Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies showing that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocksdo. One particular area that has garnered interest over the years is master limited partnerships. Investors are drawn to MLPs for their high yields and tax deferment. MLPs don't pay taxes at the corporate level, so the tax burden then gets passed to the investor.
Without getting into too much detail, because of the structure of the partnerships and the distributions, investors are entitled to a serious tax deferral. Investors should fully understand what they are in for before buying MLPs, but for those willing to do the research, it can be very profitable. Certain types of companies, such as MLPs, have to pay out most of their cash flow as distributions, so their yields will be higher than "normal."
Source: Motley Fool
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