Publicly Traded Partnerships / MLPs

Question

I know most of you folks like crazy penny stock investments and pyramid schemes, so I may be approaching the wrong crowd. All kidding aside, does anyone own units of publicly traded partnerships or MLPs? Most of them are involved in the energy sector one way or another and pay a high dividend, which is treated as a return of capital. I am only own one currently but my strategy is to essentially take my return of capital every year (13-15%) and use it to purchase other securities. I think its a decent way to build my portfolio over the next 5-10 years.

So, is anyone invested in these as well?

robertelee · Answer

I know most of you folks like crazy penny stock investments and pyramid schemes, so I may be approaching the wrong crowd. All kidding aside, does anyone own units of publicly traded partnerships or MLPs? Most of them are involved in the energy sector one way or another and pay a high dividend, which is treated as a return of capital. I am only own one currently but my strategy is to essentially take my return of capital every year (13-15%) and use it to purchase other securities. I think its a decent way to build my portfolio over the next 5-10 years.

So, is anyone invested in these as well?

wallstreetcappers · Answer

I never have, but I&#x27;ve known people that do.They are illiquid, difficult to trade out of and the dividends can evaporate quickly.I have a relative who was hip deep into NG MLP&#x27;s during that massive boom when NG was flying..Well there was a promise of consolidating all the MLP&#x27;s and making it a traded stock on the exchange but that didnt happen and he was crushed when the MLP&#x27;s collapsed and he had no way out.With oil dropping like this, I would be very concerned with the dividends and the value of your MLP...

robertelee · Answer

I am not sure what you are referring to as far as units of MLPs being illiquid. They may not have the same volume of units changing hands compared to publicly traded corporations have, but that is because your typical MLP holder is investing for income production.

I bought into the MLP that I currently own a couple weeks ago when the units were trading just below book value. And since I am planning on holding long-term, current oil prices really do not really concern me too much. Oil is a finite resource after all.

SashimiKid · Answer

KMI is an energy MLP many people are interested in

wallstreetcappers · Answer

Sorry...I misread your title..I was thinking you meant PRIVATE partnerships..The concept about dividend suspension for sure is in play though..if their revenue streams dry up you better believe they will slash the divi quickly.You were asking about reinvesting the dividends, well I would be worried about getting the dividends with oil down in the 70s now.I do think this is a short term Russia squeeze though..

robertelee · Answer

Oh no problem man, I agree though cash flow is number 1 above all things when it comes to long term proven dividend payers. REITs are sort of the cousin of MLPs from a return of capital standpoint. I am not personally in them (at this moment), but if oil prices are of concern that might be another way an investor could get that cash flow going. Just an idea. I think it&#x27;s important to have several points of view when it comes to ideas on the markets.

Publicly Traded Partnerships / MLPs

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