PetroLogistics (NYSE:PDH) is a master limited partnership that owns and operates propane dehydrogenation facilities. (For us chemistry geeks, that means it converts propane into propylene.)
The chemical is a starting product for chemical reactions — a raw material used for things like films, packaging and caps. Profit depends on the spread between the commodity pricing between propane and propylene.
Personally, I don’t like being tied to commodities like this. But if you’re willing to ratchet down your holdings in commodity baskets (in a diversified portfolio), and replace it with this company, then PetroLogistics might be worth the risk. The company’s last distribution of 67 cents annualizes out to a whopping 20% yield.
Just remember that PDH falls into the speculative category of investments.