Energy Stock Showdown: MLPX Beats ICLN on Yield and Returns

Investors deciding between Global X-MLP & Energy Infrastructure ETF (NYSEMKT:MLPX) and iShares Global Clean Energy ETF (NASDAQ:ICLN) are weighing a high-yield North American infrastructure play against a global portfolio of renewable energy producers.

These ETFs offer exposure to different segments of the energy market. While the Global X fund focuses on master limited partnerships and infrastructure companies that transport fossil fuels and natural gas, the iShares fund targets companies at the forefront of the global transition to sustainable power sources such as wind and solar.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

At 0.38%, the iShares Global Clean Energy ETF is slightly more affordable than its counterpart, though both remain below the 0.5% threshold. For income-oriented investors, however, the Global X-MLP & Energy Infrastructure ETF stands out with a significantly higher distribution yield of 4.1%, more than tripling the 1.1% yield offered by the iShares fund.

Performance & risk comparison

What's inside

The Global X-MLP & Energy Infrastructure ETF provides targeted exposure to midstream energy companies, with its portfolio concentrated 100% within the energy sector. This fund holds 29 positions and aims to replicate the Solactive MLP & Energy Infrastructure Index. Its largest positions include Williams Cos Inc at 9%, TC Energy Corp at 8.9%, and Enbridge at 8.9%. It was launched in 2013. Global X-MLP & Energy Infrastructure ETF has paid $3.07 per share over the trailing 12 months, which on its recent ~$75.25 share price works out to a 4.1% yield.

The iShares Global Clean Energy ETF offers a broader, more diversified footprint with 105 holdings spread across utilities (40%), energy (29%), and industrials (24%). The fund employs an environmental, social, and governance screen to select international companies focused on sustainable power. Top holdings include Bloom Energy Class A (NYSE:BE) at 8.5%, First Solar at 7.8%, and China Yangtze Power Ltd A at 7.7%. It was launched in 2008. iShares Global Clean Energy ETF has paid $0.18 per share over the trailing 12 months, which on its recent ~$17.83 share price works out to a 1.1% yield.

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Which looks like the better buy

MLPX outperforms ICLN in several categories. It has a higher dividend yield, much lower volatility, and a stronger return over both one- and five-year periods. The fund holds midstream energy companies, which have their advantages in the energy investment landscape. These energy companies act like toll roads, charging a set fee for the volume of oil or natural gas they move. Their revenue isn't tied to the market price of oil or gas, which can fluctuate wildly. Plus, they often secure multi-year contracts, which lends to their stability and ability to distribute cash to investors.

ICLN's focus on clean energy may appeal to investors with an ESG bent. The fund could also be a bet on the future of energy, meaning buying in today could be a ticket to holding tomorrow's energy giants. But ICLN investors will have to be willing to hold the fund for years or even decades as the energy landscape evolves.

Despite its higher expense ratio and more concentrated portfolio, MLPX seems to be the better option for energy investors seeking stability, growth, and income.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy, Enbridge, and First Solar. The Motley Fool recommends Tc Energy. The Motley Fool has a disclosure policy.