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Rentech Nitrogen Partners, L.P. Message Board

  • dividendseeker dividendseeker Apr 12, 2013 10:55 AM Flag

    Nat Gas Hedging for Dividned Investors

    As we all know, nat gas prices can have some big impacts on a company like RNF. As a fellow dividend investor, I thought i would share with you my own Nat Gas hedge strategy. Heres my expamle to show you how it work. Say we want to invest 10k and what i do is i put 5k into RNF and 5k into a good dividend yeilding MLP (I use BWP for myself but theirs others just as good). As nat gas prices ran up my nat gas mlp went up 16% in price while RNF went down. I then sold 2.5k worth of the mlp locking in a good gain and rolled it into RNF. so the ratio now is 25% nat gas 75% fertalizer. If nat gas prices do back down and RNF goes up 16% i will then sell 2.5k of RNF and buy back the nat gas mlp. Why 16% gains? thats cause its 2x the dividend yeild that where it gets profitable enough to pay the cap gains on the sales. I hope this helps other long term dividend investors to make money over long term while still earning nice dividends.

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