Investing 102

[SSLance]

Originally Posted by GregWeld

What does the "EX" mean?


What do you think the price per share will do today given that it went "EX"?

I've always taken the "EX" to mean "after the dividend" but that probably isn't technically correct.

The price per share will automatically drop relative to the amount of the dividend paid.

[GregWeld]

Originally Posted by SSLance

I've always taken the "EX" to mean "after the dividend" but that probably isn't technically correct.

The price per share will automatically drop relative to the amount of the dividend paid.

They were rhetorical questions -- but good to see you know the answer!!


LOL

[GregWeld]

I just want to reinforce these IMPORTANT dividend dates because the terms used can be glossed over by a "newb" and they're important. The MORE you have invested in the names the MORE important they become!


For example:


Regular Dividend of $0.125 Announced Thursday: F announced a new dividend to be paid 03/03/2014 to shareholders of record as of 01/31/2014.



The IMPORTANT date and term here is SHAREHOLDERS OF RECORD ---- and the Date 01/31/2014


REMEMBER that you can't buy on -1/31 and be considered a SHAREHOLDER OF RECORD because of the SETTLE DATE used by your particular brokerage -- Schwab is typically 3 days... your's might be 2 days or it could be longer! You must account for the SETTLE DATE if you want to capture the dividend IF you're factoring that in. Frankly -- I usually don't...

BUT I DO note the dividend date if I'm thinking about selling!! If I can wait to get the dividend AND THEN sell... why not. But of course - like most investing there might be reasons not to hang around til that date... so it all depends.

[GregWeld]

Every day I find a compelling new reason to own stocks that PAY ME to own them.



Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today increased its quarterly cash distribution per common unit to $1.36 ($5.44 annualized) payable on Feb. 14, 2014, to unitholders of record as of Jan. 31, 2014. This represents a 5 percent increase over the fourth quarter 2012 cash distribution



How many of you have gotten raises for doing NOTHING....



And to top that off -- the shares jumped over a buck today -- so you get your raise in cash and a friggin' bonus!!!

[96z28ss]

Originally Posted by GregWeld

Every day I find a compelling new reason to own stocks that PAY ME to own them.



Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today increased its quarterly cash distribution per common unit to $1.36 ($5.44 annualized) payable on Feb. 14, 2014, to unitholders of record as of Jan. 31, 2014. This represents a 5 percent increase over the fourth quarter 2012 cash distribution



How many of you have gotten raises for doing NOTHING....



And to top that off -- the shares jumped over a buck today -- so you get your raise in cash and a friggin' bonus!!!

isnt that sweet they pay the dividend on Valentines day.

[camcojb]

Originally Posted by GregWeld

Every day I find a compelling new reason to own stocks that PAY ME to own them.



Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today increased its quarterly cash distribution per common unit to $1.36 ($5.44 annualized) payable on Feb. 14, 2014, to unitholders of record as of Jan. 31, 2014. This represents a 5 percent increase over the fourth quarter 2012 cash distribution



How many of you have gotten raises for doing NOTHING....



And to top that off -- the shares jumped over a buck today -- so you get your raise in cash and a friggin' bonus!!!

My son initially invested in them last year. Then the local "investing expert" from his work told him that for a small investor the extra tax paperwork for that particular stock would eat up any profit. In his words it's a fine investment for a big investor, but not good for my son, so he got out of it. I always wondered if that was true.

[GregWeld]

Originally Posted by camcojb

My son initially invested in them last year. Then the local "investing expert" from his work told him that for a small investor the extra tax paperwork for that particular stock would eat up any profit. In his words it's a fine investment for a big investor, but not good for my son, so he got out of it. I always wondered if that was true.

KMP is a "master limited partnership" and does come with a different tax structure - in that you are a PARTNER in the truer sense of the word... and because they distribute (by law) the profits per quarter you get a K1 tax form.

Because of depreciation etc --- they really distribute your original investment back to you so it's considered a distribution of capital or --- RETURN OF CAPITAL... That way since you're just getting your own money back -- it doesn't carry an "INITIAL" tax burden... BUT when you sell ---- now you're going to have to calculate what tax - if any - is due.

So a very good point Jody --- not a point I'd consider if the shares are held in a deferred tax account (401 etc) and certainly not if held in a tax free ROTH.

My income tax form last year was 184 pages ---- so I doubt it affected the overall cost of tax prep for me... LOL ------ And I wouldn't think for the average person it would take more than 10 or 15 minutes extra if they are using a pro tax prep firm.... BUT it is a point worth thinking about I guess.

I would advise -- and always have advised -- that a quick phone call to your tax preparer BEFORE someone gets into something they don't understand -- is a smart call.

I own a small apartment complex inside Gwen's 401K --- and I did that WITHOUT asking my guy.... and it's been nothing but a headache every year... to the point of my inquiring about just buying it out of the IRA and taking the tax hit. Seems the IRS doesn't like "PASSIVE INCOME" inside a tax deferred account so has mean spirited rules to make you want to avoid doing that.



So just one last thought on this -------- MLP's issue a K1 instead of a 1099.... and for MANY YEARS -- the "dividend" isn't a dividend -- it's treated as a return of capital. So there's no tax hit for many years -- in other words --- you'd have to have owned it for so long that you've gotten dividends that equal your original investment... Once you've reached that point --- all else that comes your way would be treated as "income".

[Vortech404]

So did I make a mistake putting Kmp in my 401k?

John

[dhutton]

Originally Posted by camcojb

My son initially invested in them last year. Then the local "investing expert" from his work told him that for a small investor the extra tax paperwork for that particular stock would eat up any profit. In his words it's a fine investment for a big investor, but not good for my son, so he got out of it. I always wondered if that was true.

TurboTax easily handles this situation. It was hardly any additional effort, just enter a couple of extra numbers from the forms they send you and you are done.

Don

[GregWeld]

Originally Posted by Vortech404

So did I make a mistake putting Kmp in my 401k?

John

NO! That's the best place for it!