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MLPs as a group remain relatively undervalued and several names are attractively priced, Credit...

MLPs as a group remain relatively undervalued and several names are attractively priced, Credit Suisse says, suggesting investors pursue a conservative posture of focusing on names with large asset footprints, diverse cash flows and limited direct commodity price exposure. The firm's favorites: PAA, MMP, EEP, EPD, GEL, KMR, KMP, KMI.
Comments (9)
  • addisonsm
    , contributor
    Comments (48) | Send Message
     
    Watch the tax treatment and total return before deciding on KMI, KMR or KMP. KMP has returned approximately 20% per year over the last 20 years AND the dividends are tax deferred so they get taxed as capital gains when the stock is sold OR your initial investment has been paid down, at which point dividends are dividends with no favorable tax treatment.
    4 Oct 2012, 05:07 PM Reply Like
  • harnettdj
    , contributor
    Comments (123) | Send Message
     
    KMI is a corporation ... NOT a MLP or LP,..so no tax problems there.. just a 1099 like any other dividend paying stock

     

    Dave
    long KMI the company
    5 Oct 2012, 06:34 AM Reply Like
  • elliot_mllr
    , contributor
    Comments (1339) | Send Message
     
    addisonsm:
    When one's basis in MLP units has been reduced to zero by returns of capital then further distributions are taxed as capital gains, not as dividends.
    Elliot Miller
    4 Oct 2012, 08:31 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    I notice that the officers buy mostly KMR instead of the Partnership or the Corporation. KMR trades at a discount to the partnership which gives a greater yield to its purchasers. Unlike KMP, owners of KMR get tax deferred compounding of distributions. KMP has to pay KMR in cash for each shareholders dividend. They are not just watering down the stock. It is because the owners of KMR have their cash reinvested in fresh shares of the company, that KMR is able to fund KMPs growth.

     

    Investors who need income should not be swayed by the current yield or the erroneous reported non-yield of KMR by Brokers. The companies earnings grow rapidly. Six years out the quarterly dividend should be twice as much as it is now. The Significant Figure is Yield on cost (YOC) two years out and beyond. The dividend increases, as the cost basis decreases. The river of pipeline income generates stable cash flows that support the Kinder share price long term. In essence, what Kinder does is extend, expand and create assets with positive cash flows, that are immediately accretive to dividends.
    4 Oct 2012, 09:02 PM Reply Like
  • Arthur Paullin
    , contributor
    Comments (483) | Send Message
     
    @sunflow: KMP does not pay cash dividends to KMR. They issue I-Units which are just like regular units except that (1) they are issued only to KMR and (2) they do not pay cash dividends. I-Units were purchased by KMR when it was formed on a one-for-one basis.

     

    As to tax deferral, KMP holders will find a high percentage of the distributions to them to be tax deferred.; KMR dividends to its stockholders have a tax deferred effect because they are not taxed until the shares are sold. At the time of sale, the gains will be capital gains whereas with the sale of KMP units some portion may be taxed as ordinary income.

     

    Very complicated structures are involved. The annual reports and 10-Ks are must reads (particularly the financial statement footnotes) for those investing in KMP. KMR, or KMI..
    4 Oct 2012, 10:46 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Popart :> KMP does not pay cash dividends to KMR.

     

    Richard Kinder :> As you know KMR we pay the dividends in stock but have to accumulate the cash as if we were paying in cash.

     

    http://bit.ly/R3l5qb

     

    Sumflow :>KMP has to pay KMR in cash for each shareholders dividend. They are not just watering down the stock.

     

    It is as if KMR shareholders received cash but have already elected to have those funds reinvested in the company. KMR at the shareholders request, purchases new capital shares from KMP with the cash.
    7 Oct 2012, 08:00 AM Reply Like
  • harnettdj
    , contributor
    Comments (123) | Send Message
     
    ONCE ...Again
    KMI is a corporation ... NOT a MLP or LP,..so no tax problems there.. just a 1099 like any other dividend paying stock

     

    Dave
    long KMI the company
    5 Oct 2012, 06:36 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Actually there is a tax problem with KMI. It's called Double Taxation. They tax the company, then they tax you.
    7 Oct 2012, 08:52 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    We give it out to the KMR shareholders and they’ve automatically elected to repurchase equity with it.

     

    C. Park Shaper: http://bit.ly/Pj2NlM
    President Kinder Morgan Inc. September 06, 2012
    8 Oct 2012, 06:00 AM Reply Like
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