Investing 102

[GregWeld]

Well that's not the kind of news ANY dividend investor wants to hear -- and my guess is that the cut was well telegraphed to their largest shareholders -- thus precipitating the large volume of selling over the last 30 days.

I would not expect KMI to hold their dividend at this low level because their game plan has always been to share the cash flow with the shareholders. So we take our lumps - the shares are already hammered - and you wait for oil to come back. When the happens is anyones guess.

Now you know why there are "rules" about limiting investments to 5% or so of your portfolio !!! This is classic. If you only hold 5% - it's just not that big of a deal. If it's 50% of your portfolio it is!

[ironworks]

Originally Posted by SSLance

There's the hammer...

Kinder Morgan whacks dividend by 75%
Dec 8 2015, 17:11 ET | About: Kinder Morgan, Inc. (KMI) | By: Carl Surran, SA

Kinder Morgan (NYSE:KMI) -7% AH after announcing a 75% cut in its 2016 quarterly dividend to $0.125/share ($0.50 annually) from the current $0.51, the company's first-ever dividend cut.

KMI says the move enables it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating."This is in the best long term interest of our shareholders,"

CEO Steven Kean tells WSJ. "It gives us the flexibility to fund our growth in other ways."The company will hold a guidance webcast tomorrow morning at 8:30 a.m.


It was already priced in, mostly anyway...I'm thinking the stock might just pick back up some steam now. Main complaint has been cash flow related, this stops that, right?

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.

[GregWeld]

Originally Posted by ironworks

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.

No --- wait until we can see the light in this name. Otherwise it becomes gambling just based on "I own it so it will come back". We don't know that now. We can wait for a change of prices and we can ALWAYS buy more.

[GregWeld]

Originally Posted by ironworks

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.

Separate response for a separate question:



5 years ago (or so) all the banks cut, or quit completely, paying any dividend. GM went completely broke... Ford quit paying a dividend. This happens from time to time when you have a complete breakdown in something beyond normal control. In this case - we have a world using less of a commodity - and we have foreign countries determined to put the USA oil production out of business. We have no control - nor do the companies swept up in the debacle.

GM is doing fine - Ford is doing fine - Banks have recovered and are now paying dividends. My point is - wait - and things will change.

[Ghiaguy]

The Saudis have a welfare state and depend on selling oil to prop up the government -- was a great article in the LA Times (I think, I read too much to remember where I saw it LOL) on it over the weekend, it was kind of tied into the shootings in San Bernardino and how the Saudis have now got a tiger by the tail in the Sunni Wahabi radicals, which is the state religion there.......

http://www.differencebetween.net/lan...ni-and-wahabi/

So now we have 3+ heads to the monster lol

[Ghiaguy]

An Article on the 8 best dividend stocks for this year

http://www.msn.com/en-us/money/savin...015/ss-BBncKK7

[WSSix]

For now, my opinion of KMI is staying the same. Since I am long term, what should hopefully turn out to be a temporary cut in the dividend doesn't bother me. Their business is strong and on track for continued growth. They are still paying a good dividend, too. So to me, this isn't things aren't going well for the company. It's people upset that things aren't going as well as they want them to. We'll see if this continues to hold true in the coming quarters. If so, it may be a good time to be buying more shares.

[GregWeld]

Originally Posted by WSSix

For now, my opinion of KMI is staying the same. Since I am long term, what should hopefully turn out to be a temporary cut in the dividend doesn't bother me. Their business is strong and on track for continued growth. They are still paying a good dividend, too. So to me, this isn't things aren't going well for the company. It's people upset that things aren't going as well as they want them to. We'll see if this continues to hold true in the coming quarters. If so, it may be a good time to be buying more shares.

I consider KMI as being in a "collateral damage" situation - one that nobody could foresee.... nor could prepare for. Oil and everything it touches is taboo for now. I just hope it's only 2 or 3 years. That's not very long. The housing debacle now seems light years ago...

[GregWeld]

Since this thread was started -- we lived in a market that pretty much just went UP day after day. I commented repeatedly during that period to have people remember what that all felt like.... It was SO EASY to just buy something and have it go up - making you feel like the smartest guy in the world.

The reason I reminded people about this - and the possible FED interest rate hikes - is because I've lived thru many periods such as we've been in the last 6 months to a year. Down - what I call "the death of a 1000 cuts".... markets just dripping away. You start to really question WTF you're doing.

This is where LONG TERM thinking comes into play! What's that look like? We have no friggin' idea.... but I'd ask you to take a look at any of your holdings longer term chart and start to see the DIPS instead of just the higher price... There's ZILLIONS of them!! But - when you smooth all of that out - the longer term is higher. Right now - everything SUCKS!

Be like me - don't be in a hurry to be buying right now. Just plug away - have your dividends reinvested. When you have extra money - don't be afraid to put it to work - but don't be a pig and try to buy a whole bunch of one thing (say "oil" just because you're 100% positive it's going to come back). Doing that will just bring more short term pain and have you reeling and thinking you're a lousy stock market investor. Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

[ErikLS2]

So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.

Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.

And off to the races we go.......possibly. Monday is going to be interesting for sure.