For Dividends, It Might Be Time To Explore Business Development Companies [View article]
BDCs are like REITs where taxation is concerned. Their distributions are all or almost all taxed at ordinary rates, and there are no gotchas like you have with MLPs. An IRA, and better yet a Roth IRA, is a great place for BDCs.
That said, if your marginal tax rate is not greater than the dividend rate, BDCs work just as well in an ordinary account.
In Vino Veritas: Third Time Not The Charm For Amazon [View article]
I think it is interesting that the 15% margin is exactly the maximum markup that Costco charges. It sounds to me like they are trying to compete with Costco. Not that I would know, of course.
Master Limited Partnerships: Stop The Insanity [View article]
Reel Ken,
Regarding what triggers UBIT in an IRA, I found this article: http://bit.ly/QL8RyS
The highlight of the article is the topic "Investments Generating UBTI". The text is: "Investments most likely to generate UBTI include limited liability companies, limited partnerships, leveraged properties, and investments in active businesses." There we have it: an MLP is a limited partnership. It will generate UBTI in an IRA.
Up until you answered my question above, I thought that the UBTI was something to do with the partnership and that holding in an IRA was not the issue. But then I also couldn't understand why if this were true, there was no UBTI issue in a non-qualified account. Your answers and the referenced article finally made it through my thick skull.
Thanks ever so much for your patience in dealing with this investor.
For Dividends, It Might Be Time To Explore Business Development Companies [View article]
richjoy403,
There is no statutory requirement for MLPs, or any other partnership, to pay anything. MLPs are, however, required to derive at least 90% of their income from qualified sources. MLPs can and do retain earnings.
Master Limited Partnerships: Stop The Insanity [View article]
Reel Ken,
I really appreciate all of your articles and comments and I like your conservative approach to keeping MLPs out of IRAs.
However, there is one statement that you make that seems to me to be incorrect. The "U" in UBTI stands for "unrelated". According to this link - http://bit.ly/Hlq1xS - there is only UBTI if the partnership engages in business activity that is unrelated to its exempt purpose. If an MLP does not engage in any non-exempt business activity, how can it have UBTI? My interpretation of the K-1s I receive showing zero UBTI is that they have not engaged in non-exempt activity.
Master Limited Partnerships: Stop The Insanity [View article]
hcg,
Thanks for asking this question. I had heard about LinnCo but not followed up. I found this article: http://bit.ly/U33yS3. Also this: http://bit.ly/SUMwnA. Sounds like it could be interesting.
LinnCo has apparently not yet gone public because the EDGAR database has nothing on the LNCO symbol.
The Price/FFO Metric: A Driving Force Of Outperformance [View article]
richjoy403,
Just to confirm what you reported - the 5 year FFO growth rate of O is 2.6%, compare to OHI at 7.4% (FAST Graphs). Current yield of O is 4.44%, OHI is 7.39% (M*).
For Dividends, It Might Be Time To Explore Business Development Companies [View article]
That said, if your marginal tax rate is not greater than the dividend rate, BDCs work just as well in an ordinary account.
In Vino Veritas: Third Time Not The Charm For Amazon [View article]
Master Limited Partnerships: Stop The Insanity [View article]
Regarding what triggers UBIT in an IRA, I found this article: http://bit.ly/QL8RyS
The highlight of the article is the topic "Investments Generating UBTI". The text is: "Investments most likely to generate UBTI include limited liability companies, limited partnerships, leveraged properties, and investments in active businesses." There we have it: an MLP is a limited partnership. It will generate UBTI in an IRA.
Up until you answered my question above, I thought that the UBTI was something to do with the partnership and that holding in an IRA was not the issue. But then I also couldn't understand why if this were true, there was no UBTI issue in a non-qualified account. Your answers and the referenced article finally made it through my thick skull.
Thanks ever so much for your patience in dealing with this investor.
For Dividends, It Might Be Time To Explore Business Development Companies [View article]
There is no statutory requirement for MLPs, or any other partnership, to pay anything. MLPs are, however, required to derive at least 90% of their income from qualified sources. MLPs can and do retain earnings.
I agree about the REITs and BDCs.
Master Limited Partnerships: Stop The Insanity [View article]
Thanks for that answer. I hope it stays in my thick head. If only the NAPTP would make that clarification on its web site.
REITs Poised To Become More Attractive In 2013 And Beyond [View article]
Master Limited Partnerships: Stop The Insanity [View article]
I really appreciate all of your articles and comments and I like your conservative approach to keeping MLPs out of IRAs.
However, there is one statement that you make that seems to me to be incorrect. The "U" in UBTI stands for "unrelated". According to this link - http://bit.ly/Hlq1xS - there is only UBTI if the partnership engages in business activity that is unrelated to its exempt purpose. If an MLP does not engage in any non-exempt business activity, how can it have UBTI? My interpretation of the K-1s I receive showing zero UBTI is that they have not engaged in non-exempt activity.
Master Limited Partnerships: Stop The Insanity [View article]
LNCO is not there but you can find it by searching for company name linnco.
Master Limited Partnerships: Stop The Insanity [View article]
Thanks for asking this question. I had heard about LinnCo but not followed up. I found this article: http://bit.ly/U33yS3. Also this: http://bit.ly/SUMwnA. Sounds like it could be interesting.
LinnCo has apparently not yet gone public because the EDGAR database has nothing on the LNCO symbol.
REITs Poised To Become More Attractive In 2013 And Beyond [View article]
Glad I could help.
Master Limited Partnerships: Stop The Insanity [View article]
REITs Poised To Become More Attractive In 2013 And Beyond [View article]
The Price/FFO Metric: A Driving Force Of Outperformance [View article]
The Price/FFO Metric: A Driving Force Of Outperformance [View article]
Just to confirm what you reported - the 5 year FFO growth rate of O is 2.6%, compare to OHI at 7.4% (FAST Graphs). Current yield of O is 4.44%, OHI is 7.39% (M*).
O is way overpriced for me, I prefer and own OHI.
REITs Poised To Become More Attractive In 2013 And Beyond [View article]
The 5 year FFO growth rate for SNH is 1.4%. Compare to OHI at 7.4%. I decided that OHI is a much better long term investment than SNH.