I have a question about the dividend on this stock. I was wondering if someone could explain how the company is able to pay 2.78 dividend when its earnings are .49 cents. I have be looking to add this stock to my portfolio but don't see how they can keep paying out more then they make. What am I missing here? Thanks
It's really very simple. This is a partnership. Its distributions are based on its cash flow and not its GAAP earnings. Therefore, depreciation and depletion are non-cash deductions when determining GAAP net income. There are other adjustments, but if you add back depreciation and depletion then you get pretty close to what can be distributed.