February 2018 Edition - suredividend.com · Buckeye Partners LP ... (SNH) in this month’s Top 10....

Sure Retirement Newsletter

HIGH YIELD, HIGH QUALITY INVESTMENTS

February 2018 Edition

By Ben Reynolds, Nicholas McCullum, & Bob Ciura

Edited by Brad Beams

2

Table of Contents

Opening Thoughts - Your Investments Should Match Your Needs - ...................................... 3

The Retirement Top 10 – February 2018 ................................................................................... 4

Analysis of Top 10 Securities ....................................................................................................... 5

Omega Healthcare Investors Inc. (OHI) ..................................................................................... 5

Buckeye Partners LP (BPL) ........................................................................................................ 7

Energy Transfer Partners LP (ETP) ............................................................................................ 9

Owens & Minor Inc. (OMI) ...................................................................................................... 11

Enterprise Products Partners LP (EPD) .................................................................................... 13

Holly Energy Partners LP (HEP) .............................................................................................. 15

Welltower Inc. (HCN) .............................................................................................................. 17

Senior Housing Properties Trust (SNH) ................................................................................... 19

ONEOK Inc. (OKE).................................................................................................................. 21

AmeriGas Partners LP (APU) ................................................................................................... 23

Closing Thoughts – Sure Retirement Performance– .............................................................. 25

List of Investments by Sector ..................................................................................................... 26

List of Investments by Rank ...................................................................................................... 29

List of Past Recommendations & Ranking Criteria ............................................................... 31

Portfolio Building Guide ............................................................................................................ 33

Examples ................................................................................................................................... 33

Tax Guide .................................................................................................................................... 34

Corporations .............................................................................................................................. 35

Master Limited Partnerships (MLPs)........................................................................................ 36

Real Estate Investment Trusts (REITs)..................................................................................... 37

Business Development Companies (BDCs) ............................................................................. 38

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Opening Thoughts - Your Investments Should Match Your Needs -

When we buy every day products and services, we buy what we need. Your investment portfolio

should be no different.

Broadly speaking, there are two investing phases: the accumulation phase, and the distribution

phase. When you aren’t actively drawing on or using money from your portfolio, the primary

function of your portfolio is to grow to a level that will support you when needed. When the time

comes, the purpose of your portfolio shifts from growth to supporting you by generating income.

Different investing phases may require different approaches. Total returns are what matters most

during the accumulation phase.

In some cases, that may mean high yielding investments. In fact, several investments in the Sure

Retirement newsletter offer very high expected total returns due to their low valuation levels

(Owens & Minor, Omega Healthcare Investors, and Energy Transfer Partners stand out here). But

the point remains, when in the accumulation phase, the focus is on total returns, not necessarily

income.

When in the distribution phase, income is king. If you can live off the income your portfolio

generates, you are completely free of worrying about stock price fluctuations. After all, it doesn’t

really matter what a stock’s price does if you have no need to sell it because it’s providing you the

income you need.

Assets that don’t produce income are less suitable for those in the distribution phase because they

only create cash when sold – and you can’t control market prices when you need to sell. This puts

you at the whim of the market. Relying on stocks to be ‘up’ when you need them to be is not a

well-thought out strategy.

Your investments should match your needs. Simply put, a higher yielding portfolio will generate

more income per dollar invested. This means a smaller portfolio in dollar terms is needed for a

given level of income. Additionally, if your portfolio income exceeds your needs, the extra

proceeds can be reinvested into more high yielding stocks, REITs, and/or MLPs. This creates a

positive cycle of rising income. Investing in companies likely to increase their payments over time

only strengthens this cycle.

The investment needs of those in the distribution phase are:

1. Income (the higher the better)

2. Safety (the more the better)

3. Income growth (the more the better)

The recommendations in the Sure Retirement Newsletter seek to strike a balance between these three

factors to provide investors in the distribution phase with actionable investments to realize high and

growing income over the long run.

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The Retirement Top 10 – February 2018

Name Type Price Score Yield Payout Growth Beta

Omega Healthcare Inc. (OHI) REIT $26 1.00 9.8% 79% 9.0% -0.56

Buckeye Partners LP (BPL) MLP $54 0.98 9.4% 102% 7.5% 0.99

Energy Transfer Partners (ETP) MLP $20 0.89 11.3% 88% 6.5% 2.32

Owens & Minor Inc. (OMI) Stock $18 0.88 5.8% 64% 11.0% 1.56

Enterprise Products (EPD) MLP $28 0.84 6.2% 83% 10.0% 0.71

Holly Energy Partners LP (HEP) MLP $31 0.71 8.3% 100% 6.0% 0.14

Welltower Inc. (HCN) REIT $58 0.70 5.8% 83% 5.0% -0.41

Senior Housing Prop. (SNH) REIT $17 0.68 9.0% 89% 1.8% -0.43

ONEOK Inc. (OKE) Stock $60 0.68 5.2% 78% 9.5% 1.15

AmeriGas Partners LP (APU) MLP $47 0.66 8.0% 125% 2.5% 0.26

Notes: The ‘Score’ column shows how close the composite rankings are between the top 10. The

highest ranked stock will always have a score of 1. The ‘Price’ column shows the price as of the

date the newsletter was published. The ‘Payout’ column uses either earnings, funds from

operations, or cash available for distribution in the denominator. The numerator is the security’s

payment to its owner.

Two stocks fell out of the Top 10 last month: Macy’s (M) and Energy Transfer Equity (ETE).

These stocks are holds, not sells, and have been replaced by Holly Energy Partners (HEP) and

Senior Housing Properties Trust (SNH) in this month’s Top 10.

The stability of the Top 10 list shows the ranking method is consistent, not based on rapid swings.

Remember: Stocks that fall out of the Top 10 are holds, not sells.

Note: Dividend or distribution yield is used for comparing valuations in the individual company

analyses below instead of P/E ratios. P/E ratios are not meaningful for MLPs and REITs.

Dividend or distribution yield is a better comparative metric for high payout investments.

An equal weighted portfolio of the Top 10 has the following characteristics:

Payout Ratio: 89%

Dividend or Distribution Yield: 7.9%

Growth Rate: 6.9%

Note: Data for the rankings, Top 10 summary page, and yield images is through the market close

as of 2/1/18. Data elsewhere is from after market close 2/2/18.

5

Analysis of Top 10 Securities Omega Healthcare Investors Inc. (OHI)

Key Statistics, Ratios, & Metrics

Distribution Yield: 10.0% 10 Year Distribution Growth Rate: 8.6%

Most Recent Annual Distribution Increase: 6.4% Sector: Healthcare Real Estate

Distribution History: 15 years of increases Business Type: REIT

Ex-Distribution Date: 4/30/18 (estimated) Payment Date: 5/15/18 (estimated)

Overview & Current Events

Omega Healthcare Investors is the largest publicly-traded REIT in the U.S. dedicated to owning and

operating skilled nursing facilities (SNFs). The trust’s portfolio is composed of approximately 85%

SNFs and 15% Senior Housing Facilities (SHFs). Omega operates ~1,000 properties in 42 states and

the United Kingdom. Omega leases these properties to 77 independent operators.

Omega’s third quarter financial results (10/30/17) were worse than expected. The trust reported a net

loss of $137.5 million ($0.67 per common unit) while the quarter’s funds from operations (FFO) were

-$46.8 million (-$0.24 per common unit). The company’s financial woes are due to tenant issues.

More specifically, Omega recorded a $194.7 million impairment charge on direct financing lease

accounts receivable related to two tenants, most notably Orianna Health Systems. Because of

Orianna’s poor financial performance, Omega had been closely monitoring this tenant and eventually

placed them on a cash basis for revenue recognition when their performance did not improve. This

means that now Omega does not record Orianna’s revenue until it is actually paid, which is in stark

contrast to how most accounting schemes function. It is possible that Omega will eventually reclaim

some of its $194.7 million in accounting write-offs if Orianna’s performance improves. Importantly,

Orianna is taking serious measures to improve performance, including “replacing the entire executive

management team.” These issues seem short-term in nature, but we’ll be watching closely nonetheless.

Tenant issues have caused Omega to lower its fiscal 2017 guidance. It now expects to generate

adjusted funds from operations of $3.27-$3.28 (down from previous guidance of $3.42 to $3.44).

More recently, Omega Healthcare Investors announced (1/16/18) that the company’s Board of

Directors approved a $0.01/share increase in its quarterly distribution payment. This represents the

twenty-second consecutive quarter in which Omega has increased its dividend payment.

Growth Prospects & Safety

Despite Omega’s woes in the most recent quarter, the trust should deliver satisfactory growth over the

long run, driven by industry tailwinds. The population of 85-year-old people in the United States is

expected to grow by ~50% in the next fifteen years. As the 4th largest publicly-traded healthcare REIT,

Omega is well-positioned to benefit from this trend. Omega’s large size (a market capitalization of

$5.3 billion) is advantageous as it gives them the capability to acquire smaller property owners.

Omega’s poor performance in the most recent quarter does not provide an accurate representation of

the trust’s long-term distribution safety. Omega’s current quarterly distribution combined with its 2017

FFO guidance ($3.27-$3.28 per unit) implies a distribution coverage ratio of 1.26x for fiscal 2017.

Valuation

Omega Healthcare Investors’ average distribution yield over the past 5 years has been 6.4% and its

average distribution yield over the past 10 years has been 6.8%. The trust’s current distribution yield

of 10.0% makes Omega a compelling buying opportunity for the long-term, high-yield investor.

7

Buckeye Partners LP (BPL)



Most Recent Annual Distribution Increase: 3.1% Sector: Energy

Distribution History: 19 years of increases Business Type: MLP



Buckeye Partners is one of the largest pipeline companies in the United States based on throughput

volumes. The partnership also has a services business and a terminals & storage business. The

partnership owns and operates ~6,000 miles of pipeline and 135 terminals with capacity for over 173

million barrels of petroleum products.

Buckeye’s third quarter financial results (11/3/17) showed solid performance, particularly given the

negative impact of Hurricane Harvey. Revenues of $922.6 million increased by 20.4% year-on-year

while adjusted EBITDA of $277.3 million increased by 2.1% from the prior year’s period.

Distributable cash flow (DCF) declined by 6.2% from the same period a year ago, driven primarily by

the new proportionate share of VTTI’s interest expense. Buckeye’s improved fundamental

performance can be attributed to strength in the Global Marine Terminals segment, which is benefitting

from the contribution of the VTTI investment.

More recently, Buckeye tapped the capital markets for two debt transactions. First, Buckeye issued

(11/9/17) $400 million of 4.125% senior unsecured notes due in 2027, raising net proceeds of $394.4

million after all expenses. Second, Buckeye issued (1/18/18) $400 million of 6.375% junior

subordinated notes due in 2078, which are expected to raise net proceeds of $394.9 million. Both

offerings are being used to repay Buckeye’s other debt maturities, repay borrowings under its revolving

credit facility, and for general partnership purposes.

Overall, it’s been a quiet few months for Buckeye Partners. The partnership is expected to report

fourth quarter earnings on February 9th, 2018. We’ll be watching closely and reporting any pertinent

findings back to you.

Growth Prospects, Safety & Valuation

Buckeye’s $1.15 billion investment in the marine storage business VTTI B.V. in 2017 has granted the

partnership some appealing exposure to the terminal storage business. Terminal revenue is highly

desirable for Buckeye because it performs well during periods of low oil prices as the demand for oil

storage increases when producers and refiners sit back to wait for higher oil prices.

In 2017, the partnership’s distribution coverage ratio dipped below 1.0x after it issued approximately

$210 million of limited partnership units to fund the VTTI acquisition. Importantly, Buckeye has

nearly returned to full distribution coverage with its most recent quarterly financial results, reporting a

distribution coverage of 0.98x. Looking ahead, we expect Buckeye to return to full distribution

coverage in the next several quarters.

Buckeye’s average distribution yield over the last 5 years has been 6.8% and its average distribution

yield over the last 10 years has been 7.0%. The partnership’s current distribution yield of 9.6%

indicates that it is meaningfully undervalued at current prices.

9

Energy Transfer Partners LP (ETP)





Ex-Distribution Date: 2/8/18 Payment Date: 2/14/18


Energy Transfer Partners operates more than 71,000 miles of natural gas, natural gas liquids (NGL),

and crude and refined products pipelines across 36 states, and is a primary operator and financier of the

notable Rover and Dakota Access Pipeline (DAPL) projects.

Energy Transfer Partners announced a deal to sell two of its subsidiaries (CDM Resource Management,

and CDM Environmental & Technical Services) to USA Compression Partners (USAC) for $1,225

million in cash, 19.2 million in ‘normal’ USAC units (current value of $349 million), and 6.4 million in

‘special’ USAC units (current value of around $100 million). The ‘special’ units do not pay a

distribution but convert 1 for 1 to ‘normal’ units after 1 year. Energy Transfer Partners will use cash

from the acquisition to pay down debt, a move that helps de-risk the partnership. The CDM business is

expected to generate $160 to $170 million in EBITDA in 2017. This means a price-to-EBITDA

multiple of approximately 10x, a high sales price and great deal for Energy Transfer Partners1.

Energy Transfer Partners also announced a quarterly cash distribution of $0.565 per unit payable in

February. The distribution is 7.1% higher versus the same quarter a year ago.

Through the first nine months of 2017, the partnership funded $4.8 billion of organic growth projects,

largely through debt and equity issuances. Energy Transfer Partners expects to fund an additional $3

billion of projects in fiscal 2018.


Energy Transfer Partners reported a distribution coverage ratio of 1.14x through the first nine months

of 2017. The partnership also sports an investment grade BBB- credit rating from S&P and a similar

Baa2 rating from Moody’s. Energy Transfer Partners is “firmly committed” to maintaining its

investment grade credit rating.

Investors should note that despite its investment grade credit rating, it has a relatively high debt burden

when compared to certain other recommendations in this newsletter. The partnership’s net debt to

EBITDA ratio was 4.16x at the end of the most recent quarter (down from 4.47x previously).

Valuation

Energy Transfer Partners is still significantly undervalued and has been so since the launch of the Sure

Retirement newsletter. On Energy Transfer Partners’ third quarter conference call, the partnership’s

Chief Executive Officer Kelcy Warren said “We do think that our unit price will recover. I think at

some point, there’s got to be some sanity to come back into the market.”

The numbers support this claim. Sunoco Logistics had a median distribution yield of 6.1% and Energy

Transfer Partners had a median distribution yield of 5.9% prior to the transformative April merger.

The partnership’s current yield of 12.2% is priced at a significant discount to these historical levels.

1 The deal is technically valued at $1.8 billion due to additional rights exchanges with Energy Transfer Equity that are beyond the

scope of this analysis and not material for Energy Transfer Partners.

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Owens & Minor Inc. (OMI) Key Statistics, Ratios, & Metrics

Dividend Yield: 5.8% 10 Year Dividend Growth Rate: 11.5%

Most Recent Annual Dividend Increase: 0.8% Sector: Healthcare

Dividend History: 20 years of increases Business Type: Corporation

Ex-Dividend Date: 3/12/18 Payment Date: 3/30/18


Owens & Minor is a healthcare logistics company that provides packaged healthcare products for

hospitals and other medical centers. The company has a market capitalization of $1.1 billion and

distributes ~220,000 different medical and surgical supplies to ~4,400 hospital systems worldwide.

Shortly before the publication of this newsletter, Owens & Minor published (1/31/18) a press release

previewing their preliminary 2017 financial results, which reflects the impact of a challenging

operating environment as well as the estimated benefit from new tax legislation. The company expects

that GAAP earnings-per-share will be in the range of $1.17 to $1.20 while adjusted earnings-per-share

will fall between $1.58 and $1.61. For context, this is noticeably below consensus estimates of $1.78

per share. Importantly, this adjusted earnings guidance excludes an estimated benefit of $0.55 to $0.60

from the recently-enacted tax reform legislation. On the top line, Owens & Minor is expecting

revenues in the range of $9.20 billion to $9.32 billion, which is also short of analyst consensus

estimates of $9.41 billion. The company cites higher input prices, margin compression, longer-than-

expected sales cycles, and supply issues as reasons for this weak guidance.

While this announcement is disappointing, we believe it has created an even more powerful buying

opportunity in Owens & Minor’s stock. The company’s new earnings guidance is 11% lower than

analyst expectations, yet its stock price fell by ~20% in the days following the announcement – and

Owens & Minor was already trading at a bargain valuation. Owens & Minor also increased its

dividend by 0.8% in the same press release, which implies that the company has confidence in the

long-term viability of its profit distributions to shareholders. All said, we believe that these short-term

price movements have been overdone and investors should react accordingly.


Owens & Minor has a long growth runway ahead due to the expansion of the broader healthcare

industry. Moreover, the company has shown a willingness to grow via acquisitions. Owens & Minor

has recently completed the acquisition of Byram Healthcare for $380 million while also announcing the

acquisition of Halyard Health’s surgical & infection prevention business for $710 million in an all-cash

transaction. These are just two examples; Owens & Minor’s track record suggests more growth

through acquisitions is likely for this healthcare company.

Conservative investors should note that Owens & Minor is a very safe high-yield investment. The

company’s newly-revised financial guidance calls for adjusted earnings of $1.60 per share while full-

year dividend payments should total $1.03 for a payout ratio of 64%.

Valuation

Owens & Minor’s newly-revised financial guidance called for adjusted earnings-per-share of about

$1.60 in fiscal 2017. Using this guidance, the company is trading at a price-to-earnings ratio of about

11.1. For context, Owens & Minor has traded at an average price-to-earnings ratio of 18.2 over the last

decade, which implies a fair value of $29. Owens & Minor current trades under $18.

13

Enterprise Products Partners LP (EPD) Key Statistics, Ratios, & Metrics

Distribution Yield: 6.3% 10-Year Distribution Growth Rate: 5.4%





Enterprise Products Partners is an oil and gas MLP. It operates storage and transportation assets,

including nearly 50,000 miles of natural gas, natural gas liquids, crude oil, and refined products

pipelines. It has storage capacity of more than 250 million barrels. These assets collect fees based on

volumes of materials transported and stored. The assets are not highly sensitive to oil and gas prices.

Instead, Enterprise Products Partners has expanded its focus on fee-based assets.

On January 18th, the company reported financial results for the third quarter. Performance was robust

and is evidence that the oil and gas sector is finally recovering, after a three-year downturn. Revenue

increased 27% in 2017, to $29.24 billion. Distributable cash flow, excluding proceeds from asset sales,

increased 10% to a record $4.5 billion in 2017, up from $4.1 billion in 2016. Enterprise Products

Partners reported a distribution coverage ratio of 1.2x, which means it generated 20% more cash flow

than it needed to pay the distribution.


The most important growth catalysts for Enterprise Products Partners are new projects, and exports.

Enterprise Products retained $867 million of distributable cash flow in 2017. Excess cash flow can be

used to invest in developing new projects, without the need to issue equity. New projects are key to

Enterprise Products Partners’ growth. Enterprise Products has $5.5 billion of growth projects currently

under construction.

Another growth catalyst for Enterprise Products Partners is exports, particularly for liquefied petroleum

gas (LPG). LPG consists of gases like propane, butane, and methane. Demand for LPG is growing at a

high rate across the world, especially in emerging markets like China and India. The combined

population of China and India is approximately 8 times that of the U.S. Moreover, the International

Energy Agency predicts demand for LPG in China and India will rise by 250,000 barrels-per-day and

350,000 barrels-per-day, respectively. Enterprise has 1,150 LPG cargos contracted from 2017-2020.

Enterprise Products Partners is the safest MLP recommended in this newsletter. The company has an

investment-grade credit rating of BBB+ from Standard & Poor’s and Baa1 from Moody’s, which are

better than most MLPs. The distribution coverage ratio of 1.2x in 2017, represents strong coverage.

Valuation

Enterprise Products Partners has a 5-year average dividend yield of 4.9%, and a 10-year average

dividend yield of 5.9%. Its current yield of 6.3% is higher than both its 5-year and 10-year averages.

The company generated distributable cash flow (DCF) per unit of $2.09 in 2017. As a result, the stock

trades for a price-to-DCF ratio of 13.0. Enterprise Products Partners seems to be fairly valued or

slightly undervalued.

15

Holly Energy Partners LP (HEP)


Distribution Yield: 8.5% 10-Year Distribution Growth Rate: 6.0%



Ex- Distribution Date: 2/2/2018 Payment Date: 2/15/2018


Holly Energy Partners is a midstream MLP. It operates ~3,400 pipeline miles and 14 million barrels of

storage capability. Holly Energy Partners’ pipelines and terminals are located in Texas, New Mexico,

Arizona, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming, and Kansas. Refinery processing

facilities are in Kansas and Utah. HollyFrontier Corporation (HFC) owns the general partner of Holly

Energy Partners and has a 35% limited partner stake in the MLP.

On October 31st, 2017, Holly Energy released its third quarter earnings. Distributable cash flow of

$59.2 million rose $10.0 million, or 20% from the same quarter the previous year. Growth was

primarily due to increased operating income from Holly Energy’s Woods Cross refinery, as well as

increased earnings from equity investments. Distributable cash flow increased 11% over the first three

quarters of 2017. Additionally, the company recently (1/26/18) boosted its quarterly distribution to

$0.65 per unit versus $0.6075 the same quarter a year ago, a 7% increase. This marks the 53rd

consecutive quarter of distribution growth for Holly Energy.


Holly Energy will grow cash flow mainly through new projects. On August 10th, 2017, the company

acquired the remaining 50% interest in pipeline operator Frontier Aspen, and a 75% interest in the Salt

Lake City (SLC) Pipeline for $250 million. The Frontier Aspen Pipeline is a 289-mile crude oil

pipeline from Wyoming to Utah. The Salt Lake City Pipeline is a 95-mile crude pipeline that

transports crude oil into Salt Lake City, from the Utah terminal of the Frontier Pipeline. The acquired

interest in both pipelines is expected to generate approximately $23 million in annual EBITDA.

Another growth catalyst is the incentive distribution rights (IDR) simplification plan, in which Holly

Energy and its General Partner (GP) agreed to eliminate the incentive distribution rights held by the

General Partner. Instead, the GP’s 2% general partner interest in Holly Energy will be converted into a

non-economic interest, in exchange for approximately 37 million units. The IDR simplification should

allow Holly Energy to pursue growth opportunities more effectively, by decreasing its cost of capital.

In 2018, Holly Energy expects to increase the quarterly distribution by an additional 4%. It expects

distribution coverage to average 1.0x for the full year. This means distributable cash flow is barely

going to cover the distribution, so investors should closely monitor Holly Energy’s financial results

going forward. In 2017, Holly Energy Partners implemented a cost-cutting project that is expected to

save $14 million per year once completed. The savings from this cost-cutting initiative come from

reducing expenses by ~3.5% of revenue, which could help improve distribution coverage.

Valuation

Holly Energy Partners traded at an average dividend yield of 6.2% over the past 5 years and 6.9% over

the past 10 years. The company is trading at a current dividend yield of 8.5%, indicating that it is

significantly undervalued from typical levels.

17

Welltower Inc. (HCN) Key Statistics, Ratios, & Metrics


Most Recent Annual Distribution Increase: 1.2% Sector: Healthcare Real Estate

Distribution History: Steady or increasing since ‘85 Business Type: REIT



Welltower is a healthcare-focused real estate investment trust headquartered in Toledo, Ohio. The trust

invests alongside leading senior housing operators, post-acute providers, and broader healthcare

systems to acquire attractive properties in premier markets. Welltower has operations in the United

States, Canada, and the United Kingdom and trades with a market capitalization of $21.7 billion.

It’s been a quiet few months for Welltower. Our most recent insight into the trust’s financial

performance came with the release (11/7/17) of third quarter financial results. Normalized funds from

operations (FFO) of $1.08 beat analyst estimates by $0.03 while revenue of $1.09 billion beat by

roughly $20 million. Welltower’s strong performance was driven by its senior housing division, which

saw same store net operating income (SSNOI) increase by 4.1% over the prior year’s period. The trust

also increased its full-year normalized funds from operations guidance to $4.19 to $4.25, up from $4.15

to $4.25 previously. Welltower’s performance was slightly better than expected.

More recently, Welltower announced (1/2/18) plans to acquire a portfolio of 4 rental continuing care

retirement communities (CCRC) in Washington D.C., Miami, and Charlottesville. For a price tag of

$368 million, Welltower is projected to receive a nominal one-year cap rate of 7% (calculated as net

operating income divided by purchase price). Welltower has closed on one of the communities, with

the remaining three expected to be acquired within the first quarter of 2018.

Welltower is scheduled to report fourth quarter financial results before the market opens on February

22nd, 2018. We’ll be watching the trust’s performance closely and reporting any pertinent

developments back to you.

Safety & Growth Prospect

Welltower’s most compelling growth prospect is the rising population of senior citizens, which are the

primary customers of the trust’s property operators. Welltower estimates the population of 85+ year

old people will double over the next 20 years.

Welltower reported normalized funds from operations of $1.08 per share in the most recent quarter and

currently pays a quarterly dividend of $0.87 per share. In other words, the trust had a payout ratio of

80.6% (using funds from operations) in the most recent quarter, lower than many of its peers.

With that said, investors should note that Welltower does have an above-average amount of debt. The

trust reported a net debt to adjusted EBITDA ratio of 5.19x at the end of the most recent quarter.

Importantly, Welltower is taking strides to reduce its leverage; this ratio is down noticeably from 5.65x

reported in last year’s quarter. As of September 30, Welltower had $236 million of cash and

equivalents and $2.6 billion of available borrowing capacity under its primary unsecured credit facility.

Valuation

Welltower’s average distribution yield over the past 5 years was 4.8% and its average distribution yield

over the past 10 years was 5.4%. The trust’s current distribution yield of 6.0% indicates that it is

trading at a significant discount to its normal valuation levels.

19

Senior Housing Properties Trust (SNH)



Most Recent Annual Distribution Increase: 2.6% Sector: Healthcare / Real Estate

Distribution History: Steady or rising since 2000 Business Type: REIT



Senior Housing Properties is a REIT that owns senior living communities, medical office and life

science properties, and wellness centers throughout the U.S. The company has a portfolio of 435

properties. The senior living portfolio includes 304 properties, with an average occupancy of 85%.

The medical office buildings portfolio has an even higher occupancy rate of 96%.

Senior Housing specifically focuses on private-pay senior living communities, and medical office

buildings, including life science, patient care, and medical equipment manufacturing facilities. These

properties are generally higher-margin and have stronger growth potential. In addition, private-pay

facilities help reduce government funding exposure. Approximately 97% of the company’s net

operating income is derived from private-pay sources.

On November 9th, 2017, the company reported its most recent quarterly earnings. Revenue of $266.68

million increased 1% year-over-year (YOY) and beat analyst forecasts by $0.4 million. Adjusted funds

from operation (FFO), declined 0.2% for the quarter. Adjusted FFO-per-share declined 3.6% over the

first three quarters of 2017, to $1.33. The decline was due primarily to higher business management

incentive fees, and a higher number of shares outstanding. Still, FFO was more than enough to cover

the dividend payments, which totaled $1.17 per share during that time. As a result, the company

maintained a payout ratio of 88%, in the first nine months of 2017.


The key growth catalyst for Senior Housing Properties is the changing demographic landscape of the

U.S. The U.S. is an aging society with approximately 10,000 Baby Boomers turning 65 every day.

The U.S. Census Bureau estimates the 85+ population is growing at a faster rate than the broader

population. This creates a long-term growth driver for the senior care industry.

Senior Housing Properties has a credit rating of BBB- from Standard & Poor’s, the lowest rating that

can be considered investment-grade. It is crucial for Senior Housing to retain its investment-grade

credit rating. Downgrading one notch would reduce the company to non-investment grade, commonly

referred to as “junk” status, which would likely raise the company’s cost of capital. To help support its

liquidity, on January 2nd the company announced it will sell four senior living communities, totaling

1,179 living units/beds, for a total of $368 million to Welltower. The proceeds will be used to reduce

debt leverage, and to invest in new properties.

Valuation

In the past four reported quarters, Senior Housing Properties generated adjusted FFO-per-share of

$1.83. Based on this, the stock has a trailing price-to-FFO ratio of just 9.2. In addition, Senior

Housing Portfolio’s current dividend of 9.3% yield is at a two-year high.

21

ONEOK Inc. (OKE) Key Statistics, Ratios, & Metrics

Dividend Yield: 5.3% 10 Year Dividend Growth Rate: 7.5%

Most Recent Annual Dividend Increase: 21.1% Sector: Energy

Dividend History: Steady or rising since ‘89 Business Type: Corporation

Ex-Dividend Date: 2/3/18 (estimated) Payment Date: 2/14/18 (estimated)


ONEOK Inc. is the sole general partner and holding company of ONEOK Partners, which gathers,

processes, fractionates, transports, stores, markets, and distributes natural gas and natural gas liquids.

The company operates in three reporting segments: Natural Gas Liquids, Natural Gas Gathering and

Processing, and Natural Gas Pipelines. The company was founded in 1906 as the Oklahoma Natural

Gas Company and currently trades with a market capitalization of $22.3 billion.

Until recently, ONEOK Inc. and ONEOK Partners were separate entities and traded independently on

the New York Stock Exchange. This changed in 2017, after the partnership announced (1/31/17) an

agreement by which ONEOK would acquire all of the outstanding units of ONEOK Partners that it did

not already own. The merger closed in mid-2017 (6/30/17) and was predominantly aimed at creating a

unified entity with greater financial strength and a correspondingly lower cost of funding.

ONEOK recently (1/22/18) announced fiscal 2018 guidance. Importantly, the company does not

expect to issue any additional equity in 2018. ONEOK issued shares in early 2018 (1/4/18) that will

dilute shareholders 5% to 6%. After accounting for this dilution, ONEOK is expecting distributable

cash flow per share and adjusted EBITDA per share to grow 21% and 12%, respectively, in fiscal

2018. Also, the company continues to expect 9% to 11% dividend growth through 2021.

In late October, ONEOK Inc. reported (10/31/17) financial results for the third quarter of fiscal 2017.

Earnings-per-share were flat at $0.43. Distributable cash flow increased to $364.4 million from the

$331.5 million reported in the same quarter last year. The merger-related increase in the number of

shares outstanding has reduced the company’s dividend coverage ratio (which sits at 1.29, down from

1.52 last year), but ONEOK’s cash flow continues to adequately cover its dividend payments.


ONEOK’s merger with ONEOK Partners has created a combined company with greater financial

security, reducing its cost of funding and allowing it to more prudently invest in the long-term growth

of its business. The company has announced approximately $1.4 billion in expected growth capital

expenditures for fiscal 2018 and should continue to invest in its fixed asset base in the years ahead.

ONEOK’s main asset is the ownership of the MLP ONEOK Partners, so it should be analyzed more

like an MLP than a traditional corporation. Using distributable cash flow, ONEOK had a distribution

coverage ratio of 1.29x through the three-month period ending September 30, 2017. The company is

targeting a 1.2x or greater long-term distribution coverage ratio. ONEOK appears to have a strong

level of confidence in its dividend safety moving forward, as the company increased its dividend by

21% following the close of the ONEOK Inc. and ONEOK Partners merger transaction.

Valuation

ONEOK traded at an average dividend yield of 4.8% over the past 5 years and an average dividend

yield of 4.5% over the past 10 years. The company’s current dividend yield of 5.3% indicates that it is

noticeably undervalued at current prices.

23

AmeriGas Partners LP (APU) Key Statistics, Ratios, & Metrics


Most Recent Annual Distribution Increase: 1.1% Sector: Utilities




AmeriGas Partners is the largest propane distribution company in the United States, serving more than

2 million customers in all 50 states through approximately 1,900 distribution locations. Propane sales

account for nearly 90% of the company’s annual revenue, with related equipment and accessories

accounting for the remaining 10%. AmeriGas has a market capitalization of $4.3 billion. UGI

Corporation is AmeriGas’ general partner and also owns 26% of the partnership’s common units.

On January 31st, AmeriGas reported financial results for the first quarter of fiscal 2018. Revenue of

$787.3 million increased by 16.3% over the prior year’s period and beat analyst expectations by $12.7

million. Adjusted EBITDA of $194.1 million rose 4.8%, compared with $185.1 million in the same

quarter a year ago. The year 2017 was a challenging one for the company. For the twelve-month

period, AmeriGas’ revenue increased by 6.3% but adjusted EBITDA of $551.3 million increased by

just 1.5%. Warmer-than-normal temperatures across the U.S. have negatively impacted demand for

propane. In the 2018 first quarter, temperatures were 1.4% warmer than normal. And, excluding the

last week in December, weather was 6.6% warmer than normal as measured by heating degree days.


Conditions should improve in 2018. The company’s two main growth catalysts are its recent cylinder

exchange program, and customer account growth. AmeriGas’ growth plan is to slowly consolidate the

fragmented propane distribution industry. The partnership made 5 bolt-on acquisitions in fiscal 2017

and more than 80 acquisitions in the last decade.

Both initiatives have helped produce growth. For example, in the first quarter, cylinder exchange

volume increased 9% from the same quarter a year ago, while national accounts volume increased 7%

by adding 11 new customer accounts. This has impacted the company’s distribution safety: the

company reported a dividend payout ratio of 98% in the fiscal 2018 first quarter.

The partnership is taking action to improve its balance sheet. AmeriGas refinanced all of its long-term

debt in fiscal 2017, which reduced its weighted average interest rate by approximately 100 basis points.

More importantly, AmeriGas has entered into a standby equity purchase agreement with UGI

Corporation (its general partner) under which AmeriGas will sell UGI up to $225 million of Class B

common units. Under the terms of the agreement, AmeriGas must issue UGI at least $50 million Class

B units – which are convertible to normal common units at UGI’s option after 5 years. This agreement

provides additional liquidity to AmeriGas and gives it greater financial flexibility during this

challenging period of warm temperatures. Importantly, as a result of its refinancing actions, AmeriGas

has no significant debt maturities until 2024.

Valuation

AmeriGas has traded at an average distribution yield of 7.9% over the past 5 years and an average

distribution yield of 7.6% over the past 10 years. The partnership’s current distribution yield of 8.2%

indicates that AmeriGas is slightly undervalued, likely due to concerns about the potential impact of

more elevated temperatures on AmeriGas’ financial performance.

25

Disclaimer

Nothing presented herein is, or is intended to constitute, specific investment advice. Nothing in this newsletter should be construed as a recommendation to follow any investment strategy or allocation. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements

or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. While Sure Retirement/Sure Dividend has used

reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made. There is a risk of loss from an

investment in securities. Past performance is not a guarantee of future performance.

Closing Thoughts – Sure Retirement Performance–

This is the 15th edition of the Sure Retirement Newsletter since its launch in November of 2016. To

date, the total return (including dividends) performance of the newsletter breaks down as follows:

• 1 Recommendation up over 60%

• 2 Recommendations up over 30%

• 3 Recommendations up over 20%

• 7 Recommendations up between 10% and 20%

• 6 Recommendations up between 0% and 10%

• 6 Recommendations down between 0% and 10%

• 1 Recommendation down between 10% and 20%

• 1 Recommendation down more than 20% (down 23.5%)

The average return for our recommendations using the date of first recommendation is 9.6%, out of

a total of 27 recommendations. This is strong performance given that 11 recommendations are less

than a year old.

We have made 3 sell recommendations, with 1 finalized (Waddell & Reed, closed up 34%) and 2

pending to be sold (Genesis Energy and Suburban Propane). Our two pending sell

recommendations will trigger when the respective company’s yields decline to historical averages.

Interestingly, the performance of high yield dividend ETFs tends to track the broad market during

recessions. Said another way, high dividend stocks tend to offer no additional downside benefit

during recessions. Dividend growth stocks, on the other hand, tend to outperform during

recessions. MLPs in particular did well during the Great Recession from a business results

perspective; though MLP unit prices did see significant declines.

What should investors expect going forward? Continued solid overall performance in bull markets,

with declines during recessions. The goal of Sure Retirement is to provide high and rising income.

We expect our recommendations to provide this, on average, over the long run. While total returns

certainly matter, short-term performance is virtually meaningless. Long-term investors are far

better served watching dividends/distributions instead of prices or performance over periods less

than 3 to 5 years. Price fluctuations over time periods less than this are little more than noise.

Thanks,

Ben Reynolds

The next newsletter publishes on Sunday, March 4th, 2018.

26

Disclaimer

Nothing presented herein is, or is intended to constitute, specific investment advice. Nothing in this newsletter should be construed as a recommendation to follow any investment strategy or allocation. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements

or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. While Sure Retirement/Sure Dividend has used

reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made. There is a risk of loss from an

investment in securities. Past performance is not a guarantee of future performance.

List of Investments by Sector

Each of the securities with 4%+ yields in the Sure Dividend database are sorted by rank below in

order based on The 8 Rules of Dividend Investing (highest to lowest) based on its GICS sector.

Dividend or distribution yield is included next to each stock’s ticker symbol.

Basic Materials 1. Westlake Chemical Partners LP (WLKP) - 6.1%

2. SunCoke Energy Partners LP (SXCP) - 11.7%

3. Enviva Partners LP (EVA) - 7.9%

4. Ciner Resources LP (CINR) - 8.5%

Communication Services 1. Vodafone Grp. plc (VOD) - 5.2%

2. BCE Inc. (BCE) - 4.9%

3. AT&T Inc. (T) - 5.3%

4. Verizon Communications Inc. (VZ) - 4.4%

5. Consolidated Communications Hldgs. Inc. (CNSL) - 12.5%

6. CenturyLink Inc. (CTL) - 12.1%

7. IDT Corp. (IDT) - 7%

Consumer Cyclicals 1. GUESS? Inc. (GES) - 4.9%

2. GameStop Corp. (GME) - 9%

3. Buckle Inc./The (BKE) - 5%

4. Macy's Inc. (M) - 5.8%

5. L Brands Inc. (LB) - 4.8%

6. Cedar Fair LP (FUN) - 5.3%

7. DineEquity Inc. (DIN) - 7%

8. Ford Motor Co. (F) - 5.5%

9. National CineMedia Inc. (NCMI) - 13.1%

10. Cato Corp./The (CATO) - 11.1%

11. Bowl America Inc. (BWL.A) - 4.4%

12. New Media Inv. Grp. Inc. (NEWM) - 8.8%

13. Barnes & Noble Inc. (BKS) - 12.8%

14. Gannett Co. Inc. (GCI) - 5.4%

Consumer Defensive 1. Universal Corp. (UVV) - 4.6%

2. Vector Grp. Ltd (VGR) - 7.5%

3. Philip Morris Intl. Inc. (PM) - 4%

Energy 1. Buckeye Partners LP (BPL) - 9.4%

2. Energy Transfer Partners LP (ETP) - 11.3%

3. Enterprise Products Partners LP (EPD) - 6.2%

4. Holly Energy Partners LP (HEP) - 8.3%

5. ONEOK Inc. (OKE) - 5.2%

6. NuStar Energy LP (NS) - 13.2%

7. Enbridge Inc. (ENB) - 6%

8. Royal Dutch Shell plc (RDS.A) - 5.4%

9. Royal Dutch Shell plc (RDS.B) - 5.2%

10. TC PipeLines LP (TCP) - 7.3%

11. Sunoco LP (SUN) - 10.4%

12. NuStar GP Holdings LLC (NSH) - 12.3%

13. Energy Transfer Equity LP (ETE) - 6.5%

14. Magellan Midstream Partners LP (MMP) - 5.2%

15. CrossAmerica Partners LP (CAPL) - 10.4%

16. Western Gas Partners LP (WES) - 7.3%

17. Spectra Energy Partners LP (SEP) - 6.8%

18. Transmontaigne Partners LP (TLP) - 7.8%

19. Phillips 66 Partners LP (PSXP) - 5.2%

20. Occidental Petroleum Corp. (OXY) - 4.1%

21. Andeavor Logistics LP (ANDX) - 7.7%

22. Delek Logistics Partners LP (DKL) - 8.9%

23. Targa Resources Corp. (TRGP) - 7.6%

24. EnLink Midstream Partners LP (ENLK) - 8.9%

25. BP plc (BP) - 5.6%

26. PBF Logistics LP (PBFX) - 9.2%

27. Western Gas Equity Partners LP (WGP) - 5.6%

28. DCP Midstream LP (DCP) - 7.6%

29. EnLink Midstream LLC (ENLC) - 5.6%

30. TOTAL S.A. (TOT) - 5.1%

31. Tallgrass Energy Partners LP (TEP) - 8.8%

32. SemGroup Corp. (SEMG) - 6.3%

33. Sprague Resources LP (SRLP) - 9.5%

34. MPLX LP (MPLX) - 6.5%

35. GasLog Partners LP (GLOP) - 8.7%

36. USA Compression Partners LP (USAC) - 11.4%

37. Summit Midstream Partners LP (SMLP) - 10.3%

38. Vermilion Energy Inc. (VET) - 5.5%

39. Green Plains Partners LP (GPP) - 10.6%

40. Enable Midstream Partners LP (ENBL) - 8.4%

41. Black Stone Minerals LP (BSM) - 6.8%

42. Cheniere Energy Partners LP (CQP) - 6.5%

27

Financial Services 1. Canadian Imperial Bank of Commerce (CM) - 4.3%

2. PennantPark Floating Rate Capital Ltd (PFLT) - 8.3%

3. Mercury General Corp. (MCY) - 5.1%

4. Main Street Capital Corp. (MAIN) - 6%

5. Gladstone Inv. Corp. (GAIN) - 7.9%

6. Westpac Banking Corp. (WBK) - 5.8%

7. Hercules Capital Inc. (HTGC) - 9.8%

8. BGC Partners Inc. (BGCP) - 5%

9. AmTrust Financial Srvcs. Inc. (AFSI) - 5.1%

10. Ares Capital Corp. (ARCC) - 9.5%

11. Westwood Holdings Grp. Inc. (WHG) - 4.2%

12. Banco Latinoamericano de Comercio (BLX) - 5.2%

13. Greenhill & Co. Inc. (GHL) - 7.6%

14. Waddell & Reed Financial Inc. (WDR) - 4.4%

15. Artisan Partners Asset Mgmt. Inc. (APAM) - 6.1%

16. Golub Capital BDC Inc. (GBDC) - 7%

17. Goldman Sachs BDC Inc. (GSBD) - 8.4%

18. Virtu Financial Inc. (VIRT) - 5%

19. New York Community Bancorp Inc. (NYCB) - 4.8%

20. FS Inv. Corp. (FSIC) - 10%

21. Navient Corp. (NAVI) - 4.5%

Healthcare 1. Owens & Minor Inc. (OMI) - 5.8%

2. National Research Corp. (NRCIB) - 4.2%%

Industrials 1. Macquarie Infra. Corp. (MIC) - 8.6%

2. Golar LNG Partners LP (GMLP) - 10.5%

3. R.R. Donnelley & Sons Co. (RRD) - 6.9%

4. Compass Diversified Holdings LLC (CODI) - 8.5%

5. Iron Mountain Inc. (IRM) - 6.7%

6. Höegh LNG Partners LP (HMLP) - 9.4%

7. Icahn Enterprises LP (IEP) - 10.2%

8. USD Partners LP (USDP) - 12.4%

9. KNOT Offshore Partners LP (KNOP) - 9.8%

10. Fortress Transport. & Infra. Investors LLC (FTAI) - 7.3%

11. Dynagas LNG Partners LP (DLNG) - 14.6%

12. Costamare Inc. (CMRE) - 6.1%

Real Estate 1. Omega Healthcare Investors Inc. (OHI) - 9.8%

2. Welltower Inc. (HCN) - 5.8%

3. Senior Housing Properties Trust (SNH) - 9%

4. W.P. Carey Inc. (WPC) - 6.2%

5. HCP Inc. (HCP) - 6.2%

6. National Health Investors Inc. (NHI) - 5.4%

7. Realty Income Corp. (O) - 4.9%

8. Arbor Realty Trust Inc. (ABR) - 9.3%

9. Starwood Property Trust Inc. (STWD) - 9.4%

10. Lexington Realty Trust (LXP) - 7.9%

11. LTC Properties Inc. (LTC) - 5.6%

12. VEREIT Inc. (VER) - 7.6%

13. Sabra Health Care REIT Inc. (SBRA) - 11.5%

14. Hospitality Properties Trust (HPT) - 7.3%

15. Kimco Realty Corp. (KIM) - 7%

16. EPR Properties (EPR) - 7.3%

17. Public Storage (PSA) - 4.1%

18. National Retail Properties Inc. (NNN) - 4.8%

19. Simon Property Grp. Inc. (SPG) - 4.5%

20. DDR Corp. (DDR) - 9.4%

21. Urstadt Biddle Properties Inc. (UBA) - 5.6%

22. Select Income REIT (SIR) - 9.1%

23. Taubman Centers Inc. (TCO) - 4.1%

24. Ventas, Inc. (VTR) - 5.7%

25. Tanger Factory Outlet Centers Inc. (SKT) - 5.4%

26. Preferred Apartment Communities Inc. (APTS) - 6%

27. STAG Industrial Inc. (STAG) - 5.6%

28. One Liberty Properties Inc. (OLP) - 7.4%

29. Hannon Armstrong Sust. Infra. Capital Inc. (HASI) - 6.1%

30. Universal Health Realty Income Trust (UHT) - 4%

31. Apollo Comml. Real Estate Finance Inc. (ARI) - 10.1%

32. New Residential Inv. Corp. (NRZ) - 11.6%

33. Chesapeake Lodging Trust (CHSP) - 5.9%

34. American Campus Communities Inc. (ACC) - 4.6%

35. Kite Realty Grp. Trust (KRG) - 7.5%

36. Chatham Lodging Trust (CLDT) - 5.9%

37. Macerich Co. (MAC) - 4.6%

38. Brixmor Property Grp. Inc. (BRX) - 6.8%

39. Ares Comml. Real Estate Corp. (ACRE) - 8.5%

40. Medical Properties Trust Inc. (MPW) - 7.3%

41. Urstadt Biddle Properties Inc. (UBP) - 5.6%

42. The GEO Grp. Inc. (GEO) - 8.3%

43. Brookfield Property Partners LP (BPY) - 5.4%

44. Life Storage Inc. (LSI) - 4.8%

45. CorEnergy Infra. Trust Inc. (CORR) - 7.8%

46. Gladstone Comml. Corp. (GOOD) - 7.9%

47. Armada Hoffler Properties Inc. (AHH) - 5.3%

48. Ryman Hospitality Properties Inc. (RHP) - 4.2%

49. Government Properties Income Trust (GOV) - 10%

50. Spirit Realty Capital Inc. (SRC) - 8.8%

51. Landmark Infra. Partners LP (LMRK) - 8.1%

52. Community Healthcare Trust Inc. (CHCT) - 5.9%

53. RLJ Lodging Trust (RLJ) - 4.3%

54. Pennsylvania Real Estate Inv. Trust (PEI) - 7.5%

55. Granite Real Estate Inv. Trust (GRP.U) - 5.4%

56. LaSalle Hotel Properties (LHO) - 5.9%

57. Brandywine Realty Trust (BDN) - 4%

58. Hersha Hospitality Trust (HT) - 6%

59. Ashford Hospitality Trust Inc. (AHT) - 7.5%

60. MGM Growth Properties LLC (MGP) - 6%

61. Xenia Hotels & Resorts Inc. (XHR) - 5%

62. City Office REIT Inc. (CIO) - 8.1%

63. InfraREIT Inc. (HIFR) - 5.3%

64. Global Net Lease Inc. (GNL) - 11.6%

65. Northstar Realty Europe Corp. (NRE) - 5%

66. Apple Hospitality REIT Inc. (APLE) - 6.2%

67. Redwood Trust Inc. (RWT) - 7.5%

68. Independence Realty Trust Inc. (IRT) - 7.8%

69. Franklin Street Properties Corp. (FSP) - 7.5%

70. Outfront Media Inc. (OUT) - 6.4%

71. New Senior Inv. Grp. Inc. (SNR) - 13.6%

72. Uniti Grp. Inc. (UNIT) - 15.2%

28

Technology 1. Seagate Technology plc (STX) - 4.6%

Utilities 1. AmeriGas Partners LP (APU) - 8%

2. Southern Co. (SO) - 5.1%

3. Dominion Energy Inc./VA (D) - 4.4%

4. Brookfield Renewable Partners LP (BEP) - 5.6%

5. PPL Corp. (PPL) - 5%

6. Duke Energy Corp. (DUK) - 4.5%

7. OGE Energy Corp. (OGE) - 4.1%

8. SCANA Corp. (SCG) - 6%

9. Pattern Energy Grp. Inc. (PEGI) - 8.2%

10. NRG Yield Inc. (NYLD.A) - 6.1%

11. 8point3 Energy Partners LP (CAFD) - 7.7%

12. Entergy Corp. (ETR) - 4.5%

13. AES Corp./The (AES) - 4.5%

14. NRG Yield Inc. (NYLD) - 6.1%

15. FirstEnergy Corp. (FE) - 4.4%

29

This information is not personalized advice. It is for informational purposes only. Please see disclaimer at end of newsletter for more.

List of Investments by Rank

Each of the securities with 4%+ yields in the Sure Dividend database are sorted by

rank below in order based on The 8 Rules of Dividend Investing (highest to lowest).

Dividend or distribution yield is included next to each stock’s ticker symbol. 1. Omega Healthcare Investors Inc. (OHI) - 9.8%

2. Buckeye Partners LP (BPL) - 9.4%

3. Energy Transfer Partners LP (ETP) - 11.3%

4. Owens & Minor Inc. (OMI) - 5.8%

5. Enterprise Products Partners LP (EPD) - 6.2%

6. Holly Energy Partners LP (HEP) - 8.3%

7. Welltower Inc. (HCN) - 5.8%

8. Senior Housing Properties Trust (SNH) - 9%

9. ONEOK Inc. (OKE) - 5.2%

10. AmeriGas Partners LP (APU) - 8%

11. Vodafone Grp. plc (VOD) - 5.2%

12. NuStar Energy LP (NS) - 13.2%

13. Enbridge Inc. (ENB) - 6%

14. Royal Dutch Shell plc (RDS.A) - 5.4%

15. BCE Inc. (BCE) - 4.9%

16. Royal Dutch Shell plc (RDS.B) - 5.2%

17. Macquarie Infra. Corp. (MIC) - 8.6%

18. Universal Corp. (UVV) - 4.6%

19. W.P. Carey Inc. (WPC) - 6.2%

20. HCP Inc. (HCP) - 6.2%

21. TC PipeLines LP (TCP) - 7.3%

22. Southern Co. (SO) - 5.1%

23. Dominion Energy Inc./VA (D) - 4.4%

24. National Health Investors Inc. (NHI) - 5.4%

25. AT&T Inc. (T) - 5.3%

26. Vector Grp. Ltd (VGR) - 7.5%

27. Realty Income Corp. (O) - 4.9%

28. Sunoco LP (SUN) - 10.4%

29. Arbor Realty Trust Inc. (ABR) - 9.3%

30. Starwood Property Trust Inc. (STWD) - 9.4%

31. Brookfield Renewable Partners LP (BEP) - 5.6%

32. NuStar GP Holdings LLC (NSH) - 12.3%

33. Energy Transfer Equity LP (ETE) - 6.5%

34. Golar LNG Partners LP (GMLP) - 10.5%

35. Philip Morris Intl. Inc. (PM) - 4%

36. R.R. Donnelley & Sons Co. (RRD) - 6.9%

37. Lexington Realty Trust (LXP) - 7.9%

38. GUESS? Inc. (GES) - 4.9%

39. Magellan Midstream Partners LP (MMP) - 5.2%

40. LTC Properties Inc. (LTC) - 5.6%

41. VEREIT Inc. (VER) - 7.6%

42. Canadian Imperial Bank of Commerce (CM) - 4.3%

43. CrossAmerica Partners LP (CAPL) - 10.4%

44. PPL Corp. (PPL) - 5%

45. Sabra Health Care REIT Inc. (SBRA) - 11.5%

46. PennantPark Floating Rate Capital Ltd (PFLT) - 8.3%

47. Mercury General Corp. (MCY) - 5.1%

48. Hospitality Properties Trust (HPT) - 7.3%

49. Verizon Communications Inc. (VZ) - 4.4%

50. Western Gas Partners LP (WES) - 7.3%

51. Kimco Realty Corp. (KIM) - 7%

52. Spectra Energy Partners LP (SEP) - 6.8%

53. Transmontaigne Partners LP (TLP) - 7.8%

54. Duke Energy Corp. (DUK) - 4.5%

55. Compass Diversified Holdings LLC (CODI) - 8.5%

56. Main Street Capital Corp. (MAIN) - 6%

57. GameStop Corp. (GME) - 9%

58. OGE Energy Corp. (OGE) - 4.1%

59. EPR Properties (EPR) - 7.3%

60. Public Storage (PSA) - 4.1%

61. National Retail Properties Inc. (NNN) - 4.8%

62. SCANA Corp. (SCG) - 6%

63. Simon Property Grp. Inc. (SPG) - 4.5%

64. Gladstone Inv. Corp. (GAIN) - 7.9%

65. DDR Corp. (DDR) - 9.4%

66. Urstadt Biddle Properties Inc. (UBA) - 5.6%

67. Iron Mountain Inc. (IRM) - 6.7%

68. Buckle Inc./The (BKE) - 5%

69. Macy's Inc. (M) - 5.8%

70. Phillips 66 Partners LP (PSXP) - 5.2%

71. Select Income REIT (SIR) - 9.1%

72. L Brands Inc. (LB) - 4.8%

73. Taubman Centers Inc. (TCO) - 4.1%

74. Ventas, Inc. (VTR) - 5.7%

75. Pattern Energy Grp. Inc. (PEGI) - 8.2%

76. Occidental Petroleum Corp. (OXY) - 4.1%

77. Tanger Factory Outlet Centers Inc. (SKT) - 5.4%

78. Preferred Apartment Communities Inc. (APTS) - 6%

79. Andeavor Logistics LP (ANDX) - 7.7%

80. STAG Industrial Inc. (STAG) - 5.6%

81. Cedar Fair LP (FUN) - 5.3%

82. One Liberty Properties Inc. (OLP) - 7.4%

83. Westlake Chemical Partners LP (WLKP) - 6.1%

84. Hannon Armstrong Sust. Infra. Capital Inc. (HASI) - 6.1%

85. DineEquity Inc. (DIN) - 7%

86. Delek Logistics Partners LP (DKL) - 8.9%

87. Targa Resources Corp. (TRGP) - 7.6%

88. EnLink Midstream Partners LP (ENLK) - 8.9%

89. Universal Health Realty Income Trust (UHT) - 4%

90. Apollo Comml. Real Estate Finance Inc. (ARI) - 10.1%

91. Westpac Banking Corp. (WBK) - 5.8%

92. Hercules Capital Inc. (HTGC) - 9.8%

93. New Residential Inv. Corp. (NRZ) - 11.6%

94. NRG Yield Inc. (NYLD.A) - 6.1%

30


95. 8point3 Energy Partners LP (CAFD) - 7.7%

96. Ford Motor Co. (F) - 5.5%

97. Chesapeake Lodging Trust (CHSP) - 5.9%

98. American Campus Communities Inc. (ACC) - 4.6%

99. BP plc (BP) - 5.6%

100. Kite Realty Grp. Trust (KRG) - 7.5%

101. PBF Logistics LP (PBFX) - 9.2%

102. Western Gas Equity Partners LP (WGP) - 5.6%

103. Seagate Technology plc (STX) - 4.6%

104. Entergy Corp. (ETR) - 4.5%

105. National CineMedia Inc. (NCMI) - 13.1%

106. DCP Midstream LP (DCP) - 7.6%

107. Höegh LNG Partners LP (HMLP) - 9.4%

108. Chatham Lodging Trust (CLDT) - 5.9%

109. Macerich Co. (MAC) - 4.6%

110. EnLink Midstream LLC (ENLC) - 5.6%

111. BGC Partners Inc. (BGCP) - 5%

112. AmTrust Financial Srvcs. Inc. (AFSI) - 5.1%

113. Brixmor Property Grp. Inc. (BRX) - 6.8%

114. TOTAL S.A. (TOT) - 5.1%

115. Ares Capital Corp. (ARCC) - 9.5%

116. Ares Comml. Real Estate Corp. (ACRE) - 8.5%

117. Tallgrass Energy Partners LP (TEP) - 8.8%

118. Medical Properties Trust Inc. (MPW) - 7.3%

119. Urstadt Biddle Properties Inc. (UBP) - 5.6%

120. AES Corp./The (AES) - 4.5%

121. The GEO Grp. Inc. (GEO) - 8.3%

122. Brookfield Property Partners LP (BPY) - 5.4%

123. Life Storage Inc. (LSI) - 4.8%

124. CorEnergy Infra. Trust Inc. (CORR) - 7.8%

125. Westwood Holdings Grp. Inc. (WHG) - 4.2%

126. Gladstone Comml. Corp. (GOOD) - 7.9%

127. Banco Latinoamericano de Comercio (BLX) - 5.2%

128. Armada Hoffler Properties Inc. (AHH) - 5.3%

129. Icahn Enterprises LP (IEP) - 10.2%

130. SunCoke Energy Partners LP (SXCP) - 11.7%

131. SemGroup Corp. (SEMG) - 6.3%

132. Sprague Resources LP (SRLP) - 9.5%

133. MPLX LP (MPLX) - 6.5%

134. USD Partners LP (USDP) - 12.4%

135. Ryman Hospitality Properties Inc. (RHP) - 4.2%

136. Government Properties Income Trust (GOV) - 10%

137. KNOT Offshore Partners LP (KNOP) - 9.8%

138. Greenhill & Co. Inc. (GHL) - 7.6%

139. Spirit Realty Capital Inc. (SRC) - 8.8%

140. GasLog Partners LP (GLOP) - 8.7%

141. Landmark Infra. Partners LP (LMRK) - 8.1%

142. Community Healthcare Trust Inc. (CHCT) - 5.9%

143. RLJ Lodging Trust (RLJ) - 4.3%

144. USA Compression Partners LP (USAC) - 11.4%

145. Pennsylvania Real Estate Inv. Trust (PEI) - 7.5%

146. Summit Midstream Partners LP (SMLP) - 10.3%

147. Waddell & Reed Financial Inc. (WDR) - 4.4%

148. Granite Real Estate Inv. Trust (GRP.U) - 5.4%

149. LaSalle Hotel Properties (LHO) - 5.9%

150. Brandywine Realty Trust (BDN) - 4%

151. Vermilion Energy Inc. (VET) - 5.5%

152. Enviva Partners LP (EVA) - 7.9%

153. Green Plains Partners LP (GPP) - 10.6%

154. Ciner Resources LP (CINR) - 8.5%

155. Cato Corp./The (CATO) - 11.1%

156. Hersha Hospitality Trust (HT) - 6%

157. Bowl America Inc. (BWL.A) - 4.4%

158. Ashford Hospitality Trust Inc. (AHT) - 7.5%

159. MGM Growth Properties LLC (MGP) - 6%

160. Xenia Hotels & Resorts Inc. (XHR) - 5%

161. Artisan Partners Asset Mgmt. Inc. (APAM) - 6.1%

162. City Office REIT Inc. (CIO) - 8.1%

163. InfraREIT Inc. (HIFR) - 5.3%

164. Global Net Lease Inc. (GNL) - 11.6%

165. Golub Capital BDC Inc. (GBDC) - 7%

166. NRG Yield Inc. (NYLD) - 6.1%

167. Goldman Sachs BDC Inc. (GSBD) - 8.4%

168. New Media Inv. Grp. Inc. (NEWM) - 8.8%

169. Northstar Realty Europe Corp. (NRE) - 5%

170. Apple Hospitality REIT Inc. (APLE) - 6.2%

171. Enable Midstream Partners LP (ENBL) - 8.4%

172. Redwood Trust Inc. (RWT) - 7.5%

173. Fortress Transport. & Infra. Investors LLC (FTAI) - 7.3%

174. Independence Realty Trust Inc. (IRT) - 7.8%

175. Dynagas LNG Partners LP (DLNG) - 14.6%

176. National Research Corp. (NRCIB) - 4.2%

177. Black Stone Minerals LP (BSM) - 6.8%

178. Franklin Street Properties Corp. (FSP) - 7.5%

179. Outfront Media Inc. (OUT) - 6.4%

180. Barnes & Noble Inc. (BKS) - 12.8%

181. Consolidated Communications Hldgs. Inc. (CNSL) - 12.5%

182. Cheniere Energy Partners LP (CQP) - 6.5%

183. CenturyLink Inc. (CTL) - 12.1%

184. Virtu Financial Inc. (VIRT) - 5%

185. New Senior Inv. Grp. Inc. (SNR) - 13.6%

186. Gannett Co. Inc. (GCI) - 5.4%

187. New York Community Bancorp Inc. (NYCB) - 4.8%

188. Uniti Grp. Inc. (UNIT) - 15.2%

189. FirstEnergy Corp. (FE) - 4.4%

190. FS Inv. Corp. (FSIC) - 10%

191. Navient Corp. (NAVI) - 4.5%

192. Costamare Inc. (CMRE) - 6.1%

193. IDT Corp. (IDT) - 7%

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List of Past Recommendations & Ranking Criteria

The ranking criteria and requirements for the Sure Retirement newsletter are derived from The 8

Rules of Dividend Investing.

The sell criteria are below:

• The security trades at 2/3 or less of historical average dividend or distribution yield

• Dividend or distribution is cut or eliminated (except in special situations)

Performance of securities currently in the Top 10 are shown below:

Name & Ticker Recommend Date Yield Total Return

Buckeye Partners LP (BPL) November 2016 Hold -8.9%

Enterprise Products Part. (EPD) November 2016 Hold 18.2%

Omega Healthcare Inv. (OHI) November 2016 Hold -4.0%

Holly Energy Partners (HEP) December 2016 Hold 2.2%

Energy Transfer Partners (ETP)2 January 2017 Hold -11.0%

AmeriGas Partners LP (APU) January 2017 Hold 5.8%

Owens & Minor Inc. (OMI) November 2017 Hold -8.9%

ONEOK Inc. (OKE) January 2018 Hold 3.3%

Welltower Inc. (HCN) January 2018 Hold -6.6%

Senior Housing Prop. (SNH) February 2018 Hold New

Continue to the next page to see performance of past recommendations not currently in the top

10, as well as sells and pending sells.

2 Recommended as SXL which changed its ticker to ETP

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Past recommendations (which are holds, not sells) not currently in Top 10:

Name & Ticker Recommend Date Total Return Current Yield Sell Yield

AT&T Inc. (T) November 2016 10.0% 5.3% 3.6%

Urstadt Biddle Prop. (UBA) November 2016 -4.6% 5.7% 3.6%

Magellan Midstream (MMP) November 2016 12.3% 5.2% 3.4%

Spectra Energy Part. (SEP) November 2016 10.2% 6.9% 3.7%

Energy Transfer Eq. (ETE) November 2016 31.3% 6.8% 3.9%

TC PipeLines LP (TCP) December 2016 10.3% 7.6% 4.7%

Gladstone Inv. Corp. (GAIN) February 2017 17.8% 8.1% 6.7%

W.P. Carey Inc. (WPC) February 2017 7.5% 6.4% 4.0%

Sunoco LP (SUN) May 2017 10.3% 10.5% 5.3%

Kohl’s Corp. (KSS) May 2017 65.3% 3.5% 2.2%

Macy’s Inc. (M) May 2017 -9.3% 6.1% 1.7%

Occidental Petroleum (OXY) June 2017 27.0% 4.2% 1.9%

Royal Dutch Shell (RDS.B) July 2017 29.1% 5.5% 3.8%

Vector Group Ltd (VGR) August 2017 8.5% 7.6% 5.1%

Target Corp. (TGT) November 2017 24.0% 3.4% 1.5%

Sells & pending sells are below:

Name & Ticker Recommend Date Status Total Return

Waddell & Reed Fin. Inc. (WDR) November 2016 Sold 11/6/17 34.4%

Genesis Energy LP (GEL) November 2016 See notes3 -23.5%

Suburban Propane Part. LP (SPH) July 2017 See notes 4 8.0%

3 Sell at historical average yield of 6.5%, currently at 9.0% 4 Sell at historical average yield of 8.7%, currently at 9.5%

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Portfolio Building Guide

The process of building a high yield dividend portfolio is straightforward: Each month invest

in the top ranked security in which you own the smallest dollar amount out of the Top 10.

Over time, you will build a well-diversified portfolio of quality businesses purchased when they

yield 4% or more. If your portfolio has 25% or more allocated to one sector, buy the highest

ranked stock not in that sector. Alternatively, the Top 10 list is also useful as an idea generation

tool for those with a different portfolio allocation plan.

Examples Portfolio 1 Portfolio 2

Ticker Name Amount Ticker Name Amount

OHI Omega Healthcare $ 1,002 OHI Omega Healthcare $ 4,374

BPL Buckeye Partners $ - BPL Buckeye Partners $ 4,878

ETP Energy Transfer Partners $ - ETP Energy Transfer Partners $ 5,374

OMI Owens & Minor $ - OMI Owens & Minor $ 4,353

EPD Enterprise Products $ - EPD Enterprise Products $ 7,312

HEP Holly Energy Partners $ - HEP Holly Energy Partners $ 2,799

HCN Welltower $ - HCN Welltower $ 2,952

SNH Senior Housing Proper. $ - SNH Senior Housing Proper. $ 6,660

OKE ONEOK Inc. $ - OKE ONEOK Inc. $ 2,367

APU AmeriGas Partners $ - APU AmeriGas Partners $ 2,818

- If you had portfolio 1, you would buy BPL, the top ranked security you own least.

- If you had portfolio 2, you would buy OKE, the top ranked security you own least.

If you have an existing portfolio or a large lump sum to invest, switch over to the Sure

Retirement strategy over 20 months. Each month, take 1/20 of your initial portfolio value, and

buy the top ranked security you own the least out of the Top 10 (if that sector makes up less than

25% of your portfolio). When you sell a security use the proceeds to purchase the top ranked

security you own the least.

This simple investing process will build a diversified portfolio of high quality dividend or

distribution securities over a period of less than 2 years. There’s nothing magical about 20

months. A period of 15 months or 30 months will yield similar results.

If your portfolio grows too large to manage comfortably (for example, you are not comfortable

holding 40+ securities – which would happen after around 4 years of the Sure Dividend system),

you will need to sell holdings. I recommend eliminating positions that have the lowest yields.

You can combine recommendations from the Sure Retirement, Sure Dividend, and Sure

Dividend International Newsletters by targeting a specific yield for your overall portfolio. When

you need your portfolio yield to increase, invest from the Sure Retirement Newsletter. If less

yield is required (and growth is preferred), invest from the Sure Dividend Newsletter. The Sure

Dividend International Newsletter can also be used for yield and/or growth.

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Tax Guide There are 4 broad types of investment vehicles covered in the Sure Retirement Newsletter:

1. Corporations

2. Master Limited Partnerships (MLPs)

3. Real Estate Investment Trusts (REITs)

4. Business Development Companies (BDCs)

The organization form is important for tax purposes because it determines how efficiently a

company can return money to shareholders. An example is below.

Imagine a company makes $10, pre-tax, and distributes 100% to investors. The image below

shows how much of the $10 would go to investors using standard assumptions for the 3

investment vehicles:

Note: Tax treatment for BDCs and REITs is similar. BDCs have been omitted from the

images below because of this.

• $4.88 in after-tax income from Corporation

• $6.63 in after-tax income from REIT

• $7.37 in after-tax income from MLP

The image below gives an overview of the different organizational forms:

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Corporations Corporations are taxed on income at the corporate level. They then pay out this after-tax

income to shareholders. Shareholders are then taxed again at the individual level.

Note: The United States corporate tax rate (including the state and federal levels) is 39%.

This is the 3rd highest in the world. The global average is 23%, for comparison.

Corporations issue a 1099 to track dividend payments to shareholders. They are the simplest

and most common type of investment. They are also the least tax advantaged.

Given the choice, corporations should be held in a retirement account to minimize taxes. Of

course, owning them in a taxable account is fine, one will just be paying taxes on dividends

received. Capital gains taxes are only triggered when a common stock is sold, making it tax

advantageous to buy and hold.

Capital gains taxes are divided into two types: short-term and long-term. Short-term capital

gains tax applies to investments held for less than a year. The short-term capital gains rate is

your ordinary income tax rate. It ranges between 10% and 39.6% depending on your income

bracket.

Long-term capital gains apply to most types of investments (including Corporations, REITs,

and MLPs) held longer than 1 year. The maximum long-term capital gains tax rate is 20%.

The minimum is 0%. Most investors will fall into the 15% long-term capital gains tax

bracket.

Dividend taxes are also divided into two types: ordinary and qualified. Most dividends paid

from blue-chip dividend stocks are ‘qualified’. The requirements for a dividend to be

classified as ‘qualified’ are below:

• The company must be a U.S. corporation, or a foreign corporation that readily trades

on major U.S. exchanges, or be incorporated in a U.S. territory

• The investor must have held the stock for 60+ days before the ex-dividend date

Qualified dividends are taxed at the same rate as long-term capital gains; between 0% and

20% (though most investors will be in the 15% bracket). Ordinary dividends are dividends

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that do not meet the criteria to be ‘qualified’. Ordinary dividends are taxed at the ordinary

income tax rate.

Master Limited Partnerships (MLPs) MLPs are the most tax efficient vehicle for returning money to investors. They avoid the

double taxation issues of Corporations. MLPs are not taxed at the organization level.

Unfortunately, MLPs are also the most complicated.

Typically, somewhere around 80% to 90% of MLP distributions are considered a ‘return

of capital’ because of depreciation. You don’t pay taxes immediately on ‘return of

capital’ distributions.

Returns of capital reduce your cost basis in the MLP. You are not taxed until you sell the

units.

For example, imagine you buy 10 units of an MLP at $100 a unit for a total investment of

$1,000. Now imagine you hold for 5 years.

The MLP unit price has increased to $120. Your investment is now worth $1,200.

It also paid out $37.50 per unit in distributions over this time, with 80% of that being a

return of capital ($37.50 x 80% = $30 return of capital).

The 20% of distributions that were not returns of capital would be taxed at your ordinary

income tax rate, which is up to 39.6%. These taxes would be due the year they are

accrued.

Your cost basis would be $700 (initial investment amount of $1,000 less return of capital

of $30 per unit or $300 total). The amount of long-term capital gains tax you owe

(assuming you are in the 20% tax bracket) is $100.

Math Behind Example: Sale price of $1,200 less cost basis of $700 = $500 in capital

gains. $500 in capital gains x 20% tax bracket = $100.

As a caveat, if the cost basis ever falls below 0 (which will only happen after holding for

around a decade or more), you will owe long-term capital gains tax on the amount the

cost basis is below 0 every year.

Return of capital and other issues discussed above do not matter when MLPs are held in a

retirement account.

There is a different issue with holding MLPs in a retirement account, however. This

includes 401(k), IRA, and Roth IRA accounts, among others.

When retirement plans conduct or invest in a business activity, they must file separate tax

forms to report Unrelated Business Income (UBI) and may owe Unrelated Business

Taxable Income (UBTI). UBTI tax brackets go up to 39.6% (the top personal rate).

MLPs issue K-1 forms for tax reporting. K-1s report business income, expense, and loss

to owners. Therefore, MLPs held in retirement accounts may still qualify for taxes.

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If UBI for all holdings in your retirement account is over $1,000, you must have your

retirement account provider (typically, your brokerage) file Form 990-T. You will want

to file form 990-T as well if you have a UBI loss to get a loss carryforward for

subsequent tax years. Failure to file form 990-T and pay UBIT can lead to severe

penalties. Fortunately, UBIs are often negative. It is a fairly rare occurrence to owe

taxes on UBI.

The subject of MLP taxation can be complicated and confusing. Hiring a tax

professional to aid in preparing taxes is a viable option for dealing with the complexity.

The bottom line is this: MLPs are tax advantaged vehicles that are suited for investors

looking for current income. It is fine to hold them in either taxable or non-taxable

(retirement) accounts. Since retirement accounts are already tax-deferred, holding MLPs

in taxable accounts allows you to ‘get credit’ for the full effects of their unique structure.

Real Estate Investment Trusts (REITs) Like MLPs, REITs avoid double taxation. REITs are not taxed at the organization level.

REITs are in between MLPs and Corporations in terms of both complexity and tax-

advantages. REITs are required to pay out 90%+ of their income.

REITs are organized as trusts. As a result, ‘shareholders’ are actually unit holders.

REITs issue 1099 forms (just like corporations) instead of K-1 forms (like MLPs do).

Unit holders receive distributions, not dividends (just like MLPs). REIT distributions fall

into 3 categories:

• Ordinary income

• Return of capital

• Capital gains

Ordinary income is taxed at your ordinary income tax rate; up to 39.6%. Return of

capital reduces your cost basis (just as it does with MLPs). Capital gains are taxed at

either short-term or long-term capital gains rate.

The percentage of distributions from these 3 sources varies by REIT. In general, ordinary

income tends to be the majority of the distribution. Expect around 70% of distributions

as ordinary income, 15% as a return of capital, and 15% as capital gains.

REITs are best suited for retirement accounts because the majority of their payments are

taxed as ordinary income. Retirement accounts remove this negative and make REITs

very tax advantageous.

This doesn’t mean you should never own a REIT in a taxable account. A good

investment is a good investment, regardless of tax issues. If you have the choice, REITs

should definitely be placed in a retirement account.

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Business Development Companies (BDCs) Much like REITs, business development companies must pay out 90%+ of their income

as distributions. Additionally, business development companies must derive 90% of their

gross income from interest, dividends, or capital gains on securities.

BDCs pay their distributions as a mix of:

• Ordinary income & non-qualified dividends

• Qualified dividends

• Return of capital

• Capital gains

Just as with MLPs, returns of capital reduce your tax basis. Qualified dividends and

long-term capital gains are taxed at lower rates, while ordinary income and non-qualified

dividends are taxed at your personal income tax bracket.

Unfortunately, 70% to 80% of BDC income is typically derived from ordinary income.

Because of this, they make excellent vehicles for tax advantaged retirement accounts.

Please email me at [email protected] with any questions you have on taxes

regarding retirement accounts, MLPs, and REITs. Frequently asked questions will be

added to this tax guide.

As a newsletter provider, I can’t provide specific personal investment advice, only

general information.

February 2018 Edition - suredividend.com · Buckeye Partners LP ... (SNH) in this month’s Top 10....

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