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Clayton Rulli  

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Latest  |  Highest rated
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Office Rat:

    Midstream MLP's have higher debt levels than many other industries because of the capital intensive nature of building pipelines, but also because of the highly visible and reliable "take or pay fee based contracts", which are negligibly exposed to commodity pricing. This allows a company like KMI to have higher debt loads than others and still be healthy.

    Don't let one person sway you to sell, as many are confused by how to value KMI. Many commenters here are talking PE ratios and other metrics when they are irrelevent in the case of KMI. The best metrics to watch are dividend coverage ratio, which was 1.2X for Q1 2015's payout, DCF, and dividend growth.
    KMI reiterated a $2.00/share payout for FY 2015, then 10% annual growth through 2020, with a projected $2 B in total excess coverage through this period. What was that about KMI having a 200% payout ratio? Some people just have no clue!
    If you'd like to know where I think KMI will be through this period of 10% annual dividend growth, based on the historical dividend yield the market has assigned to KMI's dividend $/share, here it is: http://bit.ly/1cPmmPT
    May 12, 2015. 05:13 PM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Ian. New debt and equity is used to fund expansion capex. This is the way most MLP's work, and KMI is not alone. Even EPD, which has one of the best distribution coverage ratios in the industry, also issues debt and/or shares to fund expansions and acquisitions. The problem with the pipeline business is it does take many years for projects to be in the black, but then again so does your mortgage.

    I suppose issuing shares and/or debt that prove to be accretive in time is not acceptable to you?
    May 12, 2015. 03:03 PM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Six. if you're not going to listen that PE for KMI is not accurate to use I cannot continue the debate.
    May 12, 2015. 02:20 PM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Ian,

    You said its a c corp , not an MLP GP right? Then in the next sentence you say " 2015 earnings forecast is below 2014 so the PE is going to running over 50 for awhile." How can you compare the two years when so much has changed post reorganization? Please tell me how you are accurately comparing the PE's of both years please share with us this mathematical miracle, and don't tell me scott trade or fidelity told you so. Also, PE TTM would include earnings from 2014, which again you simply shouldnt use. So please share your methods
    May 12, 2015. 12:37 PM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Again, P/E and EPS is not usable when evaluating MLPS. Since you guys keep harping on 2014's numbers, You must use DCF /unit. Since KMI was simply a vehicle that held units of KMP and EPB, this is how you must do it
    May 12, 2015. 12:04 PM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    If you are using stats provided by scottrade to evaluate KMI, there is your first mistake.

    Your second mistake, is using EPS to evaluate cash available for dividends. You must use DCF Distributable Cash Flow.
    Your third mistake is assuming I know nothing about KMI since I don't agree with your foolish methods of evaluating this company
    May 12, 2015. 12:03 PM | 2 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Ian. If rates go higher that is arguably a long run headwind for many companies, not a unique issue to KMI solely.
    May 12, 2015. 11:49 AM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    PE does not little to accurately value MLP's. Watch dividend, dividend growth, and DCF coverage ratios
    May 12, 2015. 11:23 AM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    ddeckert

    I am sorry but you are mistaken. debt and share issuances fund expansions, while FCF pays the dividend, not vice versa
    May 12, 2015. 10:41 AM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    "it sure looks to me like they are borrowing money to pay the dividend"

    Actually they are borrowing and issuing shares to fund expansions, not to pay the dividend.
    May 12, 2015. 10:40 AM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    196% payout ratio? how did you manufacture that number? please show or provide link, thank you
    May 12, 2015. 10:04 AM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Nigel, actually there is a margin of safety.

    " FULL-YEAR impact of 100-bp increase in floating rates equates to a pre-tax ~$108 million increase in interest expense. As of 3/31/2015, approximately $10.8 billion of KMI’s total $42.8 billion in debt was floating rate (net of cash) slide 16 http://bit.ly/1EA5O4b

    KMI is wisely issuing debt while rates are low, just as many other companies are doing in the low rate environment. The company is well prepared for a rise in rates.
    May 12, 2015. 09:54 AM | 2 Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    six--- KMI has a faster growing dividend
    May 12, 2015. 09:31 AM | Likes Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Under the new structure there will be excess coverage despite the dividend increases and low energy prices...

    2015 Outlook

    "KMI expects to declare dividends of $2.00 per share for 2015, an approximately 15 percent increase over the 2014 declared dividend of $1.74 per share. Our budgeted cash coverage in excess of our declared dividends is $654 million and is based on an assumed average WTI crude oil price of approximately $70 per barrel and a Henry Hub natural gas price of $3.80 per MMBtu in 2015. The overwhelming majority of cash generated by KMI’s assets is fee based and is not sensitive to commodity prices. KMI does have some commodity price sensitivity, primarily in its CO2 segment, and hedges the majority of its next 12 months of oil production to minimize this sensitivity. For 2015, the company estimates that every $1 per barrel change in average WTI crude oil price will impact Kinder Morgan’s distributable cash flow by approximately $10 million, and each $0.10 per MMBtu change in the average price of natural gas will impact distributable cash flow by approximately $3 million. Even adjusting for current commodity prices, the company expects to have significant excess coverage in 2015."

    http://bit.ly/1EzXCAJ
    May 12, 2015. 08:53 AM | 1 Like Like |Link to Comment
  • Is There A Dividend Bubble: Kinder Morgan Edition [View article]
    Find me another company with 10% annual dividend growth with excess coverage through the next several years. Funny the author claims there is no organic growth.... I guess he/she doesn't understand pipelines. When a pipe is booked to capacity with take or pay contracts how is there to be "organic growth"? This isn't a tech company, stupid. KMI must add pressure loops or more pipes, storages etc for additional capacity and growth. I guess the author has little to no knowledge of the expansions going on in Mexico and in LNG, not even discussing Canada's big expansion.

    KMI is still growing the yield despite low energy prices...imagine if energy prices come back? Since KMI/KMP is no longer an MLP, all the big energy funds own a big chunk of KMI now... think (XLE) and the like. When/if money pours back into energy, KMI is going to snowball higher.

    Been long shares and warrants since before Hedgeye attack. First round's on me, boys.
    May 12, 2015. 08:06 AM | 5 Likes Like |Link to Comment
COMMENTS STATS
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