Turbo Tax sorts it out, yes.
And I didn't pay that close attention, but I'm pretty sure the entire dividend falls to the regular income box.
Not sure it is worth it for the 11% yield . . .
Buy and never sell. What else safely pays 11% (albeit taxed)?
Sure, the partnership could go bust, but recently the opposite is happening. Look at the common stock price.
For those paying attention, NGL has three series of preferreds. The B and C series are publicly traded. The D's are private, and must be redeemed by end of 2027. The partnership is slowly buying chunks of D's in the secondary market, but how they plan to redeem all of them by 2027 is not yet clear. They said in the recent Q conference call that they're spending $100m Cap Ex in Q4 2025 for new contracted long term sales which will begin in Q1 2026. That spending should push the balance sheet the wrong way when they report Q4 2025, however the additional new EBITDA will make their metrics (debt to EBITDA) look much better from 2026 on.
It may be that their plan is to add this additional EBITDA, and then in one shot (about $900m) refinance 11.4% B, C and D preferreds with fresh 8.25% long term debt. If so, the B's (which we have been discussing) would pay 11.4% while you wait, and perhaps before end of 2027 you also get $25 per B series share (price today is about $23.50). So if that happens the B's yield to refinance would approach 15% (taxable!).
Anyways, 11.4% is a great yield. If you know of other securities that approach that and seem reasonably safe please share the info. |
