Master Limited Partnerships 2020

High Yield

By: Martin Lees

Narrated by: Virtual Voice

Master Limited Partnership MLP offer diversification, tax-advantaged and tax-deferred income, high-yields and have historically generated excellent total returns. Typically, MLP offers: Tax advantaged income High yield in excess of market averages Bulk of cash flow returned to shareholders through distributions Distributions (not a dividend) are either a return of capital or ordinary income. Each individual MLP distribution is normally around 80-90% and 10-20% ordinary income. MLPs are tax-advantaged vehicles that are suitable for investors looking for current income. Advantages of MLPs Lower taxes Tax-deferred income through returns of capital Diversification from other assets High-Yields Historical high returns Disadvantages of MLPs Complicated tax calculation Paperwork if held in a retirement account Little diversification as most in the oil and gas sector Elevated risk of distribution cuts due to high pay-out ratios Growth through debt and share issuances Management and ownership distribution put a cap on distribution increases