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American Capital Agency Corp. Message Board

divyinvstr 2 posts  |  Last Activity: Mar 13, 2015 12:32 PM Member since: Jun 30, 2011
  • Reply to

    dividend increase

    by biglob55 Mar 13, 2015 9:59 AM
    divyinvstr divyinvstr Mar 13, 2015 12:32 PM Flag

    Nine months ago the index, according to BAC/ML estimates for each company, had an expected distribution growth rate of just under 7%. Since then one of its largest components, KMP, has been removed and replaced with slightly faster growing companies. However, due to the conditions in the energy industry, distribution growth rates have been lowered. I haven't run the numbers yet, but I would suspect the index growth rate has been lowered to approximately 6% with the near term bias for additional declines. A 2X the index growth rate that still leaves dividend growth (really interest) of near 12%. Another caveat is that if short rates rise the cost of leverage will also rise, eating into the return. I do believe that the cost is born by the NAV and not the dividend, however. So, barring a true disaster in the MLP space (which could, of course, occur) dividend increases should remain somewhere near the 10% range (assumes 5% CAGR on the index).

  • Reply to

    Oil Price is up and MLPL is down

    by weirherr Feb 9, 2015 3:46 PM
    divyinvstr divyinvstr Feb 15, 2015 4:34 PM Flag

    The price of MLPL reflects the pricing of the Alerian MLP Infrastructure Index, not the price of oil.

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