When it comes to Oil and Gas MLP’s, Three is Better than One

by David Fessler, Advisory Panelist

Much has been written about the benefits of owning oil and gas Master Limited Partnerships, or MLP’s as they’re commonly referred to.

They trade just like stocks, but are structured as limited partnerships instead of as corporations. Buyers purchase “units” instead of “shares”. This is done primarily to avoid corporate taxation, and allows more of the MLP’s profits to be passed onto the unit holder.

Of course, there’s no free lunch when it comes to taxes, so the unit holder is ultimately responsible for the taxes on the profits – potentially a complicated task when April 15th rolls around.

Despite the extra work for you or your accountant, MLP’s are just too good to overlook, especially if you have an

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Kinder Morgan Energy Partners, L.P. (KMP) -- the largest independent owner and operator of petroleum product pipelines in the U.S. -- completed its first commercial shipment of bio-diesel through its Plantation Pipeline Company. The process, a technological breakthrough in transporting bio-diesel through pipelines, carried the fuel to various marketing terminals across Georgia and Virginia.Until now, shipment of bio-diesel has been limited to trucks and trains due to several problems in passing bio-diesel through pipelines. Bio-diesel tends to contaminate other fuels, particularly jet fuels, flowing through the same pipeline. Kinder Morgan's breakthrough was to identify a proprietary additive that prevents this contamination. The injection of this additive -- B99 -- has enabled the pipeline transportation.We believe that the Plantation Pipeline project should go a long way toward meeting demand for bio-diesel across the Southeast. Moreover, the ability to blend and transport bio-diesel through ...

In every new Administration, there are some fresh faces and some holdovers. Among the holdovers on the economic team is Ms. Rosy Scenario. The president's budget assumes that while this will be a rough year, particularly in the first half, things will start to get better in the second half, and will be much stronger in 2010.

The graph below shows the year-over-year growth rates expected for each year out to 2014. I think they are all too high, but for 2010, the administration's forecast is the highest and, therefore, the most off base. Yes, the stimulus will help, but the underlying situation is much more dire than the forecasters admit. We are caught up in a vicious cycle, where declining wealth has lead to lower consumption, which has lead to decreases in production, which has lead to more unemployment, causing more stress on the financial system, causing more

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The Best Stock Market Buy Signal In 51 Years

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, January 5, 2009: Issue #910

Media pundits keep reminding us how tough 2009 will be economically. Nevertheless, I predict this will be a good year for the stock market.

How can this be?

The stock market is a leading indicator. It generally falls before consumers and investors realize just how bad the economy is.

It also recovers long before economic activity picks up. Perversely, that means stocks often plummet during good economic times and rally during recessions… or worse.

In the January issue of The Oxford Club Communiqué, for example, I note that:

In the 13-month recession in 1926-27, the market went up 41.1%.

 

In the eight-month recession in 1945, it went up 19.5%. In the 11-month recession in 1948-49, it went up 15.2%.

 

In the 10-month recession in 1953-54, the stock market went up 24.2%.

 

In ...

The mad rush to US Treasuries has driven yields down to measly levels. But Andrew Gordon says investors can find much better returns with Master Limited Partnerships (MLPs). Better still, large-cap pipeline MLPs get their revenues from fees, and so are less exposed to wild swings in oil and gas prices.

This from Investor’s Daily Edge:

The chart below is only one month old. But in their recent flight toward safety, investors have driven the yield of the 10-year Treasuries down to 2.13 percent – below the three percent shown in the chart.

That rate doesn’t even keep up with the rate of inflation.

On the other hand, parts of the stock market are throwing up some hefty yields. Take a look at these…

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Master Limited Partnerships are a useful investment for minimizing your tax bill says Jim Nelson. They are trusts mainly comprised of natural resource, financial services, and real estate assets. Jim picks five small-cap MLPs that should provide steady income without the burden of double taxation.

This from Penny Sleuth:

In the corporate tax world, one dreaded phrase reappears when you talk about dividends: “Double Taxation”. All incorporated companies are taxed on the income they make. The shareholders are taxed again on any dividend distribution they receive from the company. So the same income is taxed twice. But, there is a way around it…

Master Limited Partnerships, or MLPs, are nearly identical to royalty income trusts. The only difference between them is double taxation.

Regular trusts must pay taxes on income before it is distributed to shareholders. Those shareholders also have to pay taxes on the already-taxed income when they receive it. MLPs, on the

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Global stocks are getting mauled again today. Wild market swings are making stock investing a risky business. But Floyd Brown says little-known Master Limited Partnerships (MLPs) provide a steady dividend income and are extremely cheap right now. They have the tax benefits of a partnership, but the liquidity of a publicly traded stock. Floyd gives his three favourite MLP plays in the energy sector.

This from Investment U:

Most investors have never heard of, or purchased, shares of a master limited partnership (MLP). But, with many yielding more than 10% and prices at historically low levels, these bargains are getting hard to ignore.

Few investors know that master limited partnerships are publicly traded asset pools. They have the tax benefits of a partnership plus the liquidity of a publicly traded stock.

Because they invest in many different types of assets, most master limited partnerships have significant debts on the balance sheet and

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Income partnerships, generally known as Master Limited Partnerships or MLP's or US Income Partnerships, are investments that are similar to income royalty trusts, except that they are structured as limited partnerships. MLP's have certain advantages over regular stocks with high dividends. There is no double taxation because the income is passed through without being taxed at the corporate level. Also, they can pass through tax deductions. However, there are a couple issues you should be aware of, that make them different from income trusts. For example, income partnerships don't send out 1099 forms, they send out a Schedule K-1 Form, and the income is reported on your tax return differently from regular dividends. In addition, you should never, ever put an MLP into a retirement plan because of the UBTI or Unrelated Business Taxable Income problem, which could put the tax deferred status of your retirement plan ...

As you know, I think stockholders deserve to get their fair share of a company’s profits. And that’s why I love investing in companies that not only make substantial distributions to their shareholders, but are legally bound to do so.

Today, I want to tell you about one such group of stocks, known as Master Limited Partnerships (MLPs). If you’re an income investor looking for big dividends, you can’t afford to ignore these investments …

Why Master Limited Partnerships
Are Your Pipeline to Profits

The typical company is a plain old corporation, a separate legal entity from its employees and investors. …