Investing 102

[WSSix]

Good job and good luck, Mike. It'll feel great being out of debt.

[GregWeld]

Nice headline if you own this name.... I'd still prefer Wells Fargo (WFC) over it but that's beside the point... if you own BAC you just got a nice raise. It's the yield that kills it for me.



Bank of America Corp. (BAC) Raises Quarterly Dividend 400% to $0.05; 1.3% Yield

[toy71camaro]

400% wow. Now there's a raise.

[GregWeld]

It's not my job - or desire - to keep everyone informed about companies we've discussed in this thread over the last couple of years.... but we have discussed Kinder Morgan Partners (KMP) and it's various other companies quite a bit.

This is a Master Limited Partnership -- which has many rules about distributions etc.

I just read where they're are going to abandon that structure and consolidate their various companies under one name. What that's going to look like - or do to the dividend and share price etc is anyones guess at the moment.

I own a fairly substantial stake in these shares (11,000 shares) -- so obviously I hope that it's beneficial. My guess is - there will be some selling pressure as people tend to bail when they don't understand (or don't want to understand) what's going on.


http://www.bloomberg.com/news/2014-0...tnerships.html

[Sieg]

I'm due for some KMP love and certainly need it after last weeks pummeling! LOL

[GregWeld]

Originally Posted by Sieg

I'm due for some KMP love and certainly need it after last weeks pummeling! LOL

It's a long term hold for me - so I'll just trade my KMP in for the KMI (when they offer the swap) whatever that looks like. I'll roll with Richard Kinder whom seems to have a very good handle on the oil and gas and pipe biz. I liked the tax free income (they do this as a "return of equity" vs a dividend) but that's not really a big deal as it's only $60K per year in "tax free" income...

What I hope is that the savings of Admin etc --- is given back to the shareholders in the form of higher dividend - which will offset the taxes.

[GregWeld]

Originally Posted by Sieg

I'm due for some KMP love and certainly need it after last weeks pummeling! LOL

You'll be happier when you pick up the $1.39 dividend on the 14th.....

[Sieg]

Originally Posted by GregWeld

You'll be happier when you pick up the $1.39 dividend on the 14th.....

Haven't lost sight of that! I bought it at what looked like a good price and it went lower thanks to my Midas touch. Then the legality issues surfaced and now for phase three. It's still minimal, so no worries, not compared to the 35% hit I took on Sprint last week!

[WSSix]

Yeah, there's been a lot of talk about KMP for a while now. I figured I'd just be patient with it as they aren't going anywhere. There may be bumps along the way but Kinder Morgan has their stuff together. This, however, is news to me. Guess I'll have to be a little more vigilant until they get this sorted out.

[rocketrod]

KMP is up big pre-market. Here is more information on the deal
http://seekingalpha.com/article/2408...&uprof=45&dr=1

First, let's address the core financial parameters of the deal. KMP holders will receive 2.1931 shares of KMI and $10.77 in cash, which translates to an 11.4% premium. KMR holders will receive 2.4849 shares of KMI for a premium of 16%. As a reminder, KMR is merely an LLC that holds KMP units and reinvests distributions. EPB holders will receive .9451 shares of KMI and $4.65 in cash for a 15% premium. Thanks to this deal, KMI expects to increase its 2015 payout to $2.00 from $1.72. It also aims to grow its dividend by 10% annually through 2020.

Now while KMP is being sold at a premium, it should be noted that investors will see less cash flow up-front. In 2015, KMP was on track to pay out at least $5.75. With the $2 anticipated dividends, KMP holders will now receive about $4.39 per KMP unit from their new KMI holding. Even if they were to automatically reinvest their $10.77 cash payment, their dividends will be about 14% lower. Functionally, with the new tax status, the payout will be a bit lower. At first glance, this might upset some KMP holders, especially those in retirement who rely on the distributions. That's an understandable but short-sighted reaction.