|Bid||7.80 x 309400|
|Ask||0.00 x 43500|
|Day's Range||7.79 - 7.89|
|52 Week Range||7.65 - 10.25|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||-5.74%|
|Beta (5Y Monthly)||1.02|
|Expense Ratio (net)||0.85%|
The Alerian MLP ETF (NYSE Arca: AMLP) declared its first quarter 2020 distribution of $0.19 on Wednesday, February 12th. The dividend is payable on February 20, 2020 to shareholders of record on February 14, 2020. Based on current financial information, the distribution is estimated to consist of 100% return of capital.
With some of the biggest dividends of the stock market MLP partnerships are tempting, but you have to know how to get paid without getting burned.Partnerships are all about paying stockholders to own them. The whole structure of a partnership is set up to pass through profits right to their owners without imposing corporate income tax costs. Investors are already paying regular income taxes on their dividend income.Partnerships come in a variety of structures that include limited partnerships (LPs), master limited partnerships (MLPs), general partnerships (GPs) and limited liability companies (LLCs). For my purposes I tend to refer to all of them as publicly traded partnerships (PTPs) or just good old partnerships.InvestorPlace - Stock Market News, Stock Advice & Trading TipsPartnerships have been around in various forms for many years and exist not just in the U.S. market, but in an increasing number of other nations and tax jurisdictions. But it's been the U.S. that's been the biggest market for these companies thanks to a massive tax reformation that took place in 1986.Prior to 1986, partnerships were operating wildly in the U.S. That was thanks to out-of-this-world effective income tax rates for individuals that topped 70% and a loophole in the U.S. tax code. This loophole meant that partnerships could be structured to generate large amounts of tax losses which could then be used not just to offset current dividend income, but also offset active income including salaries and bonuses.Tax reform legislation changed the code for partnerships and all other pass-through investments. As a result, losses can offset passive investment income.This brought carnage for those gaming the system prior to the tax reforms. And on top of that, the petrol industry further soured investors that weren't prepared for the changes. A Real PartnershipLet's move forward to our current market. Partnerships have continued to mature and expand, resulting in a great opportunity for investors seeking high dividends from solid cash-generating assets.The industries that fit the bill for partnerships include a variety of businesses involved in energy production, processing and distribution as well as other major capital asset businesses including infrastructure and transportation.Energy of course continues to be the biggest part of the U.S. partnership market. This means that you need to be careful not to be too invested -- and thus exposed to a potential fall in crude oil, natural gas or coal. Such falls can have quite dire consequences for cash flows, dividends and stock prices.Partnerships have devastated too many investors, tempting them with super high dividends and then succumbing to market woes. How bad can it be? When a partnership goes under it results in suspended or eliminated dividends, or even worse, bankruptcy.Partnerships are just like any other stocks that pay you to own them. Each of them has to prove how they're going to continue to be profitable with market downturns including the current downdraft of lower crude oil prices.And then they have to prove how each will be able to continue to finance their debt. Taxes Get Paid One Way or AnotherBefore I get to some of my favored partnerships, I need to go through how the taxes work on these partnerships.As noted above, partnerships are structured as pass-through investments. Partnerships earn profits and then pass them through to pay shareholders. That process happens before the partnership pays federal or state taxes.This helps avoid the dreaded double taxation challenge that impacts dividends paid by ordinary common stocks. But it comes with some additional benefits as well as some pitfalls.To start, let's look at the benefits. Not only do you as an investor in a PTP get paid more by not having the PTP pay taxes before you get your cut, but the PTP gets to also pass through depreciation and other costs which is listed as return of capital.The result is that for the dividends paid by PTPs, much of the cash is actually deemed as return of capital and not actual earned income. This means that investors aren't liable for income taxes on much -- or in some cases all -- of the dividend income.But the return of capital then must be used to reduce your cost basis for your investment in the PTPs. So, when you sell, you'll pay taxes on the capital gains that you've had. But you won't have to pay until you sell. So, at worst, you'll defer your tax bills and perhaps, just maybe, you might pay at a lower tax rate for the gains.However, there is a hidden benefit here. If you die before selling, the shares' cost basis is reset to the current market, so the tax bill goes to nill. But of course you have to die to get this benefit, so there is some cost. Partnerships and Retirement AccountsOne more limitation concerns qualified retirement accounts that hold partnerships. IRAs, SEPs and other plans can hold PTPs, but these are not the most tax-efficient accounts to get the full tax benefits of the partnership structure.And if you own too many of these PTPs inside a qualified account you could owe taxes as unrelated business taxable income (UBTI). The tax code establishes that somebody will eventually have to pay taxes on income, even income generated by partnerships.This means that since most income paid by a PTP is return of capital, UBTI limits won't kick in for the vast majority of the dividend income paid by partnerships. K-1s Are OKPTPs don't pay any tax at the corporate level on qualified activities. Instead, quarterly distributions are passed directly to unitholders. (If you're unfamiliar, a unitholder is an investor who owns one or more units in an MLP or investment trust). Investors pay individual taxes on their distributions. But PTP distributions are highly tax-advantaged and offer a significant tax shield.Because many PTP distributions aren't dividends, unitholders don't get a 1099 form at tax time. Unitholders receive a K-1, a standard form typically mailed in February.There are some big tax benefits to owning PTPs. Specifically, due to depreciation allowance, 80%-90% of the distribution you receive from a typical MLP is considered a return of capital by the IRS. You don't pay taxes immediately on this portion of the distribution. Instead, return of capital payments reduce your cost basis in the particular PTP. You're not taxed on the return of capital until you sell the units, which means, at worst, that you get to defer taxes for years to come.And there are other ways to invest in PTPs while completely avoiding these tax considerations. There are exchange-traded funds and closed-end funds which invest in PTPs. The benefit of buying these funds is that all of the K-1 forms and cost basis calculations are handled by the fund manager, and fund holders simply receive a 1099 at tax time.In other words, all the income passed through from the PTPs held in the fund is considered dividend income. You pay taxes on these distributions as you would for any other dividends. And funds help avoid a rare potential additional tax on some qualified investment accounts and plans, unrelated business tax income (UBTI). 3 MLPs and an ETF AlternativeMLPs in the U.S. are largely focused on the petroleum market. And the market for crude and natural gas has been facing challenges since summer 2019. After a bit of a respite in December and early January, the market has taken it on the chin again thanks to the fallout from the coronavirus (2019 n-CoV).The argument goes that as the virus leads to less production of goods and services as well as restricted travel in Asia, that demand for crude oil and natural gas will drop, depressing demand and resulting in lower prices.That said, China only buys 200,000 barrels per day (bpd) of crude from the U.S. -- but it does make up 13% of global consumption of crude.But the key to remember is that MLPs in the U.S. petroleum market are largely focused not on production, but on pipes, terminals and storage facilities. These are less at risk for oil and gas pricing than producers or refiners.But pipeline MLPs do have to deal with counterparty risks. This means that they have to manage the risks that their contracted producers and contracted consumers of petroleum will be able to stand up to their contracts. Because if they don't, then pipes go idle and so too shall cash flows for revenues.The three MLP pipelines below each have been in the markets through thick and thin. So, they have proven their ability to deal with counterparty risk. MLPs to Buy: Enterprise Products Partners (EPD)Source: Chart by Bloomberg Enterprise Products Partners (NYSE:EPD) has a vast network of natural gas, crude oil and other petroleum-related pipelines. Despite the challenges in the markets, revenues are still ample. EPD brought in $8 billion for the recent quarter.It is efficient in its operations, with operating margins running at a fat 18.5% which in turn works to deliver a return on equity of 20.1%. With ample cash and debts manageable at 46.2% of assets, Enterprise is a capable company.And it is a value as the shares are at a mere 2.4 times book value and only 1.8 times trailing revenues.The dividend distribution is running at 44.5 cents for a yield of 6.8%. And those distributions continue to rise by an average annual rate of 4% over the past five years.Investing in quality MLPs is all about buying and owning for the longer term for income and gradual gains. And Enterprise has proven to be a longer-term performer.Source: Chart by Bloomberg The shares have returned 197.7% over the past trailing ten years for an average annual equivalent return of 11.5% per year. Plains GP Holdings (PAGP)Source: Chart by Bloomberg Plains GP Holdings (NYSE:PAGP) is the general partner of Plains All American Pipeline (NYSE:PAA). As the general partner it has the controlling interest and ownership in Plains All American. And PAA has a massive collection of terminals, storage and pipe for crude oil, natural gas and refined products.Plus it is one of the primary pipelines for core U.S. shale production in the Permian Basin.Revenue is strong with the most recent quarter showing over $9 billion. And that revenue has been gaining over the past five year by a compound annual growth rate (CAGR) of 9.5%.The operating margin for the general partner is more modest at 5.9%, but the return on shareholder's equity is ample at 16.5%. And cash is on hand and debts are low at only 31.9% of assets.What's more, the stock is a big bargain as it is valued at a 90% discount to the trailing revenues of the company.Source: Chart by Bloomberg Given the focus on crude oil from the Permian, the stock market hasn't been too keen to provide a better valuation for the share. This shows in the price-to-revenue ratio of 0.1.And the shares are newer to the public market, so the trailing four years have only resulted in a return of 13.1%.The distributions are running at 36 cents per share for a yield of 8.3%. And the distributions are up by 20% over the past year. All of the distributions are fully shielded from current income tax liability, making them worth even more. Magellan Midstream Partners (MMP)Source: Chart by Bloomberg Refined products are where there are better stories. Marine fuel standard changes are providing opportunities for pipes, storage and marine terminals.And that also extends to diesel, gasoline and jet fuels.This is why Magellan Midstream Partners (NYSE:MMP) is a prime pick for me. MMP calls Tulsa, Oklahoma home, and it deals with refined products. Revenues continue to climb with the compound annual growth rate over the past five years running at 7.3%. And operating margins are a whopping 44.1%, which in turn delivers a return on equity of 40.2%.Source: Chart by Bloomberg Dividends provide a yield of 6.8% and the distributions are rising, with the five-year annual average running at 9.1%. And MMP has returned a positive 373.3% over the past ten years for an average annual equivalent return of 16.8%. ETF Alternative: Alerian MLP (AMLP)Source: Chart by Bloomberg For investors wanting to gain the income and longer-term growth of MLPs without K-1 tax forms, there is the Alerian MLP ETF (NYSEARCA:AMLP). This ETF has the three MLPs as primary synthetic holdings in the fund.The ETF hasn't been gaining investor attention because the MLP space has been challenged. This means AMLP is a bit of a bargain.But for those that do like to buy a bargain, you'll be well paid. The dividend is running at 19.5 cents for a yield of 9.5%. And this ETF works for those seeking to avoid K-1s.Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps -- and into safe, top-performing income investments. Neil's new income program is a cash-generating machine … one that can help you collect $208 every day the market's open. Neil does not have any holdings in the securities mentioned above. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Utility Stocks to Buy That Offer Juicy Dividends * 10 Gold and Silver Stocks to Profit Off 2020's Fear Trade * 3 Top Companies That Should Be More Careful With Your Data The post 3 MLPs and a Rich ETF to Buy for Excellent Portfolio Padding appeared first on InvestorPlace.
The movements in these sector ETFs should be watched closely as the phase-1 trade deal is being signed and there is no tariff relief for a huge chunk of goods until phase-2.
One of my newsletter editor friends is Doug Casey, whom I've known since the early 1990s. He's the author of numerous books including the seminal Crisis Investing in 1979, which I have an original copy of on my bookshelves. Doug has always been one of the smarter guys in the room -- particularly when it comes to finding bargains in the markets where others are missing them. And one of his tenets is to buy when there's blood in the streets.Source: Kodda / Shutterstock.com I have always marveled at how he can take a market which is deemed to be in trouble and pick through the facts while tossing away the hyped fear. And in turn -- I have enjoyed watching as the facts play out, rewarding him with gains and often lots of income along the way.The energy market is where seemingly no one wants to be an investor right now. With the S&P 500 generating a return year-to-date of 31.1%, the energy market, as tracked by the S&P 500 Energy Index, has recently just managed to recover a bit in December for a return of 12%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSource: Bloomberg -- S&P 500 (White) & S&P Energy (Red) Indexes Total Return The year though, was much worse. From April 23 through Dec. 3, the energy market was down in price by 16.3%. Blood in the StreetsThis makes for a bit of a "blood in the streets" case for the energy market. And then there's the valuation of the S&P 500 compared to the Energy Index. On a price-to-earnings basis, the energy market is at a discount to the S&P 500 by 8%. And on a price-to-sales basis, the Energy Index is at a 49.3% discount to the general S&P 500. Then lastly, on a price-to-book basis, the Energy Index is at a discount of 53.8% to the S&P 500.All of this comes as oil prices are up for the year by 35.9% in West Texas Intermediate (WTI) oil. And while oil is up, it isn't being reflected in the S&P Energy Index's performance.Source: Bloomberg -- S&P Energy Index (White) & WTI Oil Spot (Green) Prices In this week's Barron's, Peter Lynch of Fidelity fame and long-time former manager of its flagship Magellan Fund (NASDAQ:FMAGX) was interviewed. Lynch is another investor who likes to cast off the market chaff to focus on the kernels of facts.One of the more important observations of his was that much of the energy market is making assumptions that the world won't be using oil and gas much longer, let alone for the next year or 20 years. In turn, stocks are being tossed.And yes, wind and solar energy are gaining -- but natural gas is needed when the sun isn't shining or the wind isn't bellowing, as battery costs are still not completely viable.Then for transportation, electric planes are still a pipe dream. And while electric cars and trucks are gaining in number, they are still dwarfed by the continued production of traditional petrol-powered vehicles. My Way to Invest in EnergyOne of the more dependable segments of the energy markets which is less dependent on oil and natural gas prices is the pipeline and related infrastructure industry. This is the segment which acts as a toll-taker to gather and transport oil and gas from the field to the end users from refineries to consumers.Oil and gas prices rise and fall, but as long as the pipes are filled, these companies earn their fees and in turn, share the bulk of the profits with shareholders. The real risk for pipe companies is managing counterparty risks. This means they must know their customers well and learn how to survive when prices are low.The best in this segment have been around during the boom and bust times of oil and gas prices. And so, it is pretty straightforward to examine how they fared during times of stress.That said, these names haven't done all that well this year. Pipeline companies, as measured by the Alerian MLP Index, have only returned 8% year-to-date for 2019. U.S. pipeline companies entered into a major slump from July to early December, but have been sharply rebounding since. The Alerian MLP IndexSource: Alerian and Bloomberg -- Alerian MLP Index Total Return Since the start of December, the index has been making a sharp turnaround with a gain of 12.8% -- nearly triple the performance of the S&P 500.There's much to say about the demand for yield as the MLP pipeline segment of the midstream market offers outlier dividend yields. The Alerian Index has an implied yield of 8.9% which is eye-watering in an increasingly lower yield market.And there is some differentiation in the MLP pipes. One of the big stories over the past three years has come from the U.S. government supporting pipeline network expansion, field gathering and marine terminals. With the support for the export of crude and natural gas, pipelines are in a very good space to increase fee income.Source: U.S. Department of Energy & Bloomberg -- U.S. Crude Oil and Petroleum Exports The major Permian Basin continues to be awash in oil and natural gas, depressing local prices for petrol, which continues to be locked out of the market. But with the exports, pipelines are stepping up with expansion plans.One of my favorites in the gas and oil pipes continues to be Enterprise Product Partners (NYSE:EPD). The stock is up 13.8% in price since Nov. 19 and has returned 23.9% year-to-date. Enterprise Product Partners (EPD)E Source: Bloomberg -- Enterprise Product Partners Total Return The company is at the forefront of solving key problems for U.S. oil and gas thanks to its capacity to get more of the products from the fields to the markets. Enterprise has been expanding its capabilities and has just announced this month that it is working on a venture with Enbridge (NYSE:ENB) to develop a deep-water oil export terminal in the Gulf of Mexico for loading "very large crude carriers" or VLCCs.This should further give the company the ability to raise its revenues and profits. EPD stock has trailed the return of the S&P 500 -- but I still see more value here.Revenues are already up on a trailing year basis by 24.9%. And it is very efficient in its operations with operating margins running at 13.5%. This is returning 20.1% on shareholder's equity and an impressive 8% return on the overall capital of the company.It runs a good cash hoard and has limited debts running at 46.2% of assets. This puts the company above the credit profile of some of its lesser peers in the U.S. market.Unit distributions are running near 44 cents per share for a current yield of 6.2%. And the distributions continue to rise with an average annual increase over the past five years running at 4.2%. Compiled estimates for the next distribution going ex-dividend in January shows a further increase.EPD makes for a smart buy in a taxable account as much of the dividend distribution is shielded from current income tax liability. That makes the yield worth even more. Plains GP Holdings (PAGP)Source: Bloomberg -- Plains GP Holdings Total Return Plains GP Holdings (NYSE:PAGP) is a Permian-focused pass-through company deriving revenue from its stake as the general partner of Plains All American Pipeline (NYSE:PAA). It has already turned on new and expanded pipe this year -- and additional capacity is in the works.Revenues are up 29.9% over the trailing year. Operating margins are a bit thinner than for Enterprise at 6.7%. But the return on shareholder's equity is fat at 23.7%. And the return on the overall capital of the company is also good at 13.5%.Cash is well-managed and debts are even lower at only 34.3% of assets, making it a compelling creditor for further investment as needed.The distribution is currently running at 36 cents per unit for a yield of 7.4% and the distributions are up over the past year by 15%, reflecting the additional capacity.But the key thing about the shares is that they are priced at a 90% discount to sales. It remains another smart buy in a taxable account. Again, just like for Enterprise, it is tax-advantaged.One of the key challenges in the MLP space is that there are plenty of companies which are not in the same good shape as EPD or PAGP. Some are converting into regular corporations which would allow for a broader investor base. Others are consolidating.And in addition, there are a growing number of private equity and other institutional funds which are circling the midstream space. It's clear that the space is a good value proposition with the ability to add debt to generate more cash flows and distributions. This may well aid the quality companies in the toll-taker space.This is particularly true in some of the specific sectors of the pipeline markets such as refined products. New regulations are providing opportunities for pipes, storage and marine terminals. Magellan Midstream Partners (MMP)Source: Bloomberg -- Magellan Midstream Total Return This is where Magellan Midstream Partners (NYSE:MMP) is a prime pick for me. MMP operates in the refined products and marine storage segments. Revenues are up 35.1% over the trailing year and operating margins are a whopping 42.3%. Those margins in turn deliver a return on equity of 40.2%.Dividends provide a yield of 6.5% and the distributions are rising with the five-year annual average running at 10%. MMP has returned a positive 16.2% year-to-date.Magellan Midstream is a further smart buy in a taxable account. Alerian MLP ETF (AMLP)Source: Bloomberg -- Alerian MLP ETF Total Return This brings in the Alerian MLP ETF (NYSEARCA:AMLP) which is modest, with a year-to-date return of 8.5%. But this is not as reflective of the performances and fundamentals of its core holdings, which include Enterprise Products, Plains All American and Magellan. However, the exchange-traded fund does have many lesser MLPs represented, but they are marginal in terms of their allocations in the fund.This provides a further opportunity to buy into the prime MLPs. The ETF yields a big dividend overall at just under 9%. It remains a smart index buy which can be done in a tax-free account given the ETF structure.Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps -- and into safe, top-performing income investments. Neil's new income program is a cash-generating machine … one that can help you collect $208 every day the market's open. Neil does not have any holdings in the securities mentioned above. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy to Get 2020 Started the Right Way * 10 Best ETFs for 2020: The Competition Is Stacked Full of Potential * 4 Gold Stocks to Buy as the Yellow Metal Surges The post The 4 Best Energy Stocks for Smart Investors appeared first on InvestorPlace.
The ALPS Alerian MLP ETF (AMLP) is rebounding nicely to close 2019. The largest ETF dedicated to master limited partnerships (MLPs) gained almost 1% on Thursday, pushing its gain over the past week to 7%. AMLP seeks investment results that correspond generally to the price and yield performance of its underlying index, the Alerian MLP Infrastructure Index.
DENVER , Nov. 14, 2019 /PRNewswire/ -- The Alerian MLP ETF (NYSE Arca: AMLP ) declared its fourth quarter 2019 distribution of $0.195 on Wednesday, November 13th . The dividend is payable on November 21, ...
With 2019 coming to a close, investors have to start thinking about taxes and ways they can minimize their tax burden if they haven’t done so already. One place to look is ETF products that can take advantage of the tax benefits of master limited partnerships (MLPs). “MLPs do not pay taxes at the entity level if 90% or more of their income is from qualifying sources which are defined in the Internal Revenue Code to include exploration and production, transportation, and other activities involving any mineral or natural resource, an Alerian research report noted.
Here is a look at ETFs that currently offer attractive short selling opportunities. The ETFs included in this list are rated as sell candidates for two reasons. First, each of these funds is deemed to be in a downtrend based on the fact that its 50-day moving average is below its 200-day moving average, which are popular indicators for gauging long-term and medium-term trends, respectively. Second, each of these ETFs is also trading above its 20-day moving average, thereby offering a near-term 'sell on the pop' opportunity given the longer-term downtrend at hand. Note that this prospects list also features a liquidity screen by excluding ETFs with average trading volumes below the one million shares mark. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques. To get access to all ETFdb.com premium content, sign up for a free 14-day trial to ETFdb.com Pro.
UBS Global's Mark Haefele recently wrote in a note, "We believe that investors can keep their investment strategies on track for the long term."
On July 11–18, major energy ETFs had the following correlations with US crude oil active futures: the Energy Select Sector SPDR ETF (XLE): 42% the SPDR S&P Oil & Gas Exploration & Production ETF (XOP): 32.3% the Alerian MLP ETF (AMLP): 23.1% the VanEck Vectors Oil Services ETF (OIH): 12.3% Notably, US crude oil active […]
Currently, Energy Transfer stock looks attractive based on its valuation. The stock is trading at a forward EV-to-EBITDA multiple of ~9x based on the consensus earnings estimates for the next 12 months.
Raymond James upgraded Williams Companies (WMB) and downgraded Kinder Morgan (KMI) on June 26. Raymond James downgraded KMI from "outperform" to "market perform." Based on consensus estimates, Kinder Morgan has a mean price of $21.7 against its current market price of $20.6, indicating an estimated upside of 5% for the next year.
Last week, US crude oil prices rose 8.8%, while natural gas active futures fell 8.9%. The upturn in oil was more significant for energy ETFs than the fall in natural gas prices.
US crude oil active futures have risen 8.6% in the trailing week, which might have boosted or limited the downside in OIH, XOP, XLE, and AMLP. They have returned 5.8%, 5%, 3.7%, and -0.7%, respectively.