Editor’s Note: One of the benefits of an MLP Profits subscription is the ability to participate in my monthly readers-only chats. The complete transcript of the most recent chat is posted on the MLP Profits website.

Below are expanded answers to several queries as well as my responses to other questions received throughout the month. I hope you find them useful. — RSC

Question: Why are you still negative on Cheniere Energy Inc (NYSE: LNG) and Cheniere Energy Partners LP (NYSE: CQP)? Aren’t they moving ahead rapidly with plans to develop liquefied natural gas (LNG) export facilities?

Answer: They’ve certainly given that impression.

We’ve seen long-term agreements signed for gas purchases–such as the 20-year deal with Total SA (France: FP, NYSE: TOT)–and last month the company contracted Bechtel Group in a USD3.8 billion deal for liquefaction trains, of a total projected cost of USD4.5 billion to USD5 billion.

First deliveries, however, aren’t expected until 2018, even if everything goes well with the project. Until then Cheniere will be funding its dividend entirely on cash flow from capacity contracts for LNG import facilities that basically aren’t being used.

Truthfully, I think it’s a minor miracle Cheniere has been able to stay afloat, given that its first major business deal was to build LNG import facilities that aren’t now economic to run. And by focusing on capacity contracts that time around, it’s at least moving toward being able to import and export.

But let’s keep in mind that the organization’s credit rating is still just B+ and the USD1.665 billion in maturing debt in 2016 is nearly half current market capitalization.

This, in other words, is not a powerhouse organization. And that’s why I’m suspicious of the strength of Cheniere Energy Partners’ dividend as well as its ability to carry off such a hugely capital intensive project–which, even if it comes in on budget, will cost more than the company is worth now.

If you want a bet on LNG, I suggest taking a look at some non-MLPs, namely Dominion Resources Inc (NYSE: D), Sempra Energy (NYSE: SRE) and Chevron Corp (NYSE: CVX).

Dominion’s Cove Point facility figures to be the only export facility on the East Coast and connects to its Appalachian energy midstream network and production. Sempra is building on the Gulf Coast and Chevron last month purchased half of the Kitimat project in British Columbia, Canada.

None of these companies is a pure play on LNG. But all of them have the financial scale and strength to fund such immense projects to fruition. And at the end you might just get a valuable MLP spinoff out of the deal.

Cheniere may make it, but only if all of the stars align.

Question: Even though the Dow Jones Industrial Average goes up, the MLPs go down. Why?

Answer: It’s undeniable that MLPs have underperformed the market in 2012, largely for the reasons I highlighted in In Brief. But you have to put that performance in context.

The Alerian MLP index has returned 13.5 percent a year for the past five years, while the Dow has returned about 2.5 percent. That’s a pretty dramatic outperformance over a long period of time, so it’s not surprising we’d see a little catching up.

The important thing right now, however, is where things are going for 2013 and beyond. And the key is the operating performance of the individual MLPs you own. So long as they’re adding assets and locking in contracts, you can count on strong returns.

By the way, historically there’s a very easy indicator to watch to know where there’s finally a top in energy midstream MLPs such as pipeline operators. That’s when managements stop lining up contracts for capacity before they build.

A “build it and they will come” mentality will inevitably lead to a supply glut. And no matter how cheap capital is, this will be ruinous to the cash-strapped builder. But as we saw with ONEOK Partners LP’s (NYSE: OKS) decision in late November to scrap its proposed Bakken Crude Express Pipeline due to lack of contracts, we’re nowhere near that at this time.

Question: What’s your opinion of the new Seadrill MLP, Seadrill Partners LLC (NSDQ: SDLP)?

Answer: I prefer the parent company, Seadrill Ltd (NSDQ: SDRL). One reason is I’m not convinced drilling is really a reliable business model for paying out a steady and rising dividend over time.

Seadrill the corporation, for example, eliminated its distribution for most of 2009 in response to the financial crisis and the resulting negative impact on the energy industry. The partnership has staked a minimum distribution to the fact that it has several longer-term contracts for rigs. But so did the corporation, and it was hardly protected from the 2008 downturn.

I like the corporation, which we don’t cover in MLP Profits. We do cover the partnership, but in my view there are safer places to get a dividend.

Seadrill Partners should be viewed as a way to get a lot of cash from a rig rental business when times are good. But investors should be prepared to see a smaller payout when times get tougher.

Question: What do you think of QR Energy LP (NYSE: QRE), the energy producer? It’s really fallen out of bed lately. Is the dividend safe?

Answer: Like all energy producers, including MLPs, QR’s earnings ultimately follow the price of the oil and gas its produces. That means distributions do as well, and that’s why the unit price follows oil and gas up and down.

The good news with this one is that it does have hedges in place locking in prices and making it less vulnerable to another dip in energy prices. It’s also offsetting some of the impact of falling prices by increasing production.

The latest dip in QR’s price was on the heels of an offering of common 12 million common units at a price that was then at a discount to the market price. That’s a tactic investors have almost never responded well to, though it did raise needed funds for the recent acquisition of East Texas oil properties for USD214.3 million.

Ultimately, the most important thing about the capital raise is the purchase will be accretive to cash flow at QR. And at a current price that’s actually less than the USD16.24 offer price, QR looks very cheap and appears to be a strong bet to post a big return in 2013, barring a complete collapse in energy prices.

If you want a more conservative producer MLP, I suggest Linn Energy LLC (NSDQ: LINE) or Vanguard Natural Resources LLC (NYSE: VNR), which have more hedging in place. That’s why both have outperformed QR this year.

But if you want something more aggressive and are willing to take the greater risk of a distribution cut, QR is a good choice up to USD18.

Question: Navios Maritime Partners LP (NYSE: NMM) has fallen out of bed again. Is there any hope here?

Answer: There is so long as management continues to be able to add ships and lock in revenue with long-term contracts. Bulk shipping remains a weak industry, in part because there are so many older vessels out there that have been run well past when they should ordinarily have been retired.

Navios’ key advantage has always been that its ships are newer and better and will still be very economical to run when a lot of their competition must go to scrap. The problem is the slowdown since 2008 has slowed this process.

But so far the company has been able to continue funding the dividend and maintain financial strength. And the recent financial arrangement with its parent and restructuring of credit default insurance is very positive indeed in that regard.

No company is 100 percent safe. But Navios seems as much a victim of general investor skepticism of high-yielding stocks as anything to do with its operations or business model. The bear case is overall economic conditions get so tough the company can’t cope and has to look for cash from its dividend. Even in 2008, however, it was able to raise dividends by adding assets. For aggressive investors, it’s a good bet they’ll be able to do so again. Our buy target is up to USD18.

Question: What’s the chance we’ll see more companies spin off fee-generating assets as MLPs in 2013? I’m thinking of two of your favorite utilities Dominion Resources and NiSource Inc (NYSE: NI).

Answer: MLP spinoffs from corporations enjoyed some success this year, notably the spinoff of EQT Midstream Partners LP (NYSE: EQM) from EQT Corp (NYSE: EQT). That deal, however, was part of a wider move by EQT to focus on becoming a pure producer of energy.

The company announced last month that it would sell its gas utility business to SteelRiver Infrastructure Partners LP for USD720 million in cash. SteelRiver is a private investment fund formerly attached to Babcock & Brown and will add those assets to those of the former Peoples Natural Gas, which it purchased in 2010 from Dominion.

NiSource has in the past flirted with the idea of spinning out part of its Columbia Natural Gas pipeline system, as those are the kind of midstream assets that have fetched premium prices as MLPs. Management appears for now to have pulled that effort. But it’s definitely a possibility for down the road, as is an outright takeover of NiSource by a major MLP.

Dominion is probably too large for an MLP to try to swallow. But as it builds out its natural gas midstream assets from Appalachia, the company may be tempted to go to the well for what’s been fairly cheap capital in the past–i.e., MLP initial public offerings.

Management, however, is unlikely to do anything in a hurry, particularly in light of the recent MLP selloff. That’s because it really doesn’t have to, even though it continues to grow aggressively with capital spending.

Question: Are any of your MLP recommendations OK for retirement accounts?

Answer: Actually, I think this is one of the biggest misconceptions about MLPs now. In fact, most are fine for IRAs. And their ability to grow distributions steadily over time is ideal for wealth compounding.

MLPs aren’t as clean tax-wise as common stocks of corporations. But in reality, unless you own tens of thousands of units of MLPs in your IRA you’re not going to generate the volume of potential tax liability to merit filing or paying.

The rule of thumb, for example, is USD1,000 in unrelated business taxable income (UBTI) for all MLPs in an IRA is needed to generate a significant tax liability. Because many MLPs actually generate negative UBTI, that’s a very hard number to make. And so long as you don’t, there’s no additional tax liability that’s practical to pay.

You don’t even file K-1s for MLPs held in an IRA. Rather, the IRA custodian files a single form that adds up all the UBTI. But again, unless that figure is USD1,000 it’s pretty much invisible.

The only way you get hurt holding MLPs in an IRA is with opportunity cost: You don’t get return of capital benefits if you have them in a retirement account. But the tax disadvantages are largely a myth: You won’t owe unrelated business taxable income unless you have a portfolio that’s literally the size of a mutual fund.

Note that funds that hold MLPs don’t have any UBTI or K-1s to file, whether you hold them inside or outside of an IRA. We track a range of them in the MLP Profits How They Rate coverage universe.