Dividend growth of only 8% in 2014 is probably 1/3 to 1/2 less than most people were expecting... however, forward yield is now 5.2%, which is not shabby at all for 8% div growth.
The price should go down because they need to price the new shares at a discount so people will buy them. Always a good opportunity score some more shares.
So looking back on the chart, it's clear that when the price hit 34 a couple days ago, someone decided that would be a great time to unload some of their shares, and someone found out about it. Three days later, retail guys like us get the news.
I believe they are conducting an analyst briefing this morning in Dallas, they must be saying something good. The note about the briefing said that in addition to the Trunkline deal, they will be discussing "business in general" so they might be improving the overall outlook or raising guidance in addition to the deal.
Starting to think we should've listened......
to the person making 6% per month who said we
would see a big short term hit.
How's that working out now?? A quick blip below $30... in hindsight, nothing more than a "sell the news" blip, to be expected after a strong move up.
"Since going public HCLP has always traded right around 12 P/E to current earnings"
I just opened a position -- frustratingly, right before last week's dip below 30 -- and my sense is that since May this has been fundamentally repriced relative to other MLPs, a combination of the BHI resolution + beginning of distribution increases. Didn't buy a lot because it hurts to buy after such a run-up, but IMO there is a reasonable chance it would continue to simply run away from me. Any move back to mid 20s (unless it is because of some bad news in the business) would IMO be an exceptional opportunity. Last week's move below 30 sure didn't last long.
Nibbling on the Jan 50 calls, only $1.35 ask. That strikes me as real cheap given the potential payoff. Any sort of mediocre, middling recovery to 55 or so -- not even close to pre-selloff prices -- gives you nice profits with potential to make up this year's losses. If it expires worthless, what's another buck on top of all the misery this year? PLUS the option will expire before the next earnings announcement, so protection against being blind-sided again. Recovery to mid-60s gives you a 10-bagger. All I need is 7% recovery to make back the cost of the option.
agree,if you think about, say, a 10% downside risk, it's hard to see anything other than a dividend cut doing that -- and payout ratio even on lower estimated FFO is still less than 70%.
That's my point, I bet the stock price would respond a lot better to a 10% div increase -- at cost of $60 million/yr -- than a $500 million buyback. That would push the yield to 7% and get a lot more people's attention. And they wouldn't have to do it with borrowed money either, so the balance sheet would be stronger. There's no tax benefit to buying back shares either.
...is also completely stupid, IMO. $500 is almost 10% of the shares... IMO share price would have been helped a lot more by increasing div 10%, which would have cost a fraction of that total, and sent a better message to the street. Especially when current div is only 70% of FFO.
I think there is a real mismatch between expectations of this stock and how it is priced. What I'm seeing is a REIT with solid balance sheet and div coverage, growing -- according to lower forecasts -- mid-single digits going forward. How many REITs offer better than that? This should be priced +$60 at 5-ish% yld, it's certainly no worse than any other commercial REIT out there, and better than many. It's just not some hot "cloud-computing" play like people seem to want it to be.
the numbers I use are between the subordinated level and the targets -- essentially similar to what PER has been paying out. My 11% IRR is based on 92% of the projections. Because the distributions are so front-end loaded, the effect of being wrong in the out years is muted.
The yield to maturity is about 11%, so it's priced about right, IMO. That's the calculated IRR for the expected remaining distributions.
KMI pays out qualified dividends, same as most other publicly traded companies. KMR distributes new shares in proportion to the KMP cash distribution. You treat these exactly like a stock split--e.g. your number of shares increases every year, but your original cost basis (and date) doesn't change. There is no annual reporting or tax paperwork at all (again, in the same way that any other stock split is not a taxable event). Because KMR accrues book value proportional to the KMP dividend, the new shares aren't dilutive like a traditional split or stock dividend would be. The amount of new shares is based on the KMP dividend divided by the average trading price of KMR over a 10 or 2 day period before the payment date. KMR is also a C-corporation, not a partnership, so you do not get any K-1.
I was shocked. Well, not shocked, because they have clearly been outearning the previous distribution since they went public, still surprised that in this environment they're choosing to raise the regular dividend -- by a meaningful amount, too -- instead of just paying out the surplus as a special div at end-of-year. Any kind of increase to regular dividend in this environment is a powerful statement.
Could this be the cause of today's drop??
"Equities researchers at JPMorgan Chase & Co. initiated coverage on shares of Baxter International (NYSE:BAX) in a research report issued on Wednesday, American Banking and Market News reports. The firm set a “neutral” rating on the stock."