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Investing in Energy and Reducing Risk

Many traders and investors jumped on energy based ETFs such as UNG or ETNs such as GAZ waiting for a seasonal bounce.

There are alternative energy investments that will pay an hefty 11% yield while you wait. These are in the form of Royalty Trusts or Limited Partnerships.

One large Canadian trust is Pengrowth Energy (NYSE:PGH). Pengrowth boasts a 10.9% yield, and a low 5.5 P/E. Pengrowth owns properties that produce crude and natural gas. 

Provident Energy Trust (PVX) is another Canadian trust that has a 11.7% yield, and a low 8.6 P/E. Provident has oil producing properties in both the U.S. and Canada.

In order to diversify in this space there are close end MLP funds such as Cushing MLP (NYSE:SRV), Claymore MLP Opportunity (NYSE:FMO), Kayne Anderson (NYSE:KYN), and MLP Strategic Equity (NYSE:MTP), 

Instead of trading ETFs such as (NYSEARCA:UNG), (NYSEARCA:USO), (NYSEARCA:OLO), or ETNs such as (NYSEARCA:OIL) or (NYSEARCA:GAZ) buy Pengrowth (PGH) or Provident (PVX) for a long term energy investment and get paid a nice dividend to boot, something you will not get from a commodity based ETF.

If you like to stay more diversified pick up shares on Cushing MLP (SRV). Cushing MLP holds in the area of 30 MLPs in Crude, Natural Gas, and Coal. This closed end fund is more heavily weighted in Crude and Natural Gas.

Disclosure: MTR Investors Group holds PGH, PVX, and SRV.