has proven itself a top player in the industry since its founding in 1997.

KMP owns or operates more than 37,000 miles of pipelines and 180 terminals in North America. Then there’s Kinder Morgan Inc. (KMI) which owns the general partner, incentive distribution rights, and about 11 percent of the limited partner stake in Kinder Morgan Energy Partners. What that means it that Kinder Morgan Inc. has first claim on the MLP’s earnings.

So if you’re looking for an MLP play with more safety than normal, consider KMI, as you’re getting a piece of the general partner.

You pay for that safety. While KMP recently sported a dividend yield of 6.21 percent, KMI’s yield stood at only 3.89 percent. Of course, 3.89 percent looks pretty lofty when you compare it to the 10-year Treasury yield of 3 percent.

KMI garners regular income both from its stake in KMP and its 20 percent ownership of Natural Gas Pipeline Company of America (NGPL), a big-time national pipeline for natural gas. KMI doles out dividends to shareholders after subtracting for its low expenses and its income taxes.

Bullish view

Experts are bullish on KMI’s future. Analysts at Ned Davis Research write that KMI looks undervalued based on two measurements: A price-to-book ratio of 0.98 is far below the energy sector’s bottom quintile level of 1.48, and the price-to-sales (trailing 12 months) ratio of 0.4 is less than half the energy sector’s bottom quintile level of 1.17.