Crude oil and many energy stocks are nowhere near rebounding.

In fact, these stocks likely will continue to decline in 2015.

But in the past two weeks, a sharp selloff in pipeline MLPs has created a big opportunity for investors who can stomach short-term volatility in pursuit of long-term investments with massive income potential.

Consider the Alerian MLP ETF AMLP, -2.10% , a leading master-limited-partnership fund with just shy of $8 billion in assets under management. A recent selloff saw Alerian briefly touch under $14 a share — the fund’s lowest level since it launched in August 2010. As a result, the fund now yields about 7.6% annually.

Oil futures signal weak prices could last years

There are many reasons for the decline, not the least of which is soft energy pricing, and there are no guarantees that there won’t be further pain in the short-term given the sector’s bleak outlook.

But long-term dividend-focused investors looking to stake out a position in these income-generating MLPs would be wise to consider buying or adding to positions in these stocks now — particularly the “toll taker” partnerships focused on energy infrastructure and pipelines.

Here’s why I’m taking a serious look at the MLP space and why you should too:

Distributions are rising at many MLPs

A look at some popular MLPs can be depressing if you’re only looking at share price. But remember, these companies are basically pass-through entities where the profits are delivered directly to “unitholders” in the partnership. That means a growing level of distributions indicates better cash flows and a healthier underlying business.

Viewed this way, it’s puzzling that MarkWest Energy Partners LP US:MWE has hiked its distribution from 76 cents quarterly at the start of 2012 to 92 cents now — a 21% increase in less than four years — while shares are actually slightly in the red over that time frame due to recent declines.

Similarly, pipeline giant Energy Transfer Partners US:ETP has seen distributions increase from 89.38 cents in mid-2013 to $1.035 currently — a roughly 16% jump in two years — while the stock is down by double-digits in the past 24 months.

Not only do these stocks now offer impressive dividends, with MarkWest yielding 6.8% and Energy Transfer yielding 8.7%, but they continue to prove that they are not seeing deterioration in their fundamentals by virtue of continued increases in payouts.

That’s an encouraging sign for long-term investors.

Capitulation and liquidation

So why would an investor bail out of an MLP that yields more than 8% and keeps increasing payouts? Frankly, because they feel like they have no choice.

Jim Cramer made the case for MLPs on his “Mad Money” show in late July, saying “there’s some fund out there that owns the MLPs, and that fund either borrowed so much money or is facing such massive withdrawals that it needs to sell these stocks every single day — including today and most likely tomorrow.” Cramer contends this bear market will end “as soon as the liquidation is over.”

I’m not privy to the inner machinations of hedge funds, so I can’t confirm Cramer’s view that capitulation is focused at one shop or another. But after making plenty of mistakes myself as a trader, I am all too familiar with the general concept of “max pain,” where an asset gets so depressed that even the most stubborn investors abandon ship.

Declines like these are driven by sentiment, not underlying business concerns, and eventually result in a snap-back — though admittedly, “eventually” is the key term here.

MLP investors naturally should be in for the long term, because otherwise you don’t get the juicy dividend payouts. Declines thanks to sellers with short-term perspectives may sting, but after the speculators are gone, the MLPs will surely find firmer footing.

Pipelines are the future of energy

I’ve talked many times in the past (here, here and here, for instance) about the power of pipeline MLPs as long-term dividend plays. It’s partially because these companies are the middlemen between upstream- and downstream energy firms, and thus not as exposed to volatility in commodity prices, but also because pipelines and modern storage facilities are a crucial part of energy infrastructure.

Take Cheniere Energy LNG, -1.74% , which spent upwards of $12 billion building a facility known as the Sabine Pass, which chills natural gas to -260 degrees Fahrenheit, liquefying it to prepare it for export from the U.S. — a huge win, given the abundant domestic LNG supply thanks to fracking. And not only have some high-profile wrecks in 2015 put the spotlight on safety concerns about trains carrying oil or gas, but a preponderance of research shows that pipelines are also a much cheaper way to transport oil and gas than by truck or rail.

Moreover, the domestic energy business continues to boom, with natural gas production in 2014 up about 44% from 2005, and crude oil production up about 68% in the same period, according to data from the U.S. Energy Information Administration. We need pipelines and terminals to deal with this supply, and MLPs are the way to do that — in any economic environment.

What’s the trade?

For many investors, picking individual MLPs can be profitable. However, these investments can come with additional headaches at tax time, including state or local taxes on the partnership’s income and a K-1 form that can confuse even some veteran accountants.

Therefore, I favor both the diversification and the ease of trading that comes with MLP funds.

The aforementioned Alerian MLP ETF is the best option, covering all aspects of the midstream model. After recent declines, its yield top 7.6%. The fund owns a stake in some of the biggest names including Enterprise Products Partners EPD, -1.80% as well as the aforementioned MarkWest and Energy Transfer Partners. Expenses are a bit higher than other ETFs, around 0.85%, but that’s in part because of the structure that streamlines tax forms — something many would be happy to pay for. Check out the AMLP website for more info.

Another good option ETRACS Alerian MLP Infrastruture ETN MLPI, -2.09% , which is focused mainly on the “toll-taker” segment of pipelines and storage companies. The yield is just north of about 5%. The ETN has a portfolio similar to the rival Alerian ETF, including Enterprise Products, MarkWest and Energy Transfer as top holdings, and expenses are comparable, but between the two I favor the Alerian ETF.

Whatever investment option you choose, be aware that volatility and short-term declines are what you’re signing up for in MLPs right now. These investments are not meant to be day-traded, however. Long-term dividend investors who are in positions for many years are best suited for these trades.

If you’re in that latter camp, bargain pricing in MLPs and fat yields in some of the biggest names could make this a great time to invest.