I have my doubts about structure simplification process - buying Susser does not make things simpler. I believe one analysis asked the question about "wouldn't buying Susser be more complicated?" and ETP said something to the effect of "it is not easy keeping things simple - doing business things get complicated" I believe that was in the first quarter conference call.
I really do not care in the end, my accountant does my taxes and I just try to make money. I am just glad ETP has increased the distribution to .02 instead of .015.
Sentence by sentence --
1) You haven't received a K-1 because you bought this year. The 2014 K-1 will be issued in March 2015 for you to be able to do your 2014 taxes.
2) The distribution for an ETP (which is an MLP _Master Limited Partnership) is totally a Return of capital. You are a partner in the ownership of ETP and you are entitled to your share of the ROC distributions and you get a credit for your share of the company's expenses. For all these benefits it will reduce your taxable purchase cost and most of the distributions are TAX DEFERRED as long as you own the partnership units and don't sell. If you pass away your heirs will normally receive a step up in value to the value at the date of your death. While you are alive you can spend the ROC distributions with little taxes (if any) payable or reinvest the income (also with no tax) into additional units and receive more income (again with little or no tax)
3)Thats why they have tax accountants. Be smart USE ONE- It will be very beneficial to own MLP's in your portfolio --Mainly due to the fear of the tax complications of people like you. It is always easier to follow the herd to tax slaughter than to find and follow a better and safer path. I'm sure you went to school years ago to learn something. Now its time to go back and learn something thats important to your pocketbook.
retired_forever_more, it's a wonder you're retired. no offense, but your question displays a complete lack of knowledge of the situation. doesn't matter where the 6.6% comes from, you just get it. it's like molecules in a pipeline. how does a unit of natgas get from texas to transco zone 6 in new york? when you figure that out you have the answer to your stupid question.
generally (typically), you will receive both, ROC and distributions from earnings, if there are any earnings. You really need an accountant for K-1 tax management, especially the year in which you sell your position.
I bought some ETP this year so haven't received a K-1 yet. I'm wondering if they are paying their 6.6% distribution from earnings or is a lot of it return of capital. I'm not sure I should have gotten involved with this due to tax complications. Thanks for any replies.
How long do you want to hold either company? Understnad if ETP or RGP have any problems or stop growing rapidly then ETEs ability to increase their distribution would fall. Remember ETE mostly gets $$ from ETP, RGP and SXL. ETE is leveraged and thus subject to that risk. FWIW I own ETP, RGP and ETE. how risk tolerant are you. Any bad news and ETP goes down 3 or 4 points, but ETE goes down about 10.
Suggest you look at a broker analysis that shows distributions with anticipated increases over the next 3 years along with the current yield. There is about a .8 correlation with the yield the yield the lower the anticipated predicted increase in distribution. Of course the lower the yield (like ETE) the higher the expected increase.
MS came out with a sector report this afternoon. Companies that are at least 1/2 standard de viation above the yield/distribution curve are a bit surprising with 5 companies: ATLS, WGP, CMLP, APL, and WPZ. Companies below are EPD (they have a differerent distribution policy from every other MLP) MPLX and VLP. ETE is exactly on the median line. This is because the yield today is so low at 2.51% it will take many years (all things equal) to raise its distribution to that of ETP (rate currently 6.51%. The increases expected using the average from 4 brokers is a 25% CAGR for ETE and 6% for ETP.
What does this mean if correct? YE 2016 ETE distribution run rate of $2.81 and ETP of $4.46. Thus ETE disttribution grows faster and in 3 years is about 40% less, If you do this in about 2022 ETE should pay the same distribution as ETP.
Don't be hard on yourself. I wouldn't say "stupid" I would say "Uninformed." You probably bought ETP originally over ETE because of the higher distribution return. If thats what you wanted, Many people stop looking after they see the higher yield verses the lower yield .That's what you got, so you weren't stupid. If you wanted long term capital appreciation, you should have bought ETE, but you would have had to give up some of the current income. It appears you weren't aware of that, so that makes you uninformed, but not stupid..
So now you are informed and you have to make a decision on what to do now with your portfolio that will help you reach the goals that you want for yourself and your family.
its the growth versus income decision, if your more interested in regular tax deferred income payments right away than long term capital gain growth then etp is more desirable because of its *ahem* distributions.
Until you sell most of the gains for ETE are paper gains.
my energy transfer position is ~50% ete and ~50% etp to take advantage of both aspects.
Doesn't pay dividends?? Odd! SCOTTRADE says it does, Yahoo says it does, S&P says it pays a dividend. So....if it doesn't ....what are those payments called that you get every three months??
So why is there any benefit to own ETP at all if ETE is excelling on every performance metric over ETP? (with the exception of the dividend).
ETE up 2.5% again today...ETP down. Good thing I am going on vacation for two weeks...this is really starting to #$%$ me off.
How should we interpret “ETP is in discussions with SXL regarding a potentially significant equity participation by SXL”.
Looking to move into another MLP in PADD-3 and perhaps in PADD-2. Already have DAKP in ND, but that is it. MWE and SXL in PADD-3 and 1. Also the Patoka IL, rail connection appears to be PAGP. Sounds like two issues being addressed that is PADD-2 to 3, and rail to PADD-1 and west. This could be beneficial to the rails as the Chicago choke point is eliminated. Have to look more into this. Also recall a three tier commitment terms for E&P.
The pipeline will take 2 1/2 years to complete. Design probably 6-8 months and then they start spending $$. Thus no hurry to raise $$ for the pipeline for a while.
Very simple. ETE owns about 50M ETP units and the IDRs. It does not own ETP. That means for every .01 paid out to ETP holders that ETE holders get .01 too. Then remember to pay for the $2B (just a guess) ETP will need to issue lots of units - in the area of 18 MILLION. That means an extra 75 Million $$ each year for ETE holders.
It is called leverage! Also ETE is not the main company. Probably thinking of it as the managing partner would be helpful. That leverage is why ETE pays out at a sub 3% distribution and ETP about 6%. The ETE distribution will grow faster than ETP and can grow even if ETPs does not when units are issued.