Friday, July 18, 2008

MLPs with Yields over 7% for the Summer

MLP's, or Master Limited Partnerships, are sometimes referred to as United States Income partnerships, are investment vehicles that are similar to income royalty trusts, except that they are structured as limited partnerships. MLP's differ from high income stocks in several ways. Since they pass through income without being taxed at the corporate level, they avoid double taxation. Plus, MLPs can pass through tax deductions.

However, they differ from income trusts in several ways. MLPs shouldn’t be put into a retirement plan because of the UBTI or Unrelated Business Taxable Income problem, which could put the tax deferred status of retirement plans in jeopardy. Also, MLPs don't send out 1099 forms, they send out a Schedule K-1 Form, and the income is reported differently on tax returns. Yet, MLP closed end funds do not have the same issues. Investors should discuss that tax issues of MLP's with an accountant or CPA before investing.

Terra Nitrogen Company, L.P. (TNH) pays a yield of over 14.1%. 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 8.

Ferrellgas Partners LP (FGP), is a propane distribution company which has a yield of 10.9%. This Overland Park, Kansas company distributes gas in all 50 states. The stock has a P/E of 49 and a PEG of 5.91.

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 yield of 9.8%, forward P/E of 11 and a PEG of 3.95.

Another high yield partnership is Rio Vista Energy Partners LP (RVEP), which trades on NASDAQ, has a yield of 9.1%. This Houston, Texas based company produces and transports oil and natural gas. Recent earnings were negative.

Suburban Propane Partners LP (SPH) distributes propane, diesel fuel, gasoline, fuel oil, kerosene, refined fuels, and natural gas. The stock has a yield of 8.8%, has a PE of 8, and a PEG of 0.87.

Energy Transfer Partners L.P. (ETP) has a payout of 8.2%. 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 11.

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

Author does not own any of the above.

By Fred Fuld at

No comments: