Could Buying High-Yield Energy Transfer Stock Today Set You Up for Life?

If you're looking for a high-yield investment to add to your portfolio, you will definitely find Energy Transfer's (NYSE: ET) lofty 7.5% distribution yield to your liking. But can it set you up for a lifetime of income? That's a harder question to answer, given the history behind this midstream master limited partnership (MLP). Here's what you need to consider before you buy it.As noted, Energy Transfer is a midstream master limited partnership. MLPs are designed to pass income on to unitholders in a tax-advantaged manner, since some of the income is likely to be classified as a return of capital. That reduces the cost basis of the investment, delaying taxes until the units are sold. Effectively, you will likely pay lower capital gains tax rates when taxes are eventually paid on the distributions, because they lowered your cost basis.From this perspective, Energy Transfer is a fairly attractive income investment. But it's important to note that MLPs don't play nicely with tax-advantaged retirement accounts, and they require unitholders to deal with a special tax form, known as a K-1.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool