12-04-2015, 02:14 PM
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.
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.