KMP

Kinder Morgan: A Dividend Growth Investor’s Dream

by

Rich Kinder and I see eye to eye quite often. The riskiness of the master limited partnership (MLP) structure is not something to scoff at, especially in the face of declining crude oil prices. Kinder Morgan (KMI) will finalize the roll-up of its MLP subsidiaries come end of year, and we think holders of Kinder Morgan will literally reap dividends on the move. Yesterday brought news that the firm expects to declare dividends of $2 per share in 2015 and post $500 million of excess dividend coverage. The concept of excess dividend coverage is nothing new at Valuentum, as the Dividend Cushion focuses intensively on this very idea. The increase would represent a 16% move over the 2014 budget of $1.72 per share … Read more

$45 Oil Prices!?!? There Is Never a Sense of Urgency When One Is Prepared

by

Image Source: Macrotrends The bull market in energy (XLE) has lasted for the better part of a decade. Ever since the turn of the new century, energy perma-bulls have made the case that “black gold” (USO) should continue its ever-upward price advance thanks to ongoing demand from emerging and developing economies coupled with reduced inventories and areas of supply. We’re seeing this thesis challenged right at this moment. In deciding not to cut crude oil output in the face of oversupply and falling prices, the Organization of the Petroleum Exporting Countries (OPEC), for the lack of a better phrase, is now essentially engaged in a price war with producers in the US that are using breakthrough technology to produce oil … Read more

Third Quarter Earnings Season Pushes Forward

by

The equity markets continue to propel higher despite what we would describe to be a mixed third-quarter earnings season. Let’s walk through a number of earnings reports from popular companies reporting so far this week. Some of them we include in the newsletter portfolios. Others we don’t. But all are worth keeping tabs on. Annaly (NLY) Annaly is a mortgage REIT (mREIT) with principal business objective to generate net income for distribution to shareholders. Being critical of the mREIT business is certainly unpopular, and we understand that many retirees generate vital income streams from such investments. Bulls and bears, however, both benefit from our independent voice, and we call out risks as we see them. Annaly and American Capital Agency … Read more

Kinder Morgan Reports Third Quarter Results

by

Kinder Morgan (KMI) has moved to the top of our watch list after it made the decision to bring in-house Kinder Morgan Energy Partners (KMP), Kinder Morgan Management (KMR), and El Paso Pipeline Partners (EPB), thereby reducing its business structure risk as a holder of master limited partnerships (MLP), which remain heavily dependent on access to external new capital (something we’re not fond of). Holding an MLP in the newsletter portfolios is not a risk we take lightly. On Wednesday, Kinder Morgan (KMI) reported that cash available to pay dividends advanced 2.6% in the third quarter, to $435 million. The solid performance facilitated a dividend increase to $0.44/share on a quarterly basis, a 2.3% jump from previous levels and a … Read more

The Correction: Draghi; Chip, Telecom Warnings; Oil and MLPs

by

The equity markets have been under significant pressure the past few weeks, and we think there is further downside to come. Our view is that the equity markets will be lower than today’s levels within the next 6-18 months, if not tomorrow or next week or next month. We’ve taken profits on cyclicals, and we’ve already closed out the put option hedges in both portfolios for a substantial gain (the latest transaction alert email can be accessed here). Europe appears to be in a giant mess again. The region hadn’t been strong by any stretch of the imagination, but we recently picked up material weakness during Ford’s (F) recent analyst day, which in part prompted us to take a very … Read more

October Dividend Growth Newsletter Introduction

by

Dear Member, The month of September represented some tough sledding for the markets, and we think things will get worse before they get better. If you missed our write up on the seven reasons why we think we’re due for a fall, please be sure to catch up on the piece here. We made a number of changes to the Dividend Growth portfolio since the release of the previous edition of the newsletter. Let’s make sure you didn’t miss anything. For one, yesterday, we added S&P 500 SPDR put option contracts to the portfolio to protect the large gains. Specifically, we added protection in the form of 5 put option contracts on the S&P 500 (SPY), with November 22 expiration … Read more

What Is Fat Pitch Investing?

by

“I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” —Warren Buffett, Interview in Forbes magazine (1 November 1974) “The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” –Warren Buffett, 1999 Berkshire Hathaway Annual Meeting, … Read more

Kinder Morgan Grows Leery of MLP Structure; Consolidates Holdings

by

Kinder Morgan is the largest midstream and the fourth-largest energy company (based on combined enterprise value) in North America. The entity owns an interest in or operates ~80,000 miles of pipelines and 180 terminals. The firm’s publicly-traded companies include Kinder Morgan (KMI), Dividend Growth portfolio holding Kinder Morgan Energy Partners (KMP), Kinder Morgan Management (KMR) and El Paso Pipeline (EPB). KMI owns the general partner and limited partner interests in both KMP and EPB. KMP is one of the largest publicly traded pipeline master limited partnerships in America. KMR is a limited liability company and its only significant assets are the partnership units it owns in KMP. EPB is a publicly traded pipeline master limited partnership. — source The convoluted … Read more