June 8, 2010
Posted: Mon Jun 07, 2010 8:10 pm
If you're looking for high yield with tax benefits you should check out some of the energy sector MLP’s. These five are rock solid and offer big dividends.
Enterprise Products Partners (EPD) – current yield of 6.8%
Kinder Morgan Energy Partners (KMP) – current yield of 6.8%
Linn Energy, LLC (LINE) – current yield is 10%
Energy Transfer Partners. LP (ETP) – current yield is 8.2%
Enbridge Energy, LP (EEP) – current yield is 8.1%
What I really like about this group is that they are all large-caps with options. You can sell Covered Calls against your position to significantly reduce risk (of course you give away some upside as a result) and increase the yield. The dividend is paid on the share price not on your net investment. This is perfect for investors that want to protect principle as much as possible but still get solid cash flows.
For example:
Line Energy (LINE) is a $3.7Billion company Your Cash Dividend rate
Investor:
> Buy 1,000 shares at $25 (25,000) 10%
> Sell 10 Jan 2011 $20 Calls at $5.50 + 5,500
> Investor’s net out of pocket investment (19,500) 12.8% < Which BTW is mostly tax free return of capital
Note: In Jan 2011 investor will be called out at $20,000 for a STCG of $500 or he can roll the Call Options forward.
LINE would have to fall below $19.5/share to loose money on this trade. < it dipped that low in the late 2008 crash but quickly bounced back.
I hope you guys read the update on ATPG. When the MC 941 #3 well is completed to Telemark they will be fine.
I'm working on a Company Profile for American Oil & Gas (AEZ)that Kim will send out Wednesday moring. This Bakken focused small-cap as a lot of potential.
Dan
Enterprise Products Partners (EPD) – current yield of 6.8%
Kinder Morgan Energy Partners (KMP) – current yield of 6.8%
Linn Energy, LLC (LINE) – current yield is 10%
Energy Transfer Partners. LP (ETP) – current yield is 8.2%
Enbridge Energy, LP (EEP) – current yield is 8.1%
What I really like about this group is that they are all large-caps with options. You can sell Covered Calls against your position to significantly reduce risk (of course you give away some upside as a result) and increase the yield. The dividend is paid on the share price not on your net investment. This is perfect for investors that want to protect principle as much as possible but still get solid cash flows.
For example:
Line Energy (LINE) is a $3.7Billion company Your Cash Dividend rate
Investor:
> Buy 1,000 shares at $25 (25,000) 10%
> Sell 10 Jan 2011 $20 Calls at $5.50 + 5,500
> Investor’s net out of pocket investment (19,500) 12.8% < Which BTW is mostly tax free return of capital
Note: In Jan 2011 investor will be called out at $20,000 for a STCG of $500 or he can roll the Call Options forward.
LINE would have to fall below $19.5/share to loose money on this trade. < it dipped that low in the late 2008 crash but quickly bounced back.
I hope you guys read the update on ATPG. When the MC 941 #3 well is completed to Telemark they will be fine.
I'm working on a Company Profile for American Oil & Gas (AEZ)that Kim will send out Wednesday moring. This Bakken focused small-cap as a lot of potential.
Dan