Next Dividend Purchase

[bode316]

Hello,

First off, I'm 27, and I like to invest in dividend stocks.

Currently I own a little over 100 shares of the following stocks. (all in 401k or Roth)
MO, PFE, BMY, DOW, AA, APA, WM, GE, MSFT, UA, BP, UL and a few others.

I am interested in EPD, (enterprise products) which is an MLP. I am thinking about buying 100 shares. For some reason I'm having trouble pulling the trigger. I think Natural Gas is the future, and these guys are probably the biggest pipeline distributor in the U.S.

Just wanted a second opinion, or possibly maybe another idea.

Thanks All

 

[brewer12345]

Be careful about buying an MLP in a 401k or IRA. There are tax peculiarities associated with these things that make them most suitable for taxable accounts. If you do buy an MLP in a taxable account, you will have to deal with a K1 at tax time, which is a nuisance.

 

[bode316]

I may be wrong, but i thought unless you made $1000 a year off of the dividends, you wouldnt have to report it?


Do you have any other dividend stocks you would recommend?

 

[brewer12345]

The limit is not on dividends, but on "unrelated business taxable income" (UBTI) which may have little to do with the amount of dividends you receive. As a general rule, I would not buy an MLP in an IRA or 401k.

I will leave dividend stocks as an exercise for the reader, as it is not my investing style, generally speaking.

 

[bode316]

Ok, I get what you are saying. I will look a little closer into that.

 

[Nords]

I may be wrong, but i thought unless you made $1000 a year off of the dividends, you wouldnt have to report it?

In general, every piece of paper that reports your investment income is also sent to the IRS for their computer matching. Even if it's not considered "reportable", you still might get an IRS letter (and perhaps a state letter too) inquiring about it.

It's just one more hassle in your mailbox, and it's one that produces an adrenaline jolt which instantly elevates my heartrate.

 

[Sue J]

I have no advise but I just want you to know that my son (age 26) has owned EPD for a few years and it has been a very good investment for him. It's not in a retirement account and he reinvests to dividends.

The only negative is waiting for the K-1 form. It does not come in Jan. like a W-2 or 1099.

 

[JPatrick]

I agree with your thoughts about nat gas being the future. . I just wish I knew how much future we are dealing with.
A stock I like (and own) is SE. It is in the pipeline/distribution business so it doesn't bounce with the price of gas (so much.)
Nice 4% div that has a habit of rising once in a while.
I know you are talking about a retirement account, but FWIW to others, SE has a great div reinvestment program. Great defined as very low fees and small minimums.

 

[bode316]

SE does look good, pretty close to EPD. I will take that into consideration.

So far, I have been buying stocks for about 8 years, and good paying dividend stocks seem to be really profitable for me. Especially since I have 30 years to keep building them. (I know dividends can change, or be removed, I'm not that naive)

 

[Thormole]

The unrelated business taxable income (UBTI) becomes an issue once you go over the $1000 limit. At that point the custodian of your account must pay tax on whatever is above the $1000 level from your account. Please keep in mind that most of the income you receive from MLP's is unlikely to be UBTI and in many instances you can see a negative UBTI (which can be deducted from your overall positive UBTI in your account). In the case of 100 shares of EPD, it is very unlikely you will even get close to the $1,000 level of UBTI. I have owned several MLP's in my IRA, for the past 10+ years and have never come close to the $1000 limit of UBTI. If it is a worry, try looking at KMR and EEQ. Their distributions are in additional shares, so eliminate the UBTI issue.

 

[RockMonkey]

Have you looked at VZ? Over 5% dividend yield and it's had great growth lately too. I was glad I owned it today.

T pays an even higher dividend, but I'd stick with VZ, personally.

 

[freebird5825]

I take the easy way out...VHDYX.

 

[bode316]

I own 110 shares of vz, and really like it. I got in at around 23.

I am also looking at JNJ, on top of the MLP's I have mentioned.

 

[BUM]

Be careful about buying an MLP in a 401k or IRA. There are tax peculiarities associated with these things that make them most suitable for taxable accounts. If you do buy an MLP in a taxable account, you will have to deal with a K1 at tax time, which is a nuisance.

K1's are a PITA. I recall enjoying the divvies from Suburban Propane. But the paperwork took the fun out of it.

 

[kbst]

Trade your Roth. Invest everything else. It's easier accounting.
kbst

 

[BUM]

Trade your Roth. Invest everything else. It's easier accounting.
kbst

Hi kbst,
I started converting my trad to a roth last year at little or no tax consequence, since other interest and dividend income is scarce. Sometimes its good to be "poor".

 

[jimnjana]

I picked up some ABT. Got knocked hard, now trading near 52 week low. Seems like a gift at this level.

 

[Uncle Drew]

I picked up some ABT. Got knocked hard, now trading near 52 week low. Seems like a gift at this level.

I have been purchasing shares of ABT this week also. I hope you do well with your investment.

 

[kbst]

Hi kbst,
I started converting my trad to a roth last year at little or no tax consequence, since other interest and dividend income is scarce. Sometimes its good to be "poor".

Hi BUM,
What's a trad? BTW my wife retired last Febuary and I semied in July so we've been going down to the island about a week a month ever since. We ate at the senior center for the breakfast special in September and thought we would have seen you. We might have seen your wife.
I guess you're up north with the new grandchild from reading some of your threads. What an awful year to be in NY for the winter. We're going to try and go to KB around the end of the month for a week or so.
Best,
kbst

 

[jimnjana]

Picked up some OLP last few days. They announced an offering 15.13 and then repriced the offering at 15.85, share price took a big hit and is now recovering. Yield is near 8% at this level. Share offerings are a normal way REITs raise money to fund acquisitions. Current Share price is a discount to the offering price.

 

[haha]

Picked up some OLP last few days. They announced an offering 15.13 and then repriced the offering at 15.85, share price took a big hit and is now recovering. Yield is near 8% at this level. Share offerings are a normal way REITs raise money to fund acquisitions. Current Share price is a discount to the offering price.

This might be great, but it is not exactly a blue chip reit. I think management is reasonably good and honest, but they mostly own run of the mill big box and other generic properties.

It may not matter within our lifetimes, but there is a long term trend to online retailing that will represent a headwind.

Ha

 

[jimnjana]

This might be great, but it is not exactly a blue chip reit. I think management is reasonably good and honest, but they mostly own run of the mill big box and other generic properties.

It may not matter within our lifetimes, but there is a long term trend to online retailing that will represent a headwind.

Ha

They are small, I grant you that. They continued their dividend through the recent downturn. They have been busy making new acquisitions while many other REITs were still trying to stop the bleeding. Their tenant quality seems to be just fine at this point, people are still going to go to office depot or pep boys etc to buy what they immediately need. But you do have a point long term. That is one of the reasons I only own one other retail reit. For now the short term and intermediate term, I'm buying and will sit on a 8% yield and likely price appreciation until OLP is more fairly valued.

 

[jimnjana]

Picked up some NOK today. Got hit pretty bad with news that they are hooking up with Microsoft for operating system. 4% yield, likely price appreciation as investors realize that NOK didn't deserve the beating.

 

[bode316]

Well, I bought 200 shares of CSCO under $19. Right now its not paying a dividend, but they announced they would.

I am still looking around for some really undervalued companies.

 

[brewer12345]

Well, I bought 200 shares of CSCO under $19. Right now its not paying a dividend, but they announced they would.

I am still looking around for some really undervalued companies.

I would say that some of the cheapest things I own that pay a dividend and are not volatile small caps are LOW and AHL. The former is ready to gear up for growth as retail spending recovers and management has been buying back stock to beat the band. Dividend growth over the past 5+ years has been quite impressive. The latter is a consistently profitable company that never got itself in trouble durng the crisis and continues to pay a nice dividend, build book value and buy back stock. AHL trades at roughly .75 book value.