Seeking Alpha

El Paso plunges on disappointing dividend guidance

  • El Paso Pipeline Partners (EPB -9.5%) sinks following disappointing dividend guidance for nearly flat distributions over the next five quarters even with a lift from dropdowns.
  • At least two firms are issuing downgrades: Morgan Stanley cuts units to Underweight from Equal Weight, and Tudor Pickering lowers its rating to Trim from Hold.
  • Other Kinder Morgan companies are lower too: KMI -5%, KMP -1.9%, KMR -1.7%.
Comments (19)
  • 21thomas99
    , contributor
    Comments (396) | Send Message
     
    How many years have actual distributions and dividends exceed the budgeted amount?

     

    Quite a few times. Therefore, why flee when it is reasonable for EPB, KMP, et. al. to exceed its projections?
    4 Dec 2013, 11:09 AM Reply Like
  • Hungry for Knowledge
    , contributor
    Comments (345) | Send Message
     
    Are the Kinder Morgan companies finally getting so big that it takes too much to move the needle upward substantially?
    Perhaps.
    McDonalds also comes to mind in that vein.
    4 Dec 2013, 11:31 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Hungry for Knowledge :> move the needle<

     

    You must be thinking of Berkshire Hathaway $284.93B market cap. Kinder is solidly behind ExxonMobil $394.60B market cap, Chevron $211.60B market cap, Kinder Morgan $40.00B market cap.

     

    Fourth largest Energy Company: http://bit.ly/1aXRIdN

     

    Top 50: http://bit.ly/1f4nU4g
    6 Dec 2013, 05:30 PM Reply Like
  • smart_investoor
    , contributor
    Comments (175) | Send Message
     
    investors are over-reacting thanks to freaking analyst. manipulation at its best
    4 Dec 2013, 11:36 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1217) | Send Message
     
    EPB was a great buying opportunity this morning and I did.

     

    Long KMP and now EPB.
    8 Dec 2013, 12:06 PM Reply Like
  • TxGolfer57
    , contributor
    Comments (62) | Send Message
     
    Loving the over reaction! Just took a big position in KMI. I've been waiting for a dip to buy, but wasn't expecting this big of a gift!
    4 Dec 2013, 11:54 AM Reply Like
  • crash9010
    , contributor
    Comments (101) | Send Message
     
    A solid buying opportunity for those that take long view. Bought some KMI and thinking about added more KMP. Panic is never a sound investment.
    4 Dec 2013, 12:11 PM Reply Like
  • leviticus1935
    , contributor
    Comments (61) | Send Message
     
    The big problem for KMP/KMR is the burden of payments to KMI. So far Rich Kinder has been able to brilliantly engineer deals that overcome the KMI drag. I hope that someday he can do a deal whereby he issues KMR units in exchange for KMI. After that deal, Kinder would own KMR units whose distributions are tax-free as long as he doesn't sell them. KMP/KMR's cost of capital plummets because all of the external payments to KMI are now kept in house. I don't know if the numbers work, so Kinder gets a premium for his KMI and KMP/KMR holders also get a bump. But that kind of transaction would be a capstone for Kinder's career.
    4 Dec 2013, 12:25 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    It sure would he would be making a large company smaller.
    6 Dec 2013, 04:55 PM Reply Like
  • 66037
    , contributor
    Comments (2) | Send Message
     
    Does anyone have an idea why this is such bad news for KMI?
    4 Dec 2013, 03:32 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    El Paso is better spending cash for drop downs that will increase income in the future than just paying it out as a dividend to Kmi.
    6 Dec 2013, 05:02 PM Reply Like
  • buyandhold???
    , contributor
    Comments (882) | Send Message
     
    great time to buy!!! KMI is one that will make you millions if you buy today with a 4.9% dividend
    4 Dec 2013, 03:32 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    buyandhold??? :> KMI is one that will make you millions if you buy today with a 4.9% dividend<

     

    How much do you have to buy to make millions, $951,000,000.00 and wait 16 years?
    6 Dec 2013, 05:05 PM Reply Like
  • Diggerdugit
    , contributor
    Comments (47) | Send Message
     
    Makes for a buying opportunity I say
    4 Dec 2013, 03:48 PM Reply Like
  • hallereugene@gmail.com
    , contributor
    Comments (93) | Send Message
     
    I had posted this on Alpha news "Kinder Morgan announces 2014 financial expectations". I didnt get a response so hopefully someone can explain why KMI is such a good deal.

     

    "I dont get it. KMI has slid from 37.08 when I bought to 35.04. A yield on the lower number would be a 4.48% yield.. Yes I know you cant time the market but why is KMI the place to be when it is loosing principle value with only a 4.48% dividend yield? KMR by contrast has bounced back from when I bought it at 75.716 to 76.70 and is giving a yield of 7.3% on the current price.

     

    Also Schwab lists KMI as a "D" from their analysts.

     

    What am I missing?"

     

    Thanks in advance.
    4 Dec 2013, 03:49 PM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    Hallereugene@gmail.com :> What am I missing?<

     

    Yes Kmr is the place to be.
    6 Dec 2013, 05:07 PM Reply Like
  • buyandhold???
    , contributor
    Comments (882) | Send Message
     
    Eugene you're not missing anything buddy. The market is irrational and at times it falls for no reason, take my biggest position, HIMX, well HIMX hit $11.49 a few weeks ago then had a bad earnings report....off by a mere $700k and the stock plummeted to $8.....mind you nobody really bought HIMX for what happened this quarter but how much their revenue would grow when google glass was released

     

    today himx is back to $10.95

     

    so the market is beyond irrational is all my man. I've followed KMI for ages, and I love the company, never bought a share bc im more of a high growth high risk guy.....mostly HIMX and then just bought TNXP which was up 30% today

     

    but I couldn't pass up KMI at $32.99 and I bought 5000 shares. Im not a slow and steady investor, I usually sell puts and sell calls on positions I'm long but I couldnt resist KMI at $32.99 bc I think I can make an easy 20% in the next year
    4 Dec 2013, 10:33 PM Reply Like
  • hallereugene@gmail.com
    , contributor
    Comments (93) | Send Message
     
    Thanks for the reply. I just couldnt understand why people were in love with KMI as opposed to KMR if the payout (dividend) was less and the stock is not as stable.

     

    I knew the market was irrational and its akin to gambling. Except for people that sold the day before this story came out. I guess they can be considered the card counters of the stock market. As SeanSDS noted in the comment section of "Kinder Morgan announces 2014 financial expectations" that the stock was down 2% after hours and that "someone did not like what they saw". Seems to me like someone got some advance news.

     

    For us small investors its a rigged game unfortunately its the only one in town.

     

    Thanks for the reply.
    5 Dec 2013, 07:27 AM Reply Like
  • Sumflow
    , contributor
    Comments (3641) | Send Message
     
    >KMR if the payout (dividend) was less and the stock is not as stable.<

     

    They think that the double profits will more than make up for the double taxation. Kmr is designed for the Investor, the recent muted price action and higher compounded yield charts shout the truth.

     

    Kmr 101: http://bit.ly/1iC9ydJ
    6 Dec 2013, 05:12 PM Reply Like
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