Making Sense of Cash Flow Analysis for REITs and MLPs

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Making Sense of Cash Flow Analysis for REITs and MLPs


The common stock analysis tools of earnings per share, P/E ratios, and dividend payout ratios do not work well – OK, not at all – for the higher yield pass through types of stocks like REITs and MLPs. The tax structures and general nature of the assets owned allow many of these companies to take non-cash write-offs, and as a result the earnings per share numbers often significantly under report the cash an MLP or REIT generates and is available to pay out as distributions or dividends.

So you have a better understanding of how to evaluate these stock market investments, I will cover how I look at the numbers published by the various types of income stocks.

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