Immediate Income: InfraCap MLP ETF - The Redheaded Step Child

1. Immediate Income: InfraCap MLP ETF Immediate Income: InfraCap MLP ETF - - The Redheaded Step Child The Redheaded Step Child Summary AMZA gives the benefits of MLPs without the annoyance of a K1. The fund's performance has been lackluster but this is set to change. Management's choices have historically failed to live up to their goals. Investment Thesis InfraCap MLP ETF (AMZA) has a colourful Seeking Alpha history. AMZA offers a high yield immediate income stream for investors. Portfolio Overview AMZA is designed to provide what immediate income investors love: High current income. For more information visit: https://www.infracapfunds.com/ Due to previous confusion, whenever I write concerning immediate income investing I feel it necessary to define what I'm speaking of when doing so. I define immediate income investing as: Investing with a taxable account seeking immediate high return via dividends. AMZA seeks to provide this income stream by investing solely in master limited partnerships. AMZA unfortunately cannot be described as heavily diversified, as the top holdings comprise 88.38% of the fund's entire holdings. Furthermore, outside of call and put options, AMZA is only invested in 39 individual stocks. These stocks are primarily dividend paying and dividend growing stocks, meaning the longer AMZA holds these stock, the larger their yield on cost will grow. AMZA also seeks to generate income from stock options, but so far this methodology has been shaky at best to provide an additional income boost. Trapping Value accurately pointing out in a recent article that AMZA's options were actually dragging its dividend coverage down. Dividends Dividend wise though, AMZA consistently pays out on a monthly basis $0.11, which annualized yields 16% at the time of writing. AMZA changed its dividend policy in the beginning of the year from quarterly to monthly, while doing so it reduced its total

2. dividend payout. When seeking a stock for immediate income investing, monthly dividends provide a much needed steady revenue stream for daily life - AMZA provides this. Why Now? AMZA being a strong underperform, with a somewhat miserable history of value loss, why should anyone invest in it now? AMZA, I feel has hit a inflection point. It will rise with the MLP market as a whole, and has invested heavily in sound names which routinely raise their distributions. As AMZA has declined in value, my cost is now below $7 meaning I am now seeing not only price appreciation, but also solid dividend returns. Immediate income investors should not stray away simply because the price of a security is given to higher volatility, but must evaluate and purchase strategically - which include averaging down. Risks With AMZA being so heavily focused in its top 10 stocks, a massive distribution cut or price movement of those underlying stocks can heavily influence AMZA's value. Furthermore, changing in Oil and natural gas prices can impact its portfolio. For example China's pending tariff on Liquefied Natural Gas could reduce US based exporters ability to compete with the international market - indirectly effective AMZA. Another risk to AMZA's dividend coverage is management itself. The recent bad calls on their options strategy cause an increased lack of coverage. This is built directly into AMZA's structure and can generate additional gains or losses based on their decisions, hopefully management will make these calls with increasing discretion and not harm themselves.