Suggest yuo go back and look again.
The price will be exactly the KMI price because you will own KMI! The dividend will be about the same because you get about 2.5X shares. The bonus is the new KMI is suposed to grow payout from $1.68 to $2 at first and then by 10% a year compared to about 5% a year now for KMR.
Not by much - $5.00 vs $5.52 and the new dividend will grow at 10% a year vs. 5 or 6% for the old KMR. That suggests a YE 2018 payout of $7.32 for KMI and the old KMR would have been $6.96. abut 2 years to get even. Also with KMI lots of holders with an AGI of under about $73K if married will not pay any taxes on the dividend.
Very simple. ETE owns about 50M ETP units and the IDRs. It does not own ETP. That means for every .01 paid out to ETP holders that ETE holders get .01 too. Then remember to pay for the $2B (just a guess) ETP will need to issue lots of units - in the area of 18 MILLION. That means an extra 75 Million $$ each year for ETE holders.
It is called leverage! Also ETE is not the main company. Probably thinking of it as the managing partner would be helpful. That leverage is why ETE pays out at a sub 3% distribution and ETP about 6%. The ETE distribution will grow faster than ETP and can grow even if ETPs does not when units are issued.
What does exporting a very light oil have to do with becoming energy independent? The winners on this are the producers, processors, and exporters (of which EPD is only 1 of about 20 companies). It will also give incentive to produce more NG to use at home becasue NG producers will now have a market for their production. The only loser is refineries who now will need to compete with product that will command a world based price.
The effect on the general population would be zero to a bit positive. Zero in that prices for oil based products should not change and positive in that thousands of good paying jobs in the USA will be created. Those people will pay taxes and buy things creating more jobs.
mrtply - You and I often disagree but with Steve it is time for ignore. Saying MLPL is right for retirees is crazy as most retirees use not only their income from investments but the principal over time. One of the reasons I hang out mostly at the IV board.
With propane - EPD produces the propane and sells it on their own account. With condensate most exports will come from somewhere other than EPDs facitity in Houston because of ship issues. The exporters there would probably simply transport and store (EPD and others). The producers would generally retain title to the oil but of course each deal is made on its own. Personally why own the stuff when you can get paid a toll for transporting and handling it! No commodity risk in the manner.
How long do you want to hold either company? Understnad if ETP or RGP have any problems or stop growing rapidly then ETEs ability to increase their distribution would fall. Remember ETE mostly gets $$ from ETP, RGP and SXL. ETE is leveraged and thus subject to that risk. FWIW I own ETP, RGP and ETE. how risk tolerant are you. Any bad news and ETP goes down 3 or 4 points, but ETE goes down about 10.
Not sure where you get your numbers. EPD is up about $2.50 this week and is definately not in the worst preforming. Understand your feeling about EPD retaining cash and they have said they are not going to change their policy in the near future. They will examine their cash needs on a yearly basis for a special distribution increase that would be paid in november according to EPD and they have done this each year.
The reason gfor the low yield and a unit price in the 70s is the EPD has a long track record of stable and steadily increasing DCF. retaining earnings means that they do not need to issue another $1B worth of debt and units each year. This makes for a stronger balance sheet and additionally gives EPD the flexibity to increase the distribution rate going to say .02 or .025 if interest rates require a higher yield to keep the unit price up. Last time I looked EPD was one of the better preforming MLPs for mega caps with a steadily increasing unit price and distribution with no stumbles. How many others can say that?
If you do not like the policy regarding distributions then again - Why do you continue to own EPD?. Buy something like MMP, SXL or ETP.
Absolutely know Keystone will not affect anything. It would have an EFFECT on railroads, producers in Canada and the Bakken by giving them cheaper transport access to markets. Those producing elsewhere will have little major change. Much of Keystone is in service anyway. Only the northern part is being held back. Guess we want heavy oil from our friends in Venezuela and not Canada.
Do a bit of reading from the National Association of Publically Traded Partnerships and their primer called MLP 101. You obviously do not understand things like ETE pays no dividend and has units instead of shares. BIG DIFFERENCE!
Actually according to the NAPTP about 1/2 of individual investors in MLPs do so because of the tax deferral. As to dumping on people who talk about dividends. sorry, many investors do not know. MWE gets some 2000 calls a year about why are they getting a K-1. no arrogance only an attempt at education.
Also on a sale you actually pay more in taxes because the recapture is ordinary income and not LTCG.
Suggest you look at a broker analysis that shows distributions with anticipated increases over the next 3 years along with the current yield. There is about a .8 correlation with the yield the yield the lower the anticipated predicted increase in distribution. Of course the lower the yield (like ETE) the higher the expected increase.
MS came out with a sector report this afternoon. Companies that are at least 1/2 standard de viation above the yield/distribution curve are a bit surprising with 5 companies: ATLS, WGP, CMLP, APL, and WPZ. Companies below are EPD (they have a differerent distribution policy from every other MLP) MPLX and VLP. ETE is exactly on the median line. This is because the yield today is so low at 2.51% it will take many years (all things equal) to raise its distribution to that of ETP (rate currently 6.51%. The increases expected using the average from 4 brokers is a 25% CAGR for ETE and 6% for ETP.
What does this mean if correct? YE 2016 ETE distribution run rate of $2.81 and ETP of $4.46. Thus ETE disttribution grows faster and in 3 years is about 40% less, If you do this in about 2022 ETE should pay the same distribution as ETP.
OK. I agree. Now the reality instead of just hype. Giving EPD a couple of special distribution increases as indicated as possible you mave YE distribution run rates of about $3 fior 2014, $3.16 for 2015, $3.36 for 2016. I note this is higher than most every brokerage estimate by a bit. Given the interest rates rising a bit we should be somewhere in the 4.5% area by the end of 2016 for a yield giving a unit price in the $75 to $89 area. We do get to $100 but only after a few years. The recent run up is typical for EPD. Runup followed by a year or slow of flat unit prices. Could EPD slow priojects and thus choose to distribute more $$? Absolutely. If they increased at 8% CAGR from today they would go to $3.60 in Q1 of 2017 and that "might" get them to $100 if interest rates do not move too much.
Hard for a $90B company to move the needle very fast. I'm personally happy for distributions going up in the 6.5% area a year and unit prices moving about the same. 13% a year is more than most companies.
EPD only uses storage for their own account. They are not in the storage for rent business. The winners here are those with dockage. NS for one has lots of space in Corpus. EPD has a headstart on the production of condensates. NGLS and others will benefit.
The exact reason I post little on Yahoo. ETE is the GEneral partner of ETP, RGP and owns 1/2 of the GP interest of SXL. You spout on and on. Yes they are both MLPs. But most of ETEs $$ come from IDRs.
If you are looking to Yahoo for correct info forget it. Yahoo says ETE pays a dividend - WRONG. And as APU - Amerigas Partners being a competitor? Are you kidding. ETP sold its propane business a couple years ago. DPM is an operator in the midstream area and not a GP receiving IDR payments.
Sure hope you understand the term IDR, because without them ETE would go out of business in a blink. You correctly state its primary business is as a GP. How does that make it similar to a MLP that operates midstream assets?
That is sort of like saying OILT and EMES are similar. Yeah they are both MLPs but EMES does frac sand and OILT own storage. MLPs come in different flavors.
Susser makes things much simplier. This is because Susser can be the place the Sunoco stations go while ETP keeps the distribution business. Putting both retail operations together in a business makes it viable as an entity to sell. ETP thus gets more for both retail areas and keeps the lucrative distribution business that Susser did not run very well. Just going to take time.
The problem is the #1 deal may not go through #2 the value of both KMI and KMR will change daily for the next 4 months or so. No way to know what will be a better deal. Good part is you might get one KMR payout before. Unless you are buying several thousand shares probably makes little difference.
KM changed to eliminate the IDRs. EPD has none! Also seems you and other do not get that the cash plus the increased growth in the payout mean almost exactly the same dividend to the penny. Plus if you sell (other than KMR) you do not have recapture at ordinary income rates and all payouts are at dividend rates. Last I looked if your income for a married couple is under $77K the rate on dividends is ZERO! Think you need to look at the consequence of selling MLPs like EPD. A C corp has advantages too.
Agree with owening EPD beimng smart but target prices are really stupid. Just exactly that a number that an analyst thinks a compny might get to in a year.
Broadcasting their plans - Did I miss their conference calls and press releases? EPD has said exactly what they are doing for one, two and sometimes three years down the road!