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Boardwalk Pipeline Partners, LP Message Board

  • fountain123_45 fountain123_45 Feb 18, 2010 9:57 AM Flag

    BWP dividend

    Planning to start my position in BWP, hope someone could tell me:

    1. If the dividend paid is considered Ordinary or exempt.

    2. If it better to buy in IRA account or ordinary investment account. Plan to reinvest dividends so current income is not a concern.

    3. A good entry point.

    Thanks for the help.

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    • fountain no different than MWE which you've been in for some time, no?

    • BWP is a master limited partnership (MLP). You would do well to read a primer on MLPs.

      1) They pay a distribution from cash flow, and part of that is classified as return of capital. That portion results in no immediate federal income tax; however if you sell you will have to discount your cost basis by the same amount of capital returned (e.g., if you buy at $30/share and receive $1/share in distributions as a result of return of capital your cost basis becomes $29/share).

      2) In my opinion, MLPs are better held in a regular account as they are already tax-advantaged. You cannot hold this in a Roth IRA. This is a link to the investor relations site for BWP:

      3) The 10 million share offering is priced at $30.02/share. The underwriters will receive rights to purchase up to 1.5 million shares for the next 30 days at the $30.02/share price. In my opinion, this will likely cap the stock price for the next 30 days, but who really knows in this market.

      I acquired my shares at an average cost of $23.7/share. This is a pipeline and storage company as opposed to a producer, so the perceived risk is less resulting in the lower pay out when compared to LINE, LGCY, ENP, MWE, etc.

      They have continued to grow revenues despite fluctuations in N.G. prices. I suggest you visit their website as well. Only you can determine an appropriate entry point.

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