We continue to look for ways to boost income and Lisa Springer from
Street Authority looks into tax efficient income streams from three different sources. The three avenues she explored were:
1. Master Limited Partnerships (MLPs) have a track record for consistent
growth, steady returns and high yields that are mostly tax-free. She likes three
- Enbridge Energy (EEP) increased distributions 8%, and units currently yield 7%.
- Kinder Morgan (KMP) has posted 16 years of distribution gains, is guiding for 8% distribution growth this year and yields 5%.
- Terra Nitrogen (TNH) produces nitrogen fertilizer for farmers, nearly tripled distribution payments last year and yields 8%.
2. Real Estate Investment Trusts (REITs) pay no corporate
taxes as long as they distribute the majority of profits (usually 90%)
to shareholders. Three she likes
- Nursing home operator National Health Investors (NYSE: NHI) has posted 10 years of dividend growth and yields 5%.
- Universal Health Realty Income (NYSE: UHT) has raised dividends 22 years in a row and has a 6% yield.
- Washington REIT (NYSE: WRE) has a 39-year record of dividend growth and yields 6%.
3. Municipal Bond Funds are exempt from federal income taxes and also sometimes
exempt from state taxes. Two she likes
- PowerShares
Insured National Muni Bond (PZA), which yields 4.3% and returned
19.4% last year,
- Market Vectors Long Municipal Index ETF (MLN), which yields 4.3% and returned 22.5%.
We will build these eight into a single collection and measure them
against our dividend bearing ETF portfolio: