moneypenny

Looking at the Concept of MLPs for Dividend Growth Within Your Portfolio

I will invest my full portfolio in MLPs because it is not high risk. Where will I get 8% no risk return?


On May 20 08:02 PM Alan Young wrote:

> With all due respect, perhaps it would be better, in the future,
> to learn how something works instead of publishing articles that
> list a lot of things you don't understand.... and then reaching a
> conclusion anyway?
>
> It should be clear that an MLP's high yield is not an indication
> of high risk, but of a tax treatment and cash flow structure quite
> different from that of stocks.

Looking at the Concept of MLPs for Dividend Growth Within Your Portfolio

i agree, complications in K1 are blown out of proportion. now-a-days they are simple to fill.


On May 21 10:18 AM Lightway wrote:

> I can confirm Turbotax Premier will handle the K-1, since I used
> it this year to handle a K-1 and it was extremely easy. You literally
> fill in about 3 boxes per K-1 and that's pretty much it.
>
> I wonder if the K-1 issues that have been posted here are from past
> years, possibly the tax preparation industry has caught up and made
> it alot easier.

Looking at the Concept of MLPs for Dividend Growth Within Your Portfolio

nice use of financial terms to make it even more complex. and nice education too. keep it up! BTW - I did not understand what you said, and I do not intend to do PhD that I have to read your website.


On May 20 09:00 PM Mary@NAPTP wrote:

> As the executive director of the MLPs' trade association , I have
> to agree with Mr. Young that this article shows a poor understanding
> of MLPs, and that the author should have educated himself before
> writing about them. Allow me to clear up some of the confusion.
>
> 1) First, the author has confused the MLP's taxable income with
> their cash distributiond. MLPs, like other partnerships, do not
> pay tax at the partnership level--but tax is paid on their income.
> All items that go into calculating taxable income--income, gains,
> losses, etc.--flow through the partnership and are allocated proportionately
> among the partners (i.e., the shareholders), each of whom nets them
> out and pays tax on his/her share of net partnership income at his/her
> own rate. This occurs on paper and has nothing to do with the cash
> distribution. Thus, it is not true that individuals pay no taxes
> because of the distributions, although the passthrough of losses
> and deductions does reduce taxable income quite a bit.
> 2) The distributions are something entirely different from the partner's
> share of taxable partnership income. As the article correctly states,
> they are considered a tax deferred return of capital, lowering the
> partner's basis in his partnership units and taxed upon sale of the
> units. Typically, the partner's share of taxable income in any year
> is far less than the tax deferred cash distributions.
>
> 3) Distributable cash flow is expressed in various ways, but is basically
> equal to earnings plus depreciation or depletion (because these are
> tax deductions only and do not affect the partnership's actual cash
> flow), minus "maintenance cap ex"--the cash needed to maintain the
> partnership's assets. MLPs do not necessarily pay out all their
> dcf--many have a "coverage ratio" (dcf/distributions) of more than
> 1.0, and like any well managed company will reserve the cash they
> need for business operations.
> 4) Finally, MLPs are NOT required to pay out their earnings in distributions
> to maintain their tax treatment. Their ability to maintain partnership
> tax treatment depends on earning certain tyes of income--90% of their
> income must come from (to summarize) natural resources activities,
> real estate rents or gain from selling real estate, interest, dividends,
> or commodities. As long as they meet this income requirement they
> can pay out zero cents in distributions (which some do) and their
> tax status will be fine.
> I would urge anyone interested in learning more about MLPs to go
> to the website of the National Association of Publicly Traded Partnerships
> (naptp.org) to get some solid information.

Comparing Emerging Market Funds: And the Winner Is...

this was gem of an analysis....

Nine Potential Dividend Growth Opportunities

Great positive sense of article. I would like to see your QCOM and WMI analysis. I agree with Ryan, on providing complete view and not skipping any of the stocks in table....

Does the Dollar's Demise Affect Dividend Growth?

great perspective, and you really hit the nail on its head.