KMR versus KMP

[hendi_alex]

KMR pays the exact dividend as KMP, but KMR pays in shares versus KMP which pays in cash. KMR's yield is much higher today because the share price is about $5 less than the KMP share price. Because of that spread, I bought 100 shares of KMR @$74.95 in my IRA today.

Here is a link to an excellent article which explains the relationship between KMI, KMR, and KMP.

Relationship KMI KMR KMP

[hendi_alex]

This price disconnect, over $5 per share difference makes no sense. The two issues pay exactly the same, except holding KMR is more akin to holding shares that are in mandatory drip. I bet some of the KMP holders actually participate in the dividend re-investment program. I've read in a couple of places that insiders routinely buy more shares of KMR than KMP. This is at least in part because the KMR shares often trade at a discount therefore represent the better value.

Here is another good article that discusses the merit of KMR over KMP.

http://blog.wenxuecity.com/blogarticle.p...ostID=1805

[ronn38]

At some point, one would have to completely divest themselves of KMR and buy KMP or KMI in order to receive a dividend payment in retirement. So it would seem at some point, one will pay the premium that KMP demand over KMR.

However, for those of us in the accumulation stage, that tax benifits alone make KMR wildly attreactive. Hmmmm...I may want to rethink my KMP shares.

Nice " heads up" Alex!


Ronn

[hendi_alex]

At some point, one would have to completely divest themselves of KMR ..... in order to receive a dividend payment in retirement.

I would probably just sell a few shares once per year. On as few as 100 shares that would be a negligible 1% transaction fee. The transaction fee is much less than the higher yield that KMR generates over KMP given the current differential. Of course some times the price of KMR and KMP move very close to one another. Such a time would allow an inexpensive switch if the investor chose to do so.