The Alerian MLP ETF (AMLP) declared its fourth quarter 2012 distribution of $0.256 on Tuesday, November 6th. The dividend is payable on November 14, 2012 to shareholders of record on November 9, 2012.
The AMLP Q4 distribution will occur as follows:
- Ex-Date: Wednesday, November 7th
- Record Date: Friday, November 9th
- Payable Date: Wednesday, November 14th
MLPs combine the tax benefits of limited partnerships with the liquidity of publicly traded securities. Because MLPs are classified as partnerships, they avoid corporate income tax at both a state and federal levels. (VIDEO: An ETF Trade with an 80% gain in 2-weeks.)
To qualify for MLP status, partnerships must generate at least 90 percent of their income from "qualifying" sources, according to Internal Revenue Service (IRS) rules. As a result, MLPs are generally involved in specific industries like production, distribution, and transportation for oil, gas and coal.
AMLP is linked to the Alerian MLP Infrastructure Index (see table below), which is comprised of 25 energy infrastructure MLPs engaged in transportation, storage, and processing of energy commodities. The fund's index is a subset of the Alerian MLP Index and is calculated using a capped, float-adjusted, capitalization-weighted method.
In addition to high income, the advantage of MLP ETFs is they provide diversification, a single Form 1099, no K-1s, and investors can benefit from return of capital and qualified dividend tax treatment of distributions.
For MLP income earned in 2012, the tax rateon qualified dividends is currently 0% for taxpayers in the 10% and 15% ordinary income tax brackets and 15% for all others.
AMLP charges an expense ratio 0.85% and has a 12-month yield of 6.01%.
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