12-06-2015, 01:56 PM
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.
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.