USAC

Kinder Morgan’s Dividend Is Much Healthier These Days

by

Image: Kinder Morgan’s shares have done quite well thanks to improved free cash flow performance. By Brian Nelson, CFA On October 16, pipeline giant Kinder Morgan (KMI) reported weaker than expected third quarter results, with both revenue and non-GAAP earnings per share coming in lower than what the Street was looking for. Adjusted EBITDA expanded 2% in the third quarter on a year-over-year basis, while net income attributable to KMI came in at $625 million, higher than the $532 million mark it posted in the year-ago quarter. Third quarter earnings per share was up 17% compared to the same period last year, but adjusted earnings per share of $0.25 and distributable cash flow of $0.49 per share were flat on … Read more

Energy Transfer’s Lofty Distributions Are Much More Sustainable These Days

by

Image: Energy Transfer covered its distributions with traditional free cash flow in 2023, and the company offers investors an elevated distribution yield. By Brian Nelson, CFA Energy Transfer (ET) reported mixed fourth-quarter results on February 14, but the company’s traditional free cash flow metrics continue to hold up well, providing support to its lofty distribution. Years ago, pipeline entities were spending much more than they reasonably could to be able to sustain their distributions at prior levels, and many have readjusted both their capital spending trajectories as well as their distributions over the years. These days, pipeline entities such as Energy Transfer, with their geographically diversified portfolio of assets, are in much better shape to sustain their payouts. Units of … Read more

Energy Transfer Making a Comeback, Shares Yield ~8.7%

by

Image: Energy Transfer is working its way back after a long stretch of underperformance. By Brian Nelson, CFA Energy Transfer (ET) is one of the largest midstream, transportation and storage companies for natural gas, crude oil, NGLs (natural gas liquids), and other refined products, and the firm has investments in Sunoco LP (SUN) and USA Compression Partners (USAC). The company is nowhere near the bubble levels of 2015, but the pipeline operator has been staging a comeback backed by traditional free cash flow, and we are warming up to this dividend payer. Shares yield ~8.7% at the time of this writing. In the pipeline space, investors tend to pay attention to a metric called distributable cash flow [DCF], not to … Read more

Understanding the Phenomenon of “Price Risk” in High Yield

by

  Image Source: Julien Carnot We want you to learn about a unique risk innate to the high yield space like the back of your hand. We’ll explain the “information contained in prices” and talk about what you should be on the lookout for, the “avalanche effect.” Order the High Yield Dividend Newsletter here. — By Brian Nelson, CFA — I received a question from a dear member of ours, and I think it may be helpful that I share the response. The question had to do with why we may be ultra-cautious on high-yielding stocks that are facing considerable price declines. The risk described below makes the high yield space uniquely different than other equity strategies, in our view, … Read more

MLP Speak: A Critique of Distributable Cash Flow

by

–> Handout 1: Pitfalls of Distribution Yield Analysis (pdf) –> Handout 2: Linking P/DCF to Enterprise Free Cash Flow Valuation (pdf) Let’s talk about a controversial metric that is used in master limited partnership (MLP) reporting. Just how useful is it, and should it be allowed? By Brian Nelson, CFA It’s been a few years since the fallout in the prices of most master limited partnerships (AMLP), but to me, it still feels like yesterday. We continue to have many concerns about the longevity of the business models of MLPs, and we maintain our view that the operating structure will be challenged over the long haul. New equity and debt funding (issuance) continues to, in part, fuel the distributions of most MLPs, … Read more

Taxes and the Distressed MLP Investor

by

Image show above: Performance of the Alerian MLP ETF. “Perhaps the worst thing about MLPs is that investors can spend more time doing and thinking about tax-related items than actually evaluating the businesses of the underlying entities. This could result in poor investment decisions.” – Brian Nelson, CFA By Brian Nelson, CFA What a sensitive topic for many… Our team presented at the Chicago chapter of the American Association of Individual Investors (AAII) last weekend. It is always an honor and a privilege to have the opportunity to present to such wonderful people! They ask so many great questions. (By the way, I’m working on my schedule for 2017, so if you’d like our team to speak on a topic … Read more

Dividend Increases for the Week Ending July 24

by

Below we provide a list of firms that raised their dividends during the week ending July 24. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week BancorpSouth (BXS): now $0.10 per share quarterly dividend, was $0.075. Bar Harbor Bankshares (BHB): now $0.255 per share quarterly dividend, was $0.25. Baylake Corp (BYLK): now $0.09 per share quarterly dividend, was $0.08. BBCN Bancorp (BBCN): now $0.11 per share quarterly dividend, was $0.10. B&G Foods (BGS): now $0.35 per share quarterly dividend, was $0.34. Chemical Financial (CHFC): now $0.26 per share quarterly dividend, was $0.24. … Read more

Dividend Increases for the Week Ending January 23

by

Below we provide a list of firms that raised their dividends during the week ending January 23. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week AGCO (AGCO): now $0.12 per share quarterly dividend, was $0.11. Alaska Air (ALK): now $0.20 per share quarterly dividend, was $0.125. Alexanders (ALX): now $3.50 per share quarterly dividend, was $3.25. Allete (ALE): now $0.505 per share quarterly dividend, was $0.49. Bar Harbor Bankshares (BHB): now $0.245 per share quarterly dividend, was $0.235. Cardinal Financial (CFNL): now $0.11 per share quarterly dividend, was $0.10. Collectors Universe … Read more

Dividend Increases/Decreases for the Week Ending April 24

by

Below we provide a list of firms that raised their dividends during the week ending April 24. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week ASML Holding N.V. (ASML): final EUR 1.35 semi-annual dividend, was EUR 1.05. Canadian Banc Corp (CNDCF): now CAD 0.0517 per share monthly dividend, was CAD 0.0367. Centamin plc (CELTF): interim $0.0600 dividend, was $0.0400. Delek Logistics Partners (DKL): now $0.89 per share quarterly dividend, was $0.885. Dime Community Bancshares 5.50% Fixed Rate Non-Cum Pptl Prfd Stk, Series A (DCOMP): now $0.38 per share quarterly dividend. Dividend … Read more