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Inergy, L.P. Message Board

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  • phughyoung phughyoung Jan 27, 2012 8:46 AM Flag

    Dividend has been annnouced

    If you take the most obvious case and reduce the distribution by the shortfall in DCF (32%) you arrive at $.48 per unit. That is approximately an 8.5% yield, something that is not inconsistent with other MLP yields at the current time.

    If you consider a further reduction to provide excess coverage, then the yield would be marginally lower, perhaps 7.5%.

    Both are consistent with current market yields for non-growth MLPs.

    Therefore the current price is not out of line. I do not expect a sustained selloff from this point. Maybe a kneejerk reaction.

    I am short 34 February puts at $1.10 and will look to exit them on any runup in the next week. If not, I am happy to own NRGY at a net cost of $21.40.