Despite weak oil, MLP plays can pay: Portfolio manager

ETE & WMB good MLP picks: Pro

Crude's decline over the past year has taken many energy names down with it. However, the weakness in oil prices presents an opportunity for those looking to invest in master limited partnerships, or MLPs, according to portfolio manager Quinn Kiley.

That's because while an increased supply of crude may weigh on prices, it actually benefits MLPs, he said Monday in an interview with "Power Lunch."

"MLPs make the money mostly by handling commodities, oil and gas and other derivative products, and they do have some exposure to prices on the extremes, but generally speaking they do well when the energy production growth is positive in space and the volumes increase. That's good for MLPs," said Kiley, who manages the Advisory Research MLP and Energy Income Fund.

However, one headwind on the horizon is a Federal Reserve interest rate hike, since investors tend to bail out of dividend stocks when rates rise.

"Clearly, dividends are a big, sexy part of the MLP sector for general investors," Kiley said.

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However, he believes growth of the dividend is what is going to drive returns over the long term.

"Today we're positioned very much toward growth and the visibility of that growth is key," he said.

"So it's not about what happened the last 12 months, it's what's going to happen over the next year or three years and if we have visibility there and the market sees that visibility, we think those types of MLPs are going to do very well."

Specifically, Kiley likes Energy Transfer Equity and The Williams Cos., both of which are top holdings in his fund.

—CNBC's Brenda Hentschel contributed to this report.