Bookmark and Share

My Favorite Master Limited Partnerships - High Yields and Low Taxes

MLPs are publicly traded limited partnerships that derive at least 90% of their cash flows from real estate, commodities or natural resources. In the US there are about 120 MLPs with a combined value around $875 billion.

There are three classes of MLPs: upstream (resource extractors like oil and gas partnerships), midstream (those that transport and process resources, like pipeline operators), and downstream (refiners and distributors).

Rather than paying dividends to shareholders, they pay distributions to unit holders. Another difference is that most midstream MLPs have a general partner, who runs the partnership. 

Limited partners (investors) don't have a say in how the MLP is run. In addition, general partners typically hold incentive distribution rights (IDRs), which means that a higher proportion of the MLPs marginal cash flow goes to them as the distribution grows (up to 50% of marginal cash flow).

There are three main drawbacks to MLPs. The first is that those partnerships with a general partner will experience slower distribution growth over time, as IDRs increase. Second, MLPs issue K-1 forms which are used instead of 1099's and can add a bit of complexity during tax preparation.

Finally is the fact that they shouldn't be used in tax deferred accounts such as IRAs. This is because they can generate what's known as UBTI (unrelated business taxable income) that can result in you owing taxes even though the investment is in a tax deferred account.

Attached I've compiled a couple of MLP's I like for a deeper research. Each of them pays a high dividend and has a higer market capitalization, over 300 million.

These are the names I like from the MLP space...


  1. Hi there,

    My name is Andrew, I’m a Partner Manager for Instaforex Groups - International Forex broker.

    I was hoping to speak with you about potentially working together in some capacity.

    We have an exciting opportunity here at Instaforex company for a highly innovative partnership within online trading that we’d love to discuss with your company. As well as learning more about your market position and key drivers, I’d like to provide you with some insights into how we do things differently as the best broker in Asia.

    I believe our wide range of services and mass global clientele has the potential to drive InstaForex forward and provide you with a greater share of the market.

    It would be a pleasure to discuss this with you.

    Sincerely yours

    Andrew Poulet

    Partner Relations Department
    InstaForex Group
    Skype ID :
    InstaForex Partners Facebook Page
    InstaForex Partners Google+
    InstaForex Partners Twitter
    Inline image 1

  2. Superb. I really enjoyed very much with this article here. Really it is an amazing article I had ever read. I hope it will help a lot for all. Thank you so much for this amazing posts and please keep update like this excellent article.thank you for sharing such a great blog with us. expecting for your.
    Digital Marketing Company in India
    seo Company in India


Do you have any questions or notes to this article?
Please let me know your thoughts and we will discuss it.