Anyone own or buying KMP or SDRL?

[sheehs1]

I've been looking at these two for a couple of months.

KMP-Kinder Morgan Energy partners is an MLP paying a dividend of over 5%. Trading around 88.20.(52 week 74.15-90.60) They announced a new stock offering yesterday to generate cash. Consequently it is retreating a bit. Down to 86.20 in pre-market. It is up over 10% year to date. I actually bought and then sold it back in early January as I was unsure of the MLP status. I think KMP paid the first and possibly the 2nd 2013 divi before Dec so their next one is not until June.
Am interested in the MLP's for my taxable account since the dividend is not taxable and instead reduces your basis.

Have also thought about SDRL-Seadrill. Pays a 8.8% dividend. Currently trading at 37.10 and is 36.88 in pre-market. (2 week range is 31.37-42.34)
Was beaten up a bit earlier.

I may wait a bit, but wondered if others owned these or have considered buying recently.

 

[rbmrtn]

Have considered both just never pulled the trigger on them, KMP always seems to get above my entry point on it. I did pickup a couple of MLPs back in the november sell off.

 

[RockyMtn]

Been in KMP for a number of years. Dividend is healthy and continues to rise. They are also on an asset buying spree which does produce some hiccups in the stock price. Today's pull back may be a good place to get in though. I have a limit order in at $86.00 but doesn't look like I'm going to get that price.

K-1's are a pain in the rear but I do love the dividend and the tax status of MLP's. Last dividend payment was 2/15/13. Next will be 5/15/13.

 

[sheehs1]

Thanks for the input!

RockyMtn...back in early Jan or maybe it was Dec, KMP was at 79.05. Huge 10%+ run up Jan/Feb. When they have issued more units in the past, has the price dropped more than the almost 2% we are seeing today? I sure hate that I missed the price of 79! I'm watching closely!

 

[GrayHare]

MLPs can be interesting, except for their K-1 forms and complicating tax matters. I prefer to put them in an IRA, provided their UBTI is under the limit.

 

[RockyMtn]

Don't recall 2% drops as a result of more shares being issued in the past. The stock can be somewhat volitale. $79 last December, $75 last June, and it was at $90 last March. No crystal ball here...I usually nibble here and there on pullbacks. 10% ytd and 6% last three months is good by me although it pales in comparison to my HFC which is up 15.3% ytd and 20.4% last three months.

 

[braumeister]

I don't think there's anything wrong with SDRL. I owned it for a couple of years but sold a couple of months ago. Good dividends; I just didn't like the volatility. As a company, it seems solid.

 

[sheehs1]

MLPs can be interesting, except for their K-1 forms and complicating tax matters. I prefer to put them in an IRA, provided their UBTI is under the limit.

Interesting GrayHare....from what I've read most recommend not putting it in an IRA I presume because they already have some tax advantage status with the way they distribute, reducing cost basis and not creating a fully taxable event.

 

[sheehs1]

Don't recall 2% drops as a result of more shares being issued in the past. The stock can be somewhat volitale. $79 last December, $75 last June, and it was at $90 last March. No crystal ball here...I usually nibble here and there on pullbacks. 10% ytd and 6% last three months is good by me although it pales in comparison to my HFC which is up 15.3% ytd and 20.4% last three months.

Thanks RockyMtn. I think I may wait a bit still. As you said the price has moved around a fair amount and I'd rather get it a bit lower. Besides, I do want to wait until this sequestration thing is resolved. Chances are that can may be kicked down the road again.

 

[FIREd]

I own some KMP. I bought it when the price dipped to $77 last November. I also own some KMI.

 

[sheehs1]

I own some KMP. I bought it when the price dipped to $77 last November. I also own some KMI.

Good entry point! I was thinking about KMI too! Both sides of the coin so to speak. It's dividend is not as good but since it is the Master of their subsidiaries....and Kinder himself owns most of it I think the stability is there.

 

[KiraC]

Just sold my KMP this week to take profit before recent downturn wiped out gains. Nice dividends on KMP. Will most likely re-enter a trade if the govt can get their act together soon and stop messing up the market.

 

[eridanus]

I've held KMR for years. It's PIK (payable in kind) so it avoids the K1 tax structure. My broker sells off the partial shares so it produces a little cash each quarter too.

Richard Kinder, the CEO, pays himself $1/yr and receives distributions like the rest of the partners (shareholders).

 

[leftymd]

Like SDRL here but sold out in late December after they moved up their initial 2013 DIV payment to 2012. Will take another look see in the spring

 

[amfox1]

Like SDRL here but sold out in late December after they moved up their initial 2013 DIV payment to 2012. Will take another look see in the spring

Same here. Given the high dividend, I would only own this in a tax deferred or tax free account, if possible.

 

[sheehs1]

Thanks to all who replied. As I said before, I'm closely watching all of them including KMR, KMI, KMP, SDRL...etc. Good to get input from others!

 

[MooreBonds]

I've held KMR for years. It's PIK (payable in kind) so it avoids the K1 tax structure. My broker sells off the partial shares so it produces a little cash each quarter too.

Richard Kinder, the CEO, pays himself $1/yr and receives distributions like the rest of the partners (shareholders).

I also have owned KMR for several years. EEQ is another MLP pipeline that distributes shares inlieu of distributions.

Plus there are several other MLPs in my portfolio. The great thing about MLPs is that once you have one that you have the PIA factor with for the K-1s at tax time, the 'marginal (time) cost' of adding just one more MLP to the portfolio isn't that great...at least, that's what I keep telling myself!

 

[Eladio]

Own (KMI) in my dividend income portfolio:

Dividend Income Investing.com

No hassle with the k-1 issue at tax time. Already seen one increase in the dividend. Strong projected growth.

I also just picked up a few shares of (LNCO), which also has no K-1 issue at tax time. They are also projecting strong forward growth.

These are a small part of my portfolio, but the yields are nice.

Eladio

 

[Papa bear]

I ended up buying some KMP a few years back. I noticed a number of high net worth clients all held positions in pipelines - figured it would be a good buy and it has done well for me.

As was mentioned before, you may want to look at keeping it in an IRA if you aren't familiar with dealing with a K-1 during tax time.

 

[jwkde]

MLP's as a group tend to be good investments in my experience. The K-1's need for tax filing can be a bit complicated and some have a history of being issues late. Often they will issue a preliminary one by APril 15 then revise it later in the summer.

 

[GrayHare]

Interesting GrayHare....from what I've read most recommend not putting it in an IRA I presume because they already have some tax advantage status with the way they distribute, reducing cost basis and not creating a fully taxable event.

Another problem with holding MLPs outside an IRA/401k is the recapture tax upon their sale, as described at http://seekingalpha.com/article/1091401-hello-taxes-goodbye-mlps

 

[sheehs1]

Thanks Grayhare. Have printed and will read!

Read it. So I think if I buy the actual MLP part of KinderMorgan rather than KMI or KMR, I will buy in my IRA's. I knew about the ROC and reducing the cost basis and creating a taxable event unless held until death.
What I had not strongly considered was the possibility of being as the article puts it "tax locked". Perhaps wanting to sell but not as willing to do so because of the potential tax bite.

Thank you for the link.

 

[Ed_The_Gypsy]

I also own KMI. And EEQ and LNCO as well as TRP. No hassling with K-1's in my IRA with these. Speaking only for myself, I do not like MLPs, in or out of an IRA because of the tax headaches. These are not MLPs, but shells to make the underlying MLPs palatable to us little investors.

The yields were good when I bought and I thought they were only going to increase in value due to the current low interest rate atmosphere, their acquisition activities and the prospects for better profits for all aspects of their businesses. I am also placing a bet that the Keystone XL pipeline will be approved by Obama (but my holdings will benefit either way). When more dividends go into the MMA, I intend to buy more EEQ. I also bought two big oil sands producers as any new pipeline capacity in Canada will put bitumen and syncrude into wider markets and they will see higher market prices than the current $25/bbl.

 

[heeyy_joe]

MLPs can be interesting, except for their K-1 forms and complicating tax matters. I prefer to put them in an IRA, provided their UBTI is under the limit.

+1
I own 100 shares KMP in IRA. Always watching the UBIT limit so as not to get too tripped up. If you like KMP, take a look at KMI for holding larger positions in a tax advantaged account.

 

[Running_Man]

Another problem with holding MLPs outside an IRA/401k is the recapture tax upon their sale, as described at Hello Taxes... Goodbye MLPs - Seeking Alpha

The issue with this is overstated in my opinion, first being income must be over 223K for married filing jointly to use the 33% tax used in the example. Secondly it appears to ignore the time value of money and instead assumes over the long term there is not increase in dividends nor an increase in value of the investment. The greater the period of inflation or increase in the value of the shares from an operational standpoint, the greater the case for the deferral of income taxes from a MLP.