After its September meeting, the Federal Open Market Committee (FOMC) announced that it would launch “Operation Twist” in a bid to drive down long-term rates even further. Under the program, the US Federal Reserve will purchase $400 billion of Treasury securities with maturities of six years to 30 years by June 2012. It will also sell an equal amount of Treasury securities with remaining maturities of three years or less.

The hope is that by pushing down rates on long-term Treasury bonds and mortgage debt, the cost of borrowing for business and consumers will fall, sparking a credit expansion.

The announcement caused the yields on Treasury bonds of all maturities and corporate debt to plunge, creating big gains for investors who already owned those asset classes. Unfortunately, investors allocating additional money to bonds in the future will need to settle for even lower yields and limited prospects for capital gains.

In its announcement, the FOMC cited a dismal economic outlook as the justification for its latest move–which led equity markets to spiral downward. But that sell-off has made dividend-paying stocks all the more attractive in terms of valuations and yields, creating opportunities for income-oriented investors.

Master limited partnerships (MLPs) are perhaps the most attractive of all income equities in this environment.

MLPs operate the pipeline and storage infrastructure for our oil, gasoline and natural gas resources. They’re an attractive way to play both growing energy demand and the need for greater investment in the US energy infrastructure because they avoid direct exposure to volatile commodity prices. MLPs are paid based on the volume of commodities they move rather than on the price of oil or natural gas. As a result, most MLPs are able to pay extremely attractive dividends in terms of absolute yield and consistency of payout.

There are a number of traditionally structured mutual funds that focus on MLPs, but most charge exorbitant loads or suffer from poor stock selection. ALPS Alerian MLP ETF (NYSE: AMLP) is a passively managed index exchange-traded fund (ETF). The composition of its index rarely changes and it charges a low 0.85 percent expense ratio, making it one of the cheapest MLP funds available.

The fund holds a capitalization-weighted portfolio of 25 midstream MLPs, including names such as Enterprise Products Partners (NYSE: EPD), Kinder Morgan Energy Partners (NYSE: KMP) and Magellan Midstream Partners (NYSE: MMP).

The operations of most midstream MLPs are fairly diversified. Enterprise Products Partners operates both onshore and offshore natural gas and crude oil pipelines and storage facilities. Kinder Morgan Energy Partners owns more than 35,000 miles of pipeline and 180 crude, natural gas and bulk materials terminals.

ALPS Alerian MLP ETF is currently the least volatile exchange-traded product tracking the MLP space; its standard deviation runs at 8.1 percent and its beta is 0.63. By comparison, the S&P 500’s standard deviation is currently in excess of 21 percent.

The fund currently yields 6.4 percent, one of the highest yields in the ETF universe. The reason for such an impressive payout is the structure of MLPs; they’re not subject to corporate-level income tax, so most of their income is passed along to investors. But this isn’t a case of questionable companies making higher distributions just to attract investors; these are strong companies that take advantage of a unique structure to maximize unit-holder returns.

We expect the MLP sector will benefit greatly from America’s energy infrastructure demands. The major reason natural gas prices in the US are so low–currently around $4 per million British thermal units–is that the infrastructure is not yet in place to easily move excess supply to areas of the country where demand is greatest. Crude oil supplies in the US face a similar lack of mobility.

As a result, there are a number of new pipelines in the works, and MLPs are in the best position to build them. Even during the darkest days of the financial crisis, most MLPs were able to tap the capital markets and secure financing at favorable terms. They should be able to secure the funding necessary to complete pipeline projects regardless of the economic climate. That will be a major boon for the sector as energy demand continues to grow.