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Credit Suisse: MLPs Can Thrive W/Rising Interest Rates
I have been hesitant to invest in MLP's because I am not sure I fully appreciate/understand the cost and tax implications associated with these investments. While I have no problem with K-1's I do have a problem filing returns in every state a pipeline for example has exposure. I have been tracking the Clearbridge CEF (CEM) but am unsure if the published 1.91% cost is the true cost or if tax liabilities really push this to 4/5/6% or even teens as I have seen in some articles. In reading articles about ETF's similar issues are raised. Both in order to gain diversity and an income stream these vehicles appear attractive and look set to remain so for at least some time to come and may even do well during inflationary periods as the Credit-Suisse article indicates. So my problem is whether to zero in on an individual company with pipeleine assets, CEF, ETF, or even Royalty Trusts to meet my portfolio needs. My question then is whether there is a comprehensive, yet easy to understand explanation that will provide the comparison data to make an intelligent decision ? Of course I might also be too late to the party. Any input as always greatly appreciated.
Reply to @sligo: KMR (Kinder Morgan Management), EEQ (Enbridge Management) and LNCO (Linn Co) are MLP corporations that do not involve the same tax issues as the MLPs they are invested in. I own KMR. Enbridge also has Enbridge Income Fund (EBGUF.PK), a Canadian "MLP-like" company that offers exposure to oil storage, pipelines and green energy. It also pays a monthly (rather than quarterly) dividend (although there is foreign withholding) and is an interesting option that isn't much discussed due to its Canadian roots.
There have been some discussions of filing returns in every state where the pipeline has exposure - I haven't seen that in anything I've dealt with.
The oil royalty trust that I've looked at is Canadian co Freehold (FRHLF.PK), which offers monthly dividends. I owned it last Fall but took profits. I'd consider it again if it came down. Freehold is actually run by Rife Resources, which is owned by the pension trust of the Canadian National Railroad.
Some cefs also provide a mix of infrastructure (INF is an example, which has a large amount in MLP names, but also has a wide variety of other various infrastructure plays around the globe.) Another option with some MLP exposure is the Principal Global Diversified Income fund.
Many people do like individual names for the reason/s you mention, although personally I thought Kinder's size and scope (as well as their terminal operations and other factors) was attractive. Others I've considered include MMP and PAA.
MLPs have done well, but I do think that if unconventional oil finds continue to be a story in this country, the infrastructure will continue to be in demand. I also think the income - and how a number of MLP names have grown their dividends, as well as the hard asset nature - continues to be attractive.
Comments
There have been some discussions of filing returns in every state where the pipeline has exposure - I haven't seen that in anything I've dealt with.
The oil royalty trust that I've looked at is Canadian co Freehold (FRHLF.PK), which offers monthly dividends. I owned it last Fall but took profits. I'd consider it again if it came down. Freehold is actually run by Rife Resources, which is owned by the pension trust of the Canadian National Railroad.
Some cefs also provide a mix of infrastructure (INF is an example, which has a large amount in MLP names, but also has a wide variety of other various infrastructure plays around the globe.) Another option with some MLP exposure is the Principal Global Diversified Income fund.
Many people do like individual names for the reason/s you mention, although personally I thought Kinder's size and scope (as well as their terminal operations and other factors) was attractive. Others I've considered include MMP and PAA.
MLPs have done well, but I do think that if unconventional oil finds continue to be a story in this country, the infrastructure will continue to be in demand. I also think the income - and how a number of MLP names have grown their dividends, as well as the hard asset nature - continues to be attractive.