High yields come with a tax burden

Article Excerpt

Canadian investors must pay a 35% U.S. withholding tax on income from master limited partnerships (MLPs) like Buckeye and Cedar Fair. However, you can usually claim a non-refundable Canadian tax credit to offset that withholding tax. As well, MLPs are not suitable for RRSPs or RRIFs. These concerns aside, we like the outlook for both MLPs, but see them as holds after their recent gains. BUCKEYE PARTNERS L.P. $75 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 123.2 million; Market cap: $9.2 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.8%; TSINetwork Rating: Average; www.buckeye.com) operates over 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. The partnership also owns oil and gas storage terminals. Buckeye continues to expand by acquisition. In December 2013, it bought 19 oil-storage terminals on the U.S. east coast and one on the Caribbean island of St. Lucia from Hess Corp. (New York symbol…