Capturing Yield of MLPs into Fixed income of portfolios?

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RIMDBogle
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Capturing Yield of MLPs into Fixed income of portfolios?

Post by RIMDBogle »

Capturing Yield of MLPs into Fixed income of portfolios?
===============================================

Thanks for weighing in to my threads and seeking insights from this forum.

I find some MLPs provide attractive yield with tax headaches.

Are there ways to capture MLP's attractive yield without tax headaches?


Thanks for sharing.
petulant
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by petulant »

Many MLPs also offer preferred units. I believe you still have to wait on a K-1 for final numbers, but the MLPs' position should make it simpler. The position of many MLPs seems to be that 100% of the preferred unit distributions are taxed as ordinary income. If you wanted to be aggressive you could file a tax return without the K-1 using distributions as income and then reconcile with amended if they differ (but they shouldn't). The yields on MLP preferred units are often pretty high.

Now, BH is not really the forum for getting into specific MLP preferred units or getting into more of the strategy. MLPs are complex, require study, and need vigilance. They are active, not passive instruments.
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watchnerd
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by watchnerd »

I thought there were some MLP ETFs (or maybe ETNs) that managed to structure things in a way that eliminated K-1s?

It's been a long time since I last held MLPs -- they were great back in the early to mid 2000s, but I think I sold the last of mine circa 2009 or so.
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Grt2bOutdoors
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by Grt2bOutdoors »

watchnerd wrote: Sun May 28, 2023 9:53 pm I thought there were some MLP ETFs (or maybe ETNs) that managed to structure things in a way that eliminated K-1s?

It's been a long time since I last held MLPs -- they were great back in the early to mid 2000s, but I think I sold the last of mine circa 2009 or so.
KMI - Kinder Morgan, Inc. is one that converted to a C Corp.
Williams took its midstream WPZ private through a merger with the parent company, dividends are paid through a C Corp.
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White Coat Investor
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by White Coat Investor »

MLPs, like dividend paying stocks and REITs, are not bonds. Classic investing error made by no less than Burton Malkiel. Consider them on the risky side of your asset allocation.

In answer to the OP's question, I bet you can buy them in a tax protected account. But keep in mind that some of those tax headaches are beneficial to lowering your taxes, just like with passed through depreciation with real estate.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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White Coat Investor
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by White Coat Investor »

watchnerd wrote: Sun May 28, 2023 9:53 pm I thought there were some MLP ETFs (or maybe ETNs) that managed to structure things in a way that eliminated K-1s?

It's been a long time since I last held MLPs -- they were great back in the early to mid 2000s, but I think I sold the last of mine circa 2009 or so.
I believe that is true.

https://etfdb.com/etfs/industry/mlp/
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
rossington
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by rossington »

RIMDBogle wrote: Sun May 28, 2023 9:14 pm Capturing Yield of MLPs into Fixed income of portfolios?
===============================================

Thanks for weighing in to my threads and seeking insights from this forum.

I find some MLPs provide attractive yield with tax headaches.

Are there ways to capture MLP's attractive yield without tax headaches?


Thanks for sharing.
It depends.
MLP's can have tax consequences in taxable as well as non-taxable accounts.
Apparently you have done some research, but you need to completely research all aspects of the tax implications regarding both.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
petulant
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by petulant »

White Coat Investor wrote: Mon May 29, 2023 5:06 am MLPs, like dividend paying stocks and REITs, are not bonds. Classic investing error made by no less than Burton Malkiel. Consider them on the risky side of your asset allocation.

In answer to the OP's question, I bet you can buy them in a tax protected account. But keep in mind that some of those tax headaches are beneficial to lowering your taxes, just like with passed through depreciation with real estate.
No, don't put MLPs in tax-protected accounts except in very small increments. Tax-protected accounts will get hit by UBIT.
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White Coat Investor
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by White Coat Investor »

petulant wrote: Mon May 29, 2023 6:29 am
White Coat Investor wrote: Mon May 29, 2023 5:06 am MLPs, like dividend paying stocks and REITs, are not bonds. Classic investing error made by no less than Burton Malkiel. Consider them on the risky side of your asset allocation.

In answer to the OP's question, I bet you can buy them in a tax protected account. But keep in mind that some of those tax headaches are beneficial to lowering your taxes, just like with passed through depreciation with real estate.
No, don't put MLPs in tax-protected accounts except in very small increments. Tax-protected accounts will get hit by UBIT.
Ugh...talking about making it worse.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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illumination
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Re: Capturing Yield of MLPs into Fixed income of portfolios?

Post by illumination »

AMLP
Alerian MLP ETF
You get exposure to these companies without the K-1s
.87% expense ratio

"All K-1s are received and processed by the Alerian MLP ETF. The Alerian MLP ETF distributes a single Form 1099 to its shareholders. This notice is provided to you for informational purposes only and should not be considered tax advice. Please consult your tax advisor for further assistance."

https://www.alpsfunds.com/exchange-traded-funds/amlp




I don't recommend it, concentrated risk, but if that's the goal, it's better than a bunch of K-1s every tax year.
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