In a low yield world where government bonds pay next to no interest, S&P 500 stocks pay little more than that in dividends, the Canadian government is on the threshold of taxing income trusts, and even real estate investment trusts are suffering cash flow problems, one type of security still stands as a beacon of hope to income investors.
Master Limited Partnerships or MLPs
9% yields . . . that increase 9% annually . . . quarterly distributions almost guaranteed . . . capital gains that leave the S&P 500 in the dust . . . tax protection . . . business profits protected by federal government regulation . . . profit from the energy sector without the volatility of market prices because MLPs are paid by volume not final price.
Until now, the information available to investors has been scanty. There've been only chapters in books. One prominent financial advice company recently launched a newsletter devoted to them, but the price tag is $399 annually. The Internet contains summary but incomplete articles and snatches of advice (some good, some inaccurate).
Finally, investors can learn all about these terrific investments -- their rewards and risks; the paperwork hassles and how to get around them; and how to invest in them using both taxable and tax-deferred accounts.
In one convenient volume for one low price. This book is the first and only devoted solely to Master Limited Partnerships.
You'll discover:
The incredible benefits of Master Limited Partnerships
Why they're still incredibly cheap
How their legal rules and business structure combine to send you lots of cash
Why they'll continue to generate lots of cash for the foreseeable future
Information on every company Information on every MLP index
Information on every MLP closed-end fund
What MLP i-units are and how they can skyrocket your IRA portfolio
How to understand and complete MLP tax forms
Everything you need to know to get started to enhance your current income or save for your financially secure future.
I cover a lot of material that applies to all energy-related MLPs, but my strong recommendation is you confine your investment dollars to those in what are called "midstream" MLPs. More on that later.
I'll start off with a chapter that explains the many benefits of investing in midstream Master Limited Partnerships.
Followed by a chapter on the "catches" -- the aspects that individual investors sometimes stumble over.
Followed by information on the business risks of MLPs.
Then information on their history, structure and businesses both from the financial side and the petroleum industry side. This includes why businesses convert their assets to MLPs. And why such high yielding investments are still available in today's otherwise low-yield financial marketplace.
Then we'll cover everybody's favorite topic -- taxes. The tax and tax filing consequences of owning MLP units. I'll also cover the various tax forms and how to complete them.
Then ways of investing in MLPs that, in terms of tax paperwork and filing, are the same as investing in stocks. So you can add MLPs to your tax-deferred accounts or simply avoid the extra paperwork created by direct ownership of MLP units.
There're chapters on MLP i-units, on each MLP-related closed-end fund and MLP Exchange Traded Notes.
Then there're chapters on all the MLP indexes.
Then tips on putting this information all together to benefit from MLPs in your taxable broker account and your tax-deferred accounts.
And how to balance MLPs with the rest of your portfolio.
Then a chapter on what happens if you -- against my advice -- sell MLP units.
And a chapter on what happens if you follow my advice and hold your MLP units until you die.
33,000 words
Then chapters on each individual energy or natural resource related MLP available today.
Genre: BUSINESS & ECONOMICS / Personal Finance / InvestingIt's available in a CreateSpace paper edition, and an Audible edition is in the works.
5. The amount of cash paid quarterly has one-third the volatility of the S&P 500 stock dividends. That means your cash income from MLPs is three times as likely to remain high or higher than dividends from average S&P 500 stocks -- which can be cut. During the current recession, many were.
6. Market performance does not correlate strongly with the stock market.
This means MLP share prices can rise even while the S&P 500 market is going down. Therefore, owning MLPs can act as a hedge on your portfolio.
I must point out, however, this is historically true in the long run, BUT in the financial crisis of 2008 through March 2009 ALL securities suffered, MLPs included (but not as much as most types of investments).
7. Are in a business with high and relatively inelastic demand -- energy.
Energy demand does fluctuate, and during the 2002 and current recessions, it remained flat -- but not down.
8. Are in a business with growing demand.
Experts believe American demand for energy will continue to grow at least 1% per year for the next twenty years.
9. Do not depend on a high price for gas on oil.
During slow economic periods, the price for oil goes down. But that doesn't affect MLPs. Unlike oil companies, MLPs make a profit whether oil is selling for $10 per barrel or $150.
10. Prices are set by regulators who guarantee they make a profit.
MLPs are regulated by the Federal Energy Regulatory Commission (FERC). They're guaranteed a profit, much like utilities. However, unlike utilities, they're not required to share cuts in expenses with their customers.
This means a good management team has an incentive to cut costs as much as possible -- which means more money for you.
11. If and when society transitions to alternative, non-petroleum based sources of energy, many MLPs can be converted to ethanol and hydrogen.
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Translated by John Wannecke
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Author review: Translator is fast and responsive. |
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Portuguese
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