Sunday, March 09, 2008

Top 20 High Yield U.S. Income Partnerships

United States Income partnerships, generally known as Master Limited Partnerships or MLP's, are investment vehicles that are similar to income royalty trusts, except that they are structured as limited partnerships. MLP's have several advantages over regular high income stocks. They avoid double taxation because they pass through income without being taxed at the corporate level. In addition, they can pass through tax deductions. However, there are a couple issues you should be aware of, that make them different from income trusts.

First, they don't send out 1099 forms, they send out a Schedule K-1 Form, and the income is reported on your tax return much different from regular dividends. In addition, you should never, ever put an MLP into a retirement plan because of the UBTI or Unrelated Business Taxable Income problem, which could put the tax deferred status of your retirement plan in jeopardy, based on my understanding. MLP closed end funds should not be a problem. However, I am not an accountant; please discuss MLP's with your accountant or CPA for clarification, before making an investment.

The MLP's are generally involved in pipeline businesses, usually oil and gas. Most of these MLP's have very high dividends.

Terra Nitrogen Company, L.P. (TNH) pays a yield of over 13%. This Sioux City, Iowa based company produces and distributes nitrogen fertilizer products, such as anhydrous ammonia and urea ammonium nitrate solutions. The company, which trades on the New York Stock Exchange, has a P/E of 12.

Another high yield partnership is Energy Transfer Partners L.P. (ETP) which has a payout of 9.6%. The company is in the business of transporting and storing natural gas through its pipeline systems. The stock, which trades on the NYSE, has a P/E of 12.

Ferrellgas Partners LP (FGP), the propane distribution company, has a yield of 9.1%. This Overland Park, Kansas company distributes gas in all 50 states. The stock has a P/E of 33 and a PEG of 4.4.

Atlas Pipeline Partners LP (APL), is another natural gas distributor with about 7,900 miles of intrastate gas gathering pipelines. The Pennsylvania based company has a forward P/E of 13.7 and a PEG of 4.31.

For a list of 20 of the top American based master limited partnerships, which can be sorted, changed, added to and downloaded, go to

Author does not own any of the above.

By Fred Fuld at

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