David Fessler: One thing we believe in at The Oxford Club: You shouldn’t pay any more taxes than you have to. Of course, you must follow the law. But there are great ways to grow your investments, generate income and reduce your tax bill dramatically… legally. Today, I’m going to talk about one of my favorites.
Master limited partnerships (MLPs) offer tax-deferred income in an investment that has the liquidity of stocks. My colleague Marc Lichtenfeld wrote a great article on the tax benefits of MLPs.
But how do you decide which MLPs to purchase?Not All MLPs Are Created Equal
Investors who look at MLPs are interested in three things. The first is distributions. The second is distribution growth. Finally, share growth of the MLP itself.
The table below lists five popular MLPs (all of them are in the energy sector), their annual distribution yield and their corresponding distribution increase – on a quarterly and an annual basis.
If we just compare yields, we might be tempted to buy shares in American Midstream Partners. But we’re interested in distribution growth. Using that metric, we might pass on American Midstream. In fact, as we’ll see below, it’s more likely that American Midstream will have to cut its distribution in the(...)Click here to continue reading the original ETFDailyNews.com article: How Do You Decide Which MLP To Buy When Not All MLPs Are Created EqualYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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