Master Limited Partnership Investments Can Be Lucrative

Money bag

Don’t let the Master Limited Partnership name throw you.  They aren’t that hard to deal with.  And I’ve had great success with some MLP’s.  As a matter of fact, I had a fantastic investment in Mark West Energy – which is an MLP.

For your purposes, MLP’s trade just like a stock.  By that I mean they have a symbol, and you can buy and sell them in seconds – just like a stock.

But they can have really good dividends associated with them.  I was (and still am) getting paid a 20% dividend on the Mark West Energy MLP I invested in near the bottom of the 2008 crash.

How can they do this?  Because they get special treatment from the government.  The government will not tax them IF they distribute at least 90% of their dividends to the owners like you and me.

Many of these MLP’s are in the energy business.  The government gives them this tax break to encourage energy production.

The symbol for Mark West is MWE.  But don’t be disappointed when you check it out and it’s not paying 20% dividends today.  It is paying me 20% because I bought it at $13 a share (which makes the point that it’s important to keep some ready cash in your account so you can buy when deals like this come along).  The price is considerably higher than that today, about $59 as of this writing, so the percent dividend is much lower.  But even at that higher price, it’s paying a 5.1% dividend, which is pretty nice.

In any event, you should also note that MLP’s are treated differently on your income tax with some fairly complicated rules.  I let my tax man deal with that.  And I’ve not seen any big bad tax effect using them.  Certainly nothing that outweighs the returns I’ve made.

Keep your eye out for possible MLP investments and don’t shy away because they sound exotic or complicated.  Because you trade them just like stocks.  And they can be lucrative.

I really like MLP’s.  I wish there were more of them.

To your health and prosperity – John

Leave a Reply