Hi - I made a nice profit on WIN, and have had my eye on this for an entry point. Any opinions in light of the lowered guidance if the dividend can be maintained a the current levels? what is the coverage ratio, etc? thanks.
Since the ALSK dividend is 76 cents return of capital and 10 cents qualified dividend (per my brokers 1099), it is 88% tax deferred.
After several years of return of capital, your tax cost basis will be significantly reduced. If you sell then, you have a big long term capital gain for any price appreciation plus the return of capital.
For those, with a large tax loss carryover (from the meltdown), your tax deferred becomes tax free.
I just ran some quicks nums on a three year holding period, looks like the same net cash flow as a div stock due to LT cap gains rate = divi rate....only benefit of MLP is more cash in you pocket earlier since less divi tax earlier, therefore, in theory, you can reinvest the increment and get a leg up on a normal divi stock.
You never can tell if the div is safe because they can decide to pay it even though it is not the right thing to do, or they can cut it to use the cash to pay down debt even though they have the money to pay it.
I am long a very small position of ALSK but I will be selling soon as I like WWVY's balance sheet much more.