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Three Ways and Eight Picks to Get High Yields and Beat the Tax Man
live (public) 0.06% December 31
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:
| Asset | Fund in this portfolio | Price change* | Percentage |
|---|---|---|---|
| Asset1 | EEP (Enbridge Energy Partners L.P) | 4.63% | |
| Asset1 | TNH (Terra Nitrogen Company L.P) | 7.13% | |
| Asset1 | NHI (National Health Investors Inc) | 0.20% | 25.98% |
| Asset1 | UHT (Universal Health Realty Income Trust) | 0.53% | 18.24% |
| Asset1 | WRE (Washington Real Estate Investment) | 0.35% | 6.85% |
| Asset1 | PZA (Invesco National AMT-Free Municipal Bond ETF) | 0.04% | 9.70% |
| Asset1 | CASH (CASH) | 0.0% | 6.63% |
| CASH | CASH (CASH) | 0.0% | 20.84% |
* Day change on 12/31/2018.
Previous
Since 10/19/2007
| Name | YTD* Return |
1Yr AR** |
3Yr AR** |
5Yr AR** |
10Yr AR** |
15Yr AR** |
|---|---|---|---|---|---|---|
| Three Ways and Eight Picks to Get High Yields and Beat the Tax Man | -9.2% | -4.7% | 1.3% | 2.2% | 7.4% | |
| VFINX (Vanguard (S&P 500) Index) | 7.7% | 25.5% | 8.4% | 13.5% | 12.6% | 14.5% |
| VBINX (Vanguard Balance (60% stocks/40% bonds) | 3.0% | 14.4% | 2.6% | 7.7% | 7.7% | 9.5% |
* YTD: Year to Date
** AR: Annualized Return
| Last 1 Week* | 1 Yr | 3 Yr | 5 Yr | 10 Yr | Since 10/19/2007 |
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annualized Return(%) | -0.1 | -4.7 | 1.3 | 2.2 | 7.4 | 5.3 | -4.7 | -2.9 | 12.2 | -7.8 | 16.8 | -9.9 | 11.9 | 17.0 | 17.5 | 31.5 | -14.9 | 3.2 |
| Sharpe Ratio | NA | -0.57 | 0.05 | 0.17 | 0.51 | 0.3 | -0.57 | -0.43 | 1.01 | -0.73 | 1.68 | -0.78 | 0.99 | 0.91 | 1.23 | 1.37 | -0.48 | 0.15 |
| Draw Down(%) | NA | 10.8 | 16.1 | 18.9 | 19.8 | 32.0 | 10.8 | 8.5 | 9.3 | 16.1 | 5.8 | 19.8 | 11.0 | 12.6 | 8.6 | 15.7 | 32.0 | 6.5 |
| Standard Deviation(%) | NA | 10.6 | 10.3 | 10.4 | 13.8 | 16.5 | 10.6 | 8.2 | 11.8 | 10.7 | 10.0 | 12.7 | 12.0 | 18.7 | 14.1 | 23.0 | 32.7 | 18.4 |
| Treynor Ratio | NA | -0.21 | 0.01 | 0.04 | 0.12 | 0.08 | -0.21 | -0.08 | 0.24 | -0.17 | 0.39 | -0.14 | 0.21 | 0.25 | 0.27 | 0.43 | -0.23 | 0.04 |
| Alpha | NA | -0.01 | -0.01 | 0.0 | 0.0 | 0.01 | -0.01 | -0.04 | 0.03 | -0.03 | 0.04 | -0.12 | 0.02 | 0.06 | 0.03 | 0.05 | 0.07 | 0.1 |
| Beta | NA | 0.29 | 0.38 | 0.41 | 0.6 | 0.64 | 0.29 | 0.46 | 0.5 | 0.45 | 0.43 | 0.73 | 0.56 | 0.68 | 0.64 | 0.73 | 0.7 | 0.74 |
| RSquared | NA | 0.22 | 0.23 | 0.27 | 0.52 | 0.61 | 0.22 | 0.14 | 0.31 | 0.43 | 0.24 | 0.41 | 0.36 | 0.71 | 0.68 | 0.75 | 0.77 | 0.72 |
| Sortino Ratio | NA | -0.74 | 0.07 | 0.24 | 0.73 | 0.42 | -0.74 | -0.56 | 1.38 | -0.96 | 2.61 | -1.03 | 1.46 | 1.27 | 1.85 | 2.05 | -0.64 | 0.21 |
| Yield(%) | N/A | 0.0 | 0.0 | 0.28 | 0.14 | 0.13 | 0.0 | 0.0 | 0.0 | 0.0 | 1.44 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Dividend Growth(%) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
*: NOT annualized;YTD: Year to Date
**Inception: starting from 10/19/2007
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