Kinder Morgan Energy Partners LP (KMP)
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KMP Forum Topics
- All Comments on KMP
- General Discussion on KMP
- Why Buy MLPs? [view article]
- Why Dividend Investors View Stocks Differently [view article]
- The Top 10 Lowest Standard Deviation MLPs [view article]
- 10 Best Returning Upstream MLPs [view article]
- Kinder Morgan: Energy Infrastructure Fee Machine [view article]
- How Have 'Traditional Defensive Stocks' Done in This Downturn? [view article]
- Stocks Covered by The Energy Stock Blog [view article]
- Wall Street Breakfast: Must-Know News [view article]
- Dividend Yield as a Tool to Find Bargains [view article]
- Kinder Morgan Suffers Mounting Oil Losses [view article]
- Master Limited Partnerships Are Poised For Growth [view article]
- Kinder Morgan Energy Partners - Dividend Analysis [view article]
loading ...Recent KMP Articles
- Why Buy MLPs?
- Why Dividend Investors View Stocks Differently
- The Top 10 Lowest Standard Deviation MLPs
- How Have 'Traditional Defensive Stocks' Done in This Downturn?
- 10 Best Returning Upstream MLPs
- Wall Street Breakfast: Must-Know News
- Dividend Yield as a Tool to Find Bargains
- Kinder Morgan Energy Partners - Dividend Analysis
- Kinder Morgan Suffers Mounting Oil Losses
- Outrageous Opportunities in Upstream MLPs
- Full List of Articles »
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Why Buy MLPs? [view article]
AVI, your statement of EEP as a div payer w/ 1099 is confusing. I visited the EEP site and found------"Where is my 1099?
A: 1099's are used to report items such as interest and corporate stock dividends. Your investment in Enbridge Partners is an investment in a partnership which requires a K-1 tax form instead of a 1099."
Can you clarify your statement?
GD
Reply
The Wind
Why Dividend Investors View Stocks Differently [view article]
I have 10 years before I retire, and in the current economy I lost a bunch (to me), so my low end dividend yield is now up around 8% - I don't even look at the lower ones this year. Maybe next year I'll be looking for a touch more stability, but this year it's oil. When the banks come back, I'll add to what I have (maybe) and when REITs come back I'll look into that, but for now I'm staying with the higher yield. ReplyWhy Buy MLPs? [view article]
On the natural resource MLP's, you may want to wait after the election and if Obama wins beware of US Congressman Markey, (D. Mass.), who is a dedicated Marxist/Lenninist striving to destro capital accumulation by rich man and poor man alike.He has introduced leggislation to cancel the US tax credit given to US investors on their Canroy dividends from the Canadian witholding.
His next attempt will be to knock down tax benefits for the MLP share holders.
This election is the 600 pound gorilla in the room no one is talking about.
Wait and see, you'll be better off. Reply
Why Buy MLPs? [view article]
ERRORS/ASSUMPTIONS/ETC... in this article include:"Master Limited Partnerships (MLPs) are a new type of investment"
- MLPs have been around for decades, although the 1986 tax law changes dramatically altered their structure and availability.
"they are still little appreciated & understood partially due to poor investor relations by the companies"
- What empirical evidence exists to back this statement up?
"Capital additions are their form of addiction. They have to keep investing in more assets to build more pipelines & terminals, a national priority."
- This is a business choice, not a requirement. There is nothing that says an MLP has to keep investing in more assets. They invest in more assets to grow (which usually leads to higher valuation multiples).
"MLPs typically offer high yields, maybe because of their association with utilities."
- MLPs offer high(er) yields because of their capital structure and tax situation. Not all MLPs are associated with 'utilities'.
"Years from now, people will look back on this time with fond memories about this unusually wide spread, remembering the good old days when these high yields on were available on MLPs:
- Credit spreads for all types of yield instruments have widened in the last year. While it is true that MLPs are at historically high levels of yield compared to the 10 year, it is not true that MLP yields are high compared to investment grade or junk corporate debt.
"Commodity prices do not correlate with MLPs."
- This blatantly false. Different MLPs are impacted in different ways by commodity prices. Many hedge to limit their exposure to commodity prices. MLPs that are in the exploration & production business can be highly correlated to oil prices. Some MLPs that are in the natural gas gathering and processing business are highly correlated to either natural gas prices or fractionation spreads. Furthermore, depressed oil and gas pricing environments generally lead to lower interest in the MLP sector. I challenge the author to provide R-squared metrics to back up his assertion.
"The limited partners supply 98% of the capital expecting to get a return on their passive investment. The general partners supply 2% of the total capital."
- This is misleading. The definition of capital usually includes debt in the capital structure. Many MLPs carry debt, and thus limited partners would only provide 98% of the 'partners' capital', not the total capital. Also, it is not uncommon for the general partner to also be a limited partner (and thus provide more than 2% through a mix of GP and LP units).
"An alternative is not to worry about the profit splits, instead accept the arrangement as satisfactory if they have a good track record."
- An investor should note that the higher the profit split, the higher the equity and weighted average cost of capital is. This impacts the MLPs ability to make accretive acquisitions or fund organic growth projects profitably. To not worry about profit splits is ignorant.
"Companies have a constant need to sell more units for more capital to build more pipelines."
- Once again, this is patently false (see above). Companies may choose to sell more units, but do not have a constant need.
"MLPs have excellent track records with relatively mild price fluctuations around their growth trend line, high yields (largely tax free) with excellent prospects for rapid growth going forward from strong demand for more oil & gas pipelines"
- Not all yield is largely tax free. It is TAX DEFERRED. This is a BIG difference. Also, not all MLPs have oil & gas pipelines.
Reply
Why Dividend Investors View Stocks Differently [view article]
Don Johnson: If you write your initial call at a strike price somewhat (say 10%) higher than you entry price and the price increases to slightly higher than the strike price, you simply buy back your call just before expiration and sell another call a couple of months out at the next higher strike price. You should be able to get more for the new call than you paid to close out your old position thus making a small profit on the difference and raising your strike price in the process. If the stock price gets away from you on the high side, just let it be exercised away and take the short term profit of capital gain plus call premium. The risk is that the stock price will crash but that is a risk you take with any stock purchase and selling covered calls actually reduces your loss in that case. Selling covered calls does limit your upside but lets you profit from the decreasing time value of the option. ReplyWhy Buy MLPs? [view article]
I know some guys that tried that death approach...IRS still got their pound of flesh!! If you can time your death just right and hit it when the death tax is low, you'll be okay but its pretty tricky!!! Good way to end a week! Beer Thirty! ReplyWhy Buy MLPs? [view article]
Thanks Mmarrkk,I will call my CPA next week.
To: CT Programme....the only way out of paying taxes I am told, is to die. Then the cost basis goes to stock price as of date of death or 6 months later.
Reply
Programmer
Why Buy MLPs? [view article]
Thanks for the info everyone. My line 20 of my K-1 is zero, but I had only held it for a month in 2007 (originally bought in Dec 2007) and hadn't received any dividends yet. Does the UBTI accumulate over the years, or is there a $1,000 limit per year for all your MLP's combined? Also, about how many years does it usually take before your cost basis falls to zero? And, if I'm reading all this correctly it sounds like if your cost basis goes to zero (even if in an IRA), when you actually sell you're on the hook for taxes on the full price when you sell, correct? ReplyWhy Buy MLPs? [view article]
I am puzzeled why many others were left off the list ie APL? ReplyWhy Buy MLPs? [view article]
rdp1: here's an idea to eliminate that nasty little problem when your cost basis goes to zero:donate the shares you currently own to a charitable organization certified by the IRS. You will get to claim a tax deduction for the entire amount. Then, turn around and buy the same number of shares in your account. That will "reset" your cost basis to whatever you pay for the new shares. All of this assumes you donate money of that quantity to charity anyway. I do this every year. Instead of donating $15,000 to my church, I donate $15,000 worth of stocks that have very low cost basis/very high taxable gains. Then I buy the shares on the market. Its a win-win for everyone...except the tax man who gets way too much of my money anyway!! Reply
Why Buy MLPs? [view article]
rdp1: I'm pretty sure that's right. check with someone who knows taxes but I believe you will owe taxes on the "return of capital" portion of the dividend payment, not the whole thing. ReplyWhy Buy MLPs? [view article]
I have a question: I, too, have held KMP and other MLP's for years and am happy, indeed.My KMP cost basis will be zero in 2009.
However, i did not know that when the cost basis falls below zero that i would have to begin paying for dividend income at that time.
Are you certain of this provision? Reply
Why Buy MLPs? [view article]
I've held MLP's (Pipelines and Propane Distributors) in my IRA account since 2002 and have never seen a positive UBTI on any K-1. They've all been negative. Doesn't mean there will never be a positive but if you spread it around 4 or 5 MLPs its unlikely the combined amounts would net out to a positive number. Also, if you're going back to check prior years K-1 forms you will find the UBTI in box 20-P. Only the IRS knows why they changed it to 20-V. I have no background with REIT's. They may be a differant story. ReplyWhy Dividend Investors View Stocks Differently [view article]
As an income investor this is how we view this type investment. The author misses the point though that many of my generation are retiring from companies who have eliminated their pensions and, in fact, we need this income to for living expenses. There will be many more of this "pensionless"... invesotr in the next ten years. ReplyGrowth
Investor
Why Buy MLPs? [view article]
Very nice and thorough analysis. If analyzed TPP and KMP on my blog several months ago and concluded that they are both fine investments.dividendgrowth.blogspo...
and
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