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+--- Thread: KMI (/showthread.php?tid=456)
RE: KMI - Dividendsrule - 09-23-2015
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RE: KMI - Dividendsrule - 10-27-2015
I didn't submit the claim. Anyway, this pipeline drama is interesting stuff. All pipelines have been hit and the market seems to be more alarmed about Oneok etc and less alarmed about Kinder Morgan due to the scale and the fact they issued their mandatory convertible depositary receipts.
Anyway...Just staying put here, nibbling on a little more KMI when I can...Big pipeline, big business. A little concerned about their coal and C02 businesses, hoping the nat gas growth will overshadow the drops in those businesses. Anyone have any epiphanies on the company? Or just watching the volatility like the rest of us.
RE: KMI - Caversham - 12-04-2015
What are people's thoughts on KMI these past few weeks? I currently don't have a position, but am watching closely.
Currently, the dividend is just barley covered by free cash flows, and KMI has traditionally used debt/equity to fund growth. Currently, KMI can't secure debt at reasonable rates, and it can't issue equity at its current price.
I think they have two options:
1) Keep the dividend at its current level, and have limited growth until energy recovers.
2) Cut the dividend by X% (probably 25-50%) which will free up cash for growth capex and possibly debt repayment.
RE: KMI - crimsonghost747 - 12-06-2015
I've been looking at KMI. Doesn't look good in my opinion.
The problem I see is this:
Yes the cashflow is enough to cover the dividend. But just barely... in fact looking at the numbers during the past few years the cashflow has always covered the dividend but there is not that much left over. The EPS on the other hand... no way. EPS of roughly $0.5 with dividend above $2.00? This is a historical trend too with the dividend being multiple times higher than the EPS. So where does that difference come from? If it's just depriciation then they are completely screwed so there has to be something else here too... still doesn't look good, there is no way that this is a sustainable scenario in the long run.
Then there is the question of growth. Okay so cashflow goes mostly to dividends. So where will the capital for growth come from? In the past it's been getting more debt and creating new shares to be sold on the market. Debt option is getting out of the question since there is already a ridiculuosly huge amount and they are getting close to junk status. I do not need to tell you guys what the small but inevitable raise in interest rates (that will of course be followed by another raise sometime later) will do. So funding growth through debt is not an option. You could always issue more shares but not only does it cause dilution (that is already historically huge) but doing such things at the current share price definitely doesn't seem like a good choice. And creating new shares while keeping the current dividend of course means that the amount of cash required to pay the dividend keeps increasing.
These problems were there before the price of oil fell so they will be there even if the price goes back up. So I just don't see how the company is on a sustainable path. Either a) cut the dividend or b) issue new shares, will have to happen sooner or later. And seeing as the rating agencies are starting to lower their debt ratings it should be sooner rather than later.
Option B certainly isn't a long term answer either, they have already raised cash this way in the past and they can't continue doing it forever without the amount of shares outstanding getting completely out of hand.
RE: KMI - KenBob - 12-06-2015
I have been reading the articles on KMI with interest, even though I don't have a personal stake.
I think three things are known:
(1) The dividend will not be growing.
(2) The company will not go bankrupt.
(3) This is a relatively simple financial problem compared to the much more complex situation facing the E&P oil companies.
I believe KMI will be forced to reduce the dividend to cover the increased cost of rolling over their debt. There will be some pain for a time, but the company will recover. Under these conditions, I would be tempted to hold shares if I owned any, but would not be buying.
What I don't understand is the hero worship by many commentators. This situation appears to be more a case of the arrogance of management, rather than cold calculation.
RE: KMI - ronn38 - 12-06-2015
I sold out of KMI about a month ago--took a loss (but nothing like if I had waited). Based on when I bought-in, loss to divorce, etc. I was averaging about 5.5% on my investment. I sold and have a limit-order on EPD when it hits mid 22. I believe EPD is in a better position to ride out the current energy troubles, and the switch increases my income in the process--win-win for me. I can always buy back into KMI in a year or two--and lower than my initial cost.
Indeed there is greater upside potential in KMI, but even if I buy back in at $25, I'm money ahead of where I was before.
Ronn
RE: KMI - Dividendsrule - 12-06-2015
Tough call here...Tough call. I have a big position. Ultimately i am waiting on the company press release to say anything more, but on a macro level if the natural gas goes big starting 2017 as coal leaves the grid and ng replaces, the company should do fine. But as a well-covered, dividend artistocrat-like investment- this is nothing like it.
It's basically a REIT-like utility. WPC trades at the same debt/EBITDA ratio. If natural gas becomes the thing at the grid, it should do great.
I have a gremlin on my shoulder about whether renewables will be more disruptive than I think.
I have a very big KMI position. Hopefully this week we'll get Santa for the dividend...and not Krampus.
RE: KMI - KenBob - 12-07-2015
Pipe lines are an industry a lot like the railroads, which would normally mean I would consider pipelines a prime investment opportunity; however, I never found a stock I liked. I dislike the complexity of MLPs and the C Corps are overpriced and had too high a payout.
RE: KMI - DividendGarden - 12-07-2015
I am curious to see the company's next press release. I think they will cut the dividend. It's something like a 13% yield today. Cutting by 50% will still yield 6-7%, but it will free up $1.5 billion.
RE: KMI - lucas03 - 12-07-2015
(12-07-2015, 10:19 AM)DividendGarden Wrote: I am curious to see the company's next press release. I think they will cut the dividend. It's something like a 13% yield today. Cutting by 50% will still yield 6-7%, but it will free up $1.5 billion.
I also hope that they will cut. Yield 6-7% is pretty nice for new investors, but its 3-3,5% for current investors
RE: KMI - rapidacid - 12-07-2015
FWIW M* has KMI as a 5* stock at these prices.
RE: KMI - Jimbo - 12-07-2015
For what it's worth, I have been in KMI for some time and I am really hurting right now.
Oh well, could be worse.
Just trying to help ease someones pain of losing a "couple" of dollars the last few days.
Chin up and keep on truckin.
Jimbo