Daicheng, you are right. LINE is a partnership. LNCO is "normal" corporation that is managed by LINE and whose only operation is to own shares in LINE.
LNCO receives the distributions from LINE for the LINE stock that it owns, it pays the taxes (if any) for those distributions, and it then re-distributes those distributions as dividends to its share holers. If you own LINE you get a form K-1 for figuring your income taxes. If you own LNCO you get a regular IRS form 1090 (just like any other "normal" stock) to report your dividends.
At the moment both LINE and LNCO pay the same amount in distributions and dividends. But the share prices trade independently. That is the market determines the share price. At this moment LNCO trades cheaper than LINE. Previously LINE traded cheaper than LNCO. It could change again in the future.
I hope that helps. Good luck in this crazy market.
On or about March 14th. If you go to LINE's web site you can sign up for them to send you an e-mail when the K-1 is ready.
Sentiment: Strong Buy
Hi Hillsdale. It is tough to find good yields today. I wish I could find some more myself. I hope I am wrong, but I have a strong suspicion that the economy is going to be stagnant for the next few years and that dividend yield is more important now than it used to be.
I agree with the suggestion about PSEC. It is a risky investment. It looks to me like they are invested in a lot of junk. But on the other hand they pay a monthly dividend of 0.11 and the share price is 11.34, which works out to a yield of 11.6%. I've owned some for about half a year now, and my experience has been that the share price seems to fluctuate mostly between about 10.9 and 11.5. Be careful with this one and if you buy it keep an eye on it.
Some of the closed end preferred stock and bond funds have a nice yield and pay a monthly dividend. For example NCZ pays .085 a month with a share price of 9.62, which is a 10.6% yield; PFN pays .08 a month with a share price of 10.49 for a yield of 9.15%; and JPS pays .055 a month with a share price of 8.53 for a yield of 7.7%. These are all leveraged funds. I've owned closed end funds like these for the last 30 years, switching between funds depending on fluctuating prices and dividend yields. My experience with these funds is that you buy them and then pretty much ignore them. The dividends don't change very often.
Good luck. It isn't a good market for investors looking for yield and of course safe investments like US Treasuries or bank CDs pay nothing.
It comes from the company. You can sign up at the company's website for them to send you an e-mail when the K-1 is ready. When you get the e-mail you can download your K-1 directly from the company's website if you want to or you can wait to get a hard copy from the company in the mail.
I like this company. But doing income taxes with k-1's is a real pain. Last year using Turbo Tax Deluxe took me about two hours to do three master limited partnerships. If like me you do your own taxes, be prepared for an unpleasant experience. The directions on the K-1 are not clear and the IRS publications are useless.
Sentiment: Strong Buy
Depending on the spread between LINE and LNCO It seems like a reasonable strategy. The dividend -/distribution is the same, and LNCO is trading cheaper. So if the price spread is large enough you can increase your dividend by selling your LINE and using the money to buy LNCO. You may also be able to take a capital gain or loss on your 2013 income taxes by selling LINE.
One drawback as I see it. Most of the LINE distribution comes out as tax deferred or essentially tax free. But you pay Federal and state income taxes on your LNCO dividend. I just did some crude back of the envelope type calculations on my own taxes this morning and it looked to me like because of the additional taxes I would have to pay on the LNCO dividends, I would wind up losing money if I made the switch. I'm not a tax expert and I might have made a mistake. But depending on how many shares you own, and depending on your tax bracket and your state income tax rate, you could wind up losing money on the switch. Before you make the switch you might want to do a rough tax calculation.
By the way, I'm really bullish on this company. It looks to me like there are distribution increases coming next year and it wouldn't surprise me if we are trading somewhere around 40 by this time next year.