MLPs issue a K - 1 tax document each year that details the profits, expenses and distributions in the partnership.
REITs and
MLPs issue new shares to fund acquisitions quite commonly, but other than that it's definitely not a ponzi scheme from what I can tell.
Oil and gas companies divest high cost assets with
MLP issues while investors find MLPs attractive for their high yields and tax benefits.
Not exact matches
On Thursday, March 15th, the Federal Energy Regulatory Commission (FERC)
issued a surprising tax ruling, causing panic selling among
MLPs.
With other
MLPs one doesn't know what recontracting
issues lie in the future.
To me, the best thing that could happen for
MLPs is two quarters of nothing happening — no distribution cuts, no companies having this
issue or that
issue, no oil price plunge and no big interest rate movements.
Many oil and gas companies
issue MLPs instead of corporate stock.
Separate stock -
issuing corporations are also set up, with the sole business being to own shares (officially, units) of the company
MLP, redistributing the passive income through the corporation as a regular dividend.
And because of the tax
issues with
MLPs, it's smart to consult a tax adviser before buying.
Unlike blue chip dividend stocks and dividend aristocrats, which grow their dividends primarily as a result of earnings growth, most
MLPs need to borrow money or
issue new units to continue growing their distributable cash flows since their partnership agreements usually call for all available cash on hand to be distributed.
If you own an
MLP or other investment that will
issue a K - 1, these documents can take forever to be received.
That said, some investors avoid
MLPs entirely based on this
issue.
there are dodgy
mlps, certainly, and those in fact are the ones that are most popular / fastest movers — LINE and ARLP come to mind — brains raised on on biotech and dot.com growthstock models must see fast growth to fire synapses at all; but there are honest to goodness businesses in the segment as well; and the model they use — pay out all cashflow +
issue new equity for growth — is neither «fancy» (this used to be the standard British model of stock - market capitalism until 1980s or so) nor unsustainable (most manage 50/50 equity / debt split and total debt well under 4x cashflow).
There are
MLP's, but the tax
issues dissuade many.
As with REIT investments,
MLPs pay out a lot of their income as distributions so they may
issue shares or debt to fund future growth.
Subordinated units may be purchased directly from these persons as well as newly -
issued subordinated units from
MLPs themselves.
MLP subordinated units are typically
issued by
MLPs to their original sponsors, such as their founders, corporate general partners of
MLPs, entities that sell assets to the
MLP, and investors.
Frequent communication with physicians and
MLP's to discuss patient concerns requiring thorough knowledge of processes and
issues.