I've been watching U.S.A. Nat gas stocks and trusts for some time now. When the market dips this Trust seems to climb opposite to the market, I just can't understand why??? While I got ya here for a moment. Ya think a few units in my roth is a good bet???
First, this MLP moves with the price of oil, 90% correlated to oil. Not to the stock markets, but, then again, it's not a stock. But I'm sure you understand that a unit is not a share.
On the Roth, not such a great idea unless you know the rules. You can't get more than $1K per yr in an untaxed acct from untaxed sources. For that reason, MLPs are said to be unsuitable for IRAs. But I put them in all the time, and just sell them before the ex-divi day.
MLPs may be units, but their prices can jump around for no good reason, like the MLP sell off last month. i bot some at that time in the IRA, sold them on the bounce, before I got hit with the divi.
GL, get an education about MLps and trusts, they are much more complex than stocks.
txt, Thanks for the post and reply. I can tell this is one of the more informative boards as there are not to many posts here? As my disclaimer goes, I only finished school through 10th grade and need a lot of help. My broker talked down to me and that muddied the water quick. What I would like to do is build a dividend retirement and all I look at is the divi??? Not the best strategies as you and Lisa post that these are not the best way for a traditional IRA. And no, I have not got to a level where I earn over a $1000. in dividends yet. Thanks for being gentle with this hard headed person.
"First, this MLP moves with the price of oil, 90% correlated to oil."
First, MTR is not an MLP. It is a royalty trust. Different animal.
Second, MTR is 75% gas, only 25% oil. Distribution and hence unit price is much more likely to follow NG price than oil.
"On the Roth, not such a great idea unless you know the rules. You can't get more than $1K per yr in an untaxed acct from untaxed sources. For that reason, MLPs are said to be unsuitable for IRAs. But I put them in all the time, and just sell them before the ex-divi day."
You are thinking of UBTI, but you have the whole thing rather confused. UBTI is not tied to distributions. In any case, UBTI is not relevant for royalty trusts - again MTR is a trust, not an MLP.
And you hold MLPs/trusts and sell them just before ex-div? What a strange strategy - to invest in income vehicles but deliberately forgo the income.
remember this is a commodity. The most likely sell their oil and gas about 2 months forward for the sake of sanity. So, if they sold in january at say 70 dollars a barrel basis, and today say in March it's 60 dollars basis. They are just delivering the January sales at 70 and that's what the dividends are paid against. I hope that makes sense. If the market turns around in oil, remember they are trailing and still have to deliver on that stuff they sold in March basis 60 even it the market is 75.