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Crosstex Energy, L.P. Message Board

  • kingedxxxxx kingedxxxxx Feb 1, 2010 11:00 AM Flag

    Last post about 6% yield

    In another post, a nice link showing yields of many MLPs gives you a nice idea of what to expect from XTEX once distributions resume.

    I stick with my belief that XTEX shareholders will see PPS create about a 6% yield to start which is the low end of yields, but close to average yield overall. As I have tried to explain, this company is recovering and market is forward-looking and will already start anticipating better distributions ahead. Once distributions level out, possibly not for another three years or so, then I believe the yield will work its way back to 8-9%.

    Thus, if XTEX starts a quarterly distribution of .18, then we can expect a PPS of about $12. If it's .25, then expect PPS to be about $16.50.
    The stock is not at this price for two big reasons right now: 1. the debt has not been resolved and 2. there are no distributions. But, as you can see by current PPS, XTEX has already started pricing in these two items. Heck, it is almost at $10 and we have zero distributions.

    Only time will tell if I am right, but I see no way that you will get a 8-9% yield right now. For example, a .30 quarterly distribution at 9% would only allow for PPS of $13.30. With debt resolved and this kind of distribution, XTEX will surely work its way closer to $20 per share (6% yield) especially as economy recovers.

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