It might not be a true indication that the U.S. economy is turning around, but the master limited partnership (MLP) market is definitely at its strongest level since the recession of 2008- 2009. There aren’t many “sure things” in stock market trading, but investors are embracing the steady dividends that MLPs provide.

We’ve all heard financial and investment advisers suggest buying bonds to obtain security for riskier investments, so more MLPs are beginning to make sense as the dividends provide security and the growth potential for many partnerships allows investors to further solidify the growth aspects of their portfolios.

MLPs have become attractive for many companies in the energy sector to spin them off to obtain the strong credit profiles and tax advantages that the business structure affords. Once considered something of a niche product, MLPs have gone mainstream in 2013.

The sector was negatively impacted in early June by the same headwinds that affected the overall stock markets with concerns about interest rates and the Chinese economy. However, the market improved in the second-half of the month—with the Wells Fargo Securities MLP Index experiencing a 3.2% improvement for the month—as the interest rate concerns abated and capital flowed into the sector as buyers used the min-sell off as a buying opportunity, according to Wells Fargo Securities’ MLP Monthly for July.

The report added that approximately $42 billion was invested in MLPs by the close of June. This could continue to grow going forward as Wells Fargo Securities reported that pension funds and mutual fund complexes are expressing interest in MLP investments given their strong yield performance and solid fundamentals as oil and natural gas liquid (NGL) midstream infrastructure continues to be built out.

The investment firm predicts the MLP sector to experience an 8% increase for the next 12 months due to these fundamentals. Thus far, the market has outperformed the S&P 500 on a year-to-date basis by a large margin as MLPs generated total returns of 22.5% compared to the S&P 500 at 12.6%.

“We believe MLP valuations should improve relative to history and converge with those of REITs [real estate investment trusts] and utilities over time as the sector’s liquidity and market cap increase and MLPs gain broader acceptance among institutional investors. Consequently, we would expect MLPs to trade at a premium to historical valuation levels on a ‘normalized’ basis.”

Due to federal regulations that require the partnership to receive at least 90% of its revenues from “qualifying sources,” MLPs have generally been a vehicle largely utilized by the energy industry, especially in the midstream. These sources are largely natural-resource activities but can also include income gained from real estate sales and rent.

While companies involved in real estate would normally utilize REITs, several companies obtaining capital from real estate have selected the MLP structure. Notably, funeral home and cemetery corporation Stonmor Partners and amusement park operator Cedar Fair Partners are MLPs outside of the traditional structure focused on real estate as their qualifying incomes.

Though they have both found success, it is likely that the real growth for MLPs will continue to be found in energy. The sector, in fact, could see the addition of alternative and renewable energy companies if the MLP Parity Act (HR 1696) is passed.

Representative Ted Poe (R-Texas) and Senator Chris Coons (D-Delaware) introduced the act in May to help this still-fledgling industry secure a lower cost of capital that is available to MLPs. By altering the qualifying sources to include renewable energy sources such as wind, solar, hydro, fuel cells, geothermal, biomass and municipal solid waste, it will also help secure necessary funding for large-scale alternative- and renewable- energy projects.

It is unclear if, or when, Congress will vote on the bill, and there are questions regarding what sort of impact it would have on the MLP market should be it be passed. It is difficult to imagine investors turning their backs on the sound economics and strong returns posted by midstream and upstream MLPs in favor of a still uncertain renewables market. It is more likely investors would use MLPs involved in the renewables industry to diversify their holdings. Additionally, companies with alternative and renewable energy assets would likely spin these off into new MLPs to take advantage of improved costs of capital.

Even without alternative and renewables entering the picture, the MLP sector is growing. Thus far in 2013, seven MLPs have completed initial public offerings (IPOs): CVR Refining, Emerge Energy Services, KNOT Offshore Partners, New Source Energy Partners, SunCoke Energy Partners, Tallgrass Energy Partners and USA Compression Partners. Additionally, Phillips 66 Partners priced its IPO recently, and there are five more companies that filed their S-1 forms for IPOs.

According to Wells Fargo Securities, MLPs are increasingly turning to at-the-market equity-distribution agreements to raise larger sums of capital for certain projects. These equity offerings are in addition to the more traditional secondary offerings and private-investment-in-public-equity offerings.