Whats the equivalent yield after cap gains and recapture?
and sdrl's divi is questionable moving forward and LINE has never impressed me... ( neither is growing the divi/dist also which may limit share appreciation)
Very High yields equal risky equity
ETP seems reasonable but its a 6.5% yield not an 8 or 9%
as I thought about the possibility of continued 1 cent increases and a doubling of the growth rate I came to the conclusion that there is a small possibility that they do move in this direction....
By doubling the rate they put the growth rate in-line/ahead of the newly stated Kinder policy.... but Kinder has a policy of paying out every last cent of available cash flow where we know the exact opposite is true here
I continue to believe that the new KMI is rather overvalued and will see an equalization with EPDs mkt cap
are you implying that we will continue to see 1 cent per Q?... IF that were to happen the dist growth rate would double..... I don't see them doing that... but they could stick to the halves and give us a special 1/4.... 1/2 or 1 cent special which would keep the annualized rate in full cent increments
The real world reality is that most entering that type of security has income well in excess of $73K which more than equalizes the distribution/dividend
Less than $73K on a combined income in the real world and I don't know where one would find $.50 to invest..... and factor in that most small income investors invest through 401Ks if they invest at all and stocks are rarely an option for "low" income investors in those vehicles
Those that are looking at yield producing equities have significant 2014 type income and $73K is nothing in 2014 terms... not to mention those with the really big bucks/incomes have to pay income rates on dividends which destroys KMI as an alternative.... so maybe the guy buying 100 shares (more than 5% of income for a less than $73K earner) if they can afford it considers KMI.... IF I'm a Dr. with a decent portfolio and I'm looking to shelter $250K do I like EPDs 3.7% tax differed yield or do I like KMIs $4.5-5% yield where I could be paying 30+% Fed + 8-10% State..... ouch.......
Sheltering income from taxes will always be a priority of investors
Look at the financials... EPD has Greater revenue... greater profit.... and less tax than the combined Kinder Franchise
yet Kinder's combined mkt cap now sits above $100 billion... and EPDs is $70 Billion.. Kinder is more than 43% greater cap... how would a 43+% pop in the EPD unit price feel
There's gonna be some movement towards equalization and now matter how you slice it EPD wins because IF our unit price increase dramatically EPDs cost of capital goes lower still.... Kinder decreases... and the cost goes right back up wiping out the reason for the deal in the first place
The consolidated KMI will have market value of $100B. EPD's market value is $70B. KMI is more likely to buy EPD than vice versa
Which is interesting because EPD has greater revenue & profit with less tax than the Kinder kingdom...
That either makes EPD vastly undervalued... or there's a problem at Houston at the Kinder franchise valuation
Of course some jerkwad on the street could come up with the fantasy that IF all EPDs profits were taxed at the corporate level like Kinders will be..... that EPD would then be worth $120 Billion
Do a 5 year or any other time period chart for that matter of EPD vs LINE and you will see the risk difference
and like I said.... it wouldn't hurt to run it against KMP & KMI either
That 5 yr has EPD up about 175% before Distributions... Line is up maybe 40%
EPD blows away KMP & KMI too... that's why EPD will attract even more positive growth as a result of this bone head move by Kinder
Kinder is driving EPD cost of Capital lower and will make it more difficult to compete with a tax differed MLP for the same growth borrowing/equity dollars
Remember every dollar of profit will face corporate tax at KMI... they are tax free at EPD and because EPD has done so much organic growth they continue to have massive depreciation
Kinder should have swallowed hard and reduced KMIs IDRs from KMP which would have given KMP a massive pop reducing its cost of capital and bringing in more dollars to KMI over time but he was way too greedy
if one had a colostomy would that change things?
Yes I believe remarks would sting with cynicism
Well that's a little league vs pro call.... owning 10,000 shares of EPD I'm really not worried that the K-1 costs an extra 100 per MLP with the accounts
We will be in an environment where investors are looking at them head to head and the equalization of share price will make it quicker and simpler to see EPDs strenghts
well if you don't know the difference between the risk between upstream and mid stream MLPs you are way out of your league in commenting on anything related to MLPs...
Mid streams operate under long term toll taking contracts that have inflation hedged in... always sold out prior to being built
Upstream producers have so many variables starting with commodity cost.... production costs..... trans costs when pipe is not available...... that revenue and income could be all over the place
One of the biggest problems KMP/KMI have is they have upstream exposure
I suggest you take a look at EPDs long term chart and IF you are looking at guaranteed retirement income whether or not that is not on the top of your list to park your money
EPD also has a better uninterrupted history of distribution increases every Q since inception.... and actually at a faster growth rate most of the time than Kinder family units
It would be a good Idea to run EPDs chart with both KMP and KMI to see which equity has out performed too
oh yeah... circle back and run the EPD chart against LINE and tell me about risk!... and return
careful when your remarks exit the same place as your farts
EPD is about to split and will trade about $38-$39 and will pay about a 3.7 tax differed distribution...
KMI will pay a taxable 5% and trade in the same range
The biggest difference is EPDs coverage ratio is much healthier and their cost of capital is far less...
So if you are looking to invest in mid stream energy infrastructure where would you put your money?
& don't talk about Kinder's promise of 10% divi growth... its just a promise... EPD could cover 10% now... and it would skyrocket their unit price driving their cost of capital lower still
IF EPD offered to buy KMI out in a 1 for 1 with the lower distribution it would be a huge EPD win and all shareholders
The reason KMI/KMP finds itself in this position is EPD/Dan Duncan inspired mgmt. has vastly outperformed Rich Kinder
interestingly exactly where KMI trades..... so that means you can take your KMP conversion shares and turn them into an equal # of EPD shares and get a higher after tax return with EPD
That analysis would indicate that in order to treat KMP & EPB unitholders the same KMP holders would be entitled to about another .3 shares of KMI per unit of KMP bringing their compensation up to 2.5 KMI.... might even induce some small KMP holders to hold the conversion
It would mean an additional 150 mil shares of KMI dilution
Its interesting because that is about where I figured the deal would be a push to slight negative for me
That's why this will be in court and other math will be presented that is even more favorable to KMP unitholders... the courts will demand that all the MLP holders receive equal treatment
Kinder has a history as in when he took KMI private... the courts made him negotiate compensation that was fairer to the shareholders which was about $10 more than the original offer he and his cronies muscled thru
Well as has been pointed out EPD does not have a GP that gets IDRs so the move would just tax all of EPDs income at the corporate level so anyone who has speculated that EPD would follow suit is a moron
I'll bet the douche just want to make it appear that the KMP deal is good so he is just a foolish talking head
The most unlikely scenario is that MLP structure will go the way of the dinosaur....... which would bring up the question of what did KMI know and when did they know it?
KMI has actually made the units of EPD more attractive and is lowering their largest competitors cost of capital way below theirs... not to mention EPD covers at between 1.4-1.6Xs DCF
EPD currently has just a 3.7% yield which is tax differed so it nets investors more than KMI at 4-4.5%
EPD shares just move higher and its all thanks to Rich Kinder
Where would you put you money? Stronger share appreciation and more net income.... or KMI
KMPs greatest achievement in its merger will be to drive its largest competitors cost of capital lower (thru higher unit price) while making it that much more attractive at the same time
KMP is changing the playing field and with this change MLPs will be more attractive and may not see the pressure they might have seen as rates rise
Just to keep it in perspective you are saying the divi is going to get that significant bump in the exact same time frame that KMI needs $5bil in cash for the KMP shareholders and a few billion more for for El Passo's crew
so you're talking about some serious debt accumulation
Cheaper only IF they can dilute thru common stock sales which is not going to be easy with a C Corp
Like I said they will be forced to issue preferred and bonds at higher yield and its debt... as debt climbs ratings drop and the cost of capital increases yet again
IF there are projects out there competing for money where will it flow... ETP at 6.5% differed or KMP 4.5-5% taxable...
KMP will be forced to other vehicles to compete for the cash and those vehicles will be higher yielding debt vehicles