With that said, the partnership has been raising its dividend for 15 years: Its last increase was for the current quarter, when it was raised from 66 to 67 cents, an increase of 1.5%. The distribution was raised every quarter last year and has so far been increased twice this year. The partnership’s 5-year DGR is 5.7%, which is on the low side for what I like, but still greater than the rate if inflation.
The partnership has returned 25.8% over the past twelve months. The analysts’ 5-year annual earnings growth estimate is 12.2%, the company’s PE is 21.9 and its dividend-payout ratio is 93%.
Enterprise Products Partners L.P. (NYSE:EPD) still scores very well on my ratings system, with an increase to 19 points since I selected it. I am very pleased with its inclusion in my portfolio.
Lower current yield but higher dividend growth
My second MLP is Sunoco Logistics Partners L.P. (NYSE:SXL), which I selected for my portfolio in January. The company is currently trading at approximately $62, up from $58, where it was trading when I chose it, and yields 3.8%.
The partnership has been raising its dividend for 10 years, and its last increase was for the current quarter, when it was raised from 54.5 to 57.25 cents, an increase of 5%. Sunoco Logistics Partners L.P. (NYSE:SXL) has raised its dividend every quarter for 5 years. The partnership has returned 68% over the past twelve months, yet the dividend has remained high thanks to the 5-year average dividend growth rate of 13%. The analysts’ 5-year annual earnings growth estimate is 12.2%, the company’s PE is 21.9 and its dividend-payout ratio is 93%.
Sunoco Logistics Partners L.P. (NYSE:SXL) still scores very well on my ratings system, with an increase to 20 points since I selected it. This is currently one of my favorite companies.
A third excellent MLP
If I were to choose a third MLP for my Perfect Dividend Portfolio, it would be Plains All American Pipeline, L.P. (NYSE:PAA), which I have examined several times but have chosen not to include in my portfolio at this time. ( I already have two MLPs and Williams Company, which is another energy pipeline company, in the portfolio.)
The partnership is currently trading at approximately $58, it yields 3.9%, and it has been raising its dividend for 13 years. Its last increase was the current quarter, when it was raised from 56.25 cents to 57.5 cents, an increase of 2.2%. Like Enterprise Products Partners L.P. (NYSE:EPD), Plains All American Pipeline, L.P. (NYSE:PAA) raised its distribution every quarter last year and twice so far this year.
The partnership has returned 49.8% over the past twelve months. The analysts’ 5-year annual earnings growth estimate is 26.2%, the company’s PE is 18.3 and its dividend-payout ratio is 70%.
Plains All American Pipeline, L.P. (NYSE:PAA) is actually scoring higher now than it has the last couple of times that I checked – in the past it has scored 17, but today it scores a 19, which would be enough to qualify for my portfolio, if I were still looking to add companies.
I’ve prepared a chart to show how these three MLPs score:
| Years | Yield | DGR | EGR | Payout | Total Return | PE | TOTAL | |
|---|---|---|---|---|---|---|---|---|
| EPD | 3 | 4 | 1 | 3 | 2 | 2 | 4 | 19 |
| SXL | 1 | 3 | 4 | 4 | 1 | 4 | 3 | 20 |
| PAA | 2 | 3 | 1 | 4 | 3 | 4 | 2 | 19 |
If you’re over 70, you have little discretion in how much to withdraw from your IRA or 401(k) – you can choose how MUCH to withdraw, but not how LITTLE. The federal government has already made that decision for you, based on your projected life expectancy and the balance of your portfolio.
However, if you find that you are forced to withdraw more than you actually want or need to spend each year, you do have some pretty good options about what you can do with the “extra” money.
Consider opening a taxable account and purchasing tax-deferred Master Limited Partnerships, particularly the three I have outlined in this article. They will provide excellent tax-deferred income and also offer the potential for impressive share-price growth.
The article The 4% Withdrawal Rule Versus Required Minimum Distributions, Part Two originally appeared on Fool.com.
Karin Hernandez is long Enterprise Product Partners and Sunoco Logistics Partners. The Motley Fool recommends Enterprise Products (NYSE:EPD) Partners L.P. Karin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
