When many investors look at a dividend yield, they automatically assume it will only change if the paying company earns more money, resulting in a payout increase, or gets in trouble, resulting in a cut. That’s the practice of most US companies.

But there are master limited partnerships (MLP) that pay more in the style of European companies, which regularly adjust dividends as profits rise and fall.

Paying a variable dividend isn’t necessarily a negative. MLPs that do frequently sell at a discount to those that don’t, meaning percentage yields are higher. And tying disbursements to profits ensures MLPs will never be in the position of financing their payout with debt, which is a strategy that’s unsustainable in the long run.

Variable dividend companies also share the wealth more quickly with investors in good times, as payouts also adjust upwards with profit. That’s easy to forget when the market’s fear level is high. But it means investors can snare real value if they buy in when others fear the possibility of a lower dividend.

We don’t hold any variable-dividend MLPs in our model Portfolio. But several How They Rate companies that do have attracted significant reader interest.

The best of these is Rentech Nitrogen Partners LP (NYSE: RNF), which paid a distribution of USD1.06 per unit in May, USD1.17 in August and USD0.85 in November.

Paying a variable distribution has enabled the company to stick to its expansion strategy since its initial public offering (IPO) a year ago despite a volatile market for its primary products ammonium thiosulfate fertilizer (ATS) and sulfuric acid.

The unit price took a mild hit following the announcement of the lower November disbursement.

Selling momentum, however, quickly reversed as the company announced solid third-quarter results that demonstrated its continued ability to grow and even to lock in good selling prices in a volatile market.

Investors also remain generally bullish on fertilizer and related products in general due to surging global demand for grain.

Although I’m not attracted to Rentech at the moment, primarily because its unit price is nearly twice its IPO price, I will take another look on a dip to USD35 or lower.

Somewhat less revered by investors is Terra Nitrogen Company LP (NYSE: TNH). The producer and marketer of nitrogen, fertilizer, crop protection products and seed services trades well north of USD200 per unit but has seen some gut-wrenching volatility this year. The dividend is also variable, though the range this year has been moderate, swinging between a high of USD4.53 and low of USD4 per unit.

The longer-term pattern is considerably choppier, including a one-quarter elimination of the payout in February 2010. That year’s shortfall was due to market conditions, which caused fourth-quarter 2009 revenue to fall by more than half and more than 75 percent of profits to evaporate. And slashing the payout had the salutary effect of preserving cash and keeping the company solvent as management waited for overall conditions to improve.

At the time the dividend elimination had been largely anticipated, with selling driving down Terra Nitrogen stock 30 percent from mid-2009 levels. The stock quickly bottomed and began an upward surge that took it to nearly USD300 in April.

The current global market for fertilizer is fraught with uncertainty in the near term, despite a bullish long-run outlook. Terra Nitrogen’s unit price is currently down by nearly a third from recent highs. That kind of volatility should give pause to any conservative investor considering taking a position. We continue to rate Terra Nitrogen a sell.

We’re also sellers of AllianceBernstein Holding LP (NYSE: AB) and any other partnership with a primary business that’s not energy- or natural resource-related. That’s partly because such entities have been targets in the past of legislation to tax them. But it’s also because these companies’ business models haven’t been historically conducive to paying big dividends.

AllianceBernstein, for example, has paid dividends ranging from USD0.36 per unit this month to USD0.12 in March. That’s indicative of a variable distribution policy with a lot of downside. The recent increase in unit price is an ideal time to sell AllianceBernstein Holding.

The same goes for Blackstone Group LP (NYSE: BX), another variable-dividend payer from an industry with a dubious record of being able to finance consistently solid payouts long-term. Blackstone Group LP is a sell.

Finally, Dorchester Minerals LP (NSDQ: DMLP) also employs a dubious business model in terms of paying dividends. That’s reflected in volatile revenue, which dropped 21.9 percent in the third quarter from year-earlier levels.

And it’s also clear from the company’s erratic dividend-paying history, as income from its producing and non-producing mineral royalty interests demonstrates. Dorchester Minerals is a sell.