Are MLPs a good investment?
For instance: ; See Stock Symols below
Answers
945 points
jillybeansisme answered one year ago …
A MLP is good in the sense that they have to pay out the majority of their profits to the stockholders. They trade like stocks. I feel that if you invest in them, you should plan on keeping them long term. You can get MLPs in most any market. For example, IPSU (Imperial Sugar), KMP (Kinder Morgan Energy Partners), and MWE (Marquest Energy --spelling probably incorrect). You will get regular dividends from them. But you still have to know what you're buying. It still has to be quality. And, yes, you can still lose your investment when the market goes down.
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435 points
larryat36 answered one year ago …
I have done fairly well by investing in some of these instruments. If the company is strong it may go down but will also come back when things look up a little. It's also nice when everything else is looking so bad to at least have that income coming while waiting for the market to reverse.
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2786 points
Oldman answered one year ago …
Some Notes re: MLP's (Publicly Traded Partnership units of beneficial holdings of Master Limited Partnerships):
1. NEVER hold them in a sheltered account such as a 401K or IRA. An accumulation of >$1000.00 of Unrelated Business Taxable Income (Item 20 V) in the taxpayer's accounts will disqualify the shelters...unless the Fiduciary is willing to file a special 920t form to pay the tax on the unrelated business income from one or more of the accounts. You can't pay it yourself. The fiduciary can charge >$200 to file it + withdrawing funds from the shelter.
Also in a tax shelter, thebenefit of return of capital, and operating loss deductions by the MLP that are reported on the K-1 form are effectively lost as a deduction or change of the dividend to LT Cap Gain, because there's no basis for the MLP in the shelter as far as tax goes, you pay at marginal rates when money is withdrawn.
2. The same is true for Grantor Trusts (such as Merrill's HOLDRs) and for certain other types of royalties...If it files a K-1 DON"T hold it in a sheltered account!
3. The K-1's come late in the tax-filing period, usually during the end of March-first week of April., Both Turbotax and other Tax prep software can do all the steps of computing the net taxable amounts. Most K-1's show where the items go, and what the Tax-Shelter Registration Number is...it must be included on a form with the Tax Return...so don't try to file early!
4. To evaluate various MLP's, I'd suggest looking at the section at http://www.seekingalpha.com, and also following the editors' links to broader sites that specifically evaluate the MLP-PTP for sustainability and leverage.
