Kinder Morgan is On Sale Again With a 6% Dividend

Posted by D4L | Friday, September 04, 2015 | | 0 comments »

The selloff in Kinder Morgan and other MLPs this summer has been peculiar because KMI stock mostly avoided the pain that hit the rest of the energy sector a year ago when the price of crude oil first began falling. The massive declines are happening now, months after the oil supply glut should have been old news. Some of this is due to belated fears that U.S. domestic production – which has been slowing in recent weeks – will crimp the volume growth that drives pipeline profits. That’s a legitimate concern. But hardly one that would justify this kind of move in the stock price.

Particularly when you consider Kinder Morgan’s most recent quarterly earnings release. Kinder Morgan increased its project backlog by $3.7 in the second quarter to $22.0 billion, meaning that KMI has no shortage of growth prospects in front of it. Lower energy prices are a problem, to be sure. While KMI gets the vast majority of its revenues from fee-based contracts that are not sensitive to energy prices, the company is not completely immune. KMI estimates that every $1 change in the price of crude oil lowers distributable cash flow by $10 million. That sounds like a lot of money, but remember that Kinder Morgan produces over $15 billion per year in sales. Even at today’s depressed priced, KMI generated enough distributable cash flow in the first half of the year to cover its dividend with $226 million to spare. And speaking of that dividend…last month Kinder Morgan raised its dividend by 14%. And management reaffirmed that it intended to raise KMI’s dividend by at least 10% per year from 2016 to 2020.

Source: Charlessizemore.com

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5 MLPs With Yields You Can Actually Rely On

Posted by D4L | Thursday, September 03, 2015 | | 0 comments »

It’s no secret that master limited partnerships are a great way to bolster your investment income. Designed as pass-through entities, MLPs send much of their cash flows back to investors in the form of large tax deferred distributions (similar to dividends). These distributions often range in the mid-single digits, though some can push into double digits. The problem is since most MLPs are high-yielding by design, we get tempted by those large numbers and forget how important a reliable distribution is.

For retail investors looking for solid MLPs, you’ll want to stick to partnerships that have high coverage ratios indicating that the yield will stick around and even potentially grow over time. To help you out, we’ll look at five solid MLPs that have plenty of cover: Marathon Petroleum (MPC), EQT Midstream Partners (EQM), Cone Midstream Partners (CNNX), Calumet Specialty Products Partners LP (CLMT) and Global Partners LP (GLP).

Source: InvestorPlace

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4 Small-Cap Dividend Stocks With Big Appeal

Posted by D4L | Thursday, September 03, 2015 | | 0 comments »

For small, fast-growing companies, dividends are an unaffordable luxury. But a handful of small businesses are finding ways to pay a dividend without compromising their growth, offering potential for solid gains with a slice of income on the side. Dividends are actually quite common in small-cap country. More than half of the companies in Standard & Poor’s Small-Cap 600 Stock Index pay dividends, and they yield an average 2.3%, slightly trailing the 2.4% yield of dividend payers in the S&P 500 (the full S&P 500, which includes companies that don’t pay dividends, yields 2.1%). Granted, most of these businesses aren’t likely to make the big leagues. Financial companies and industrials dominate the roster of small-capitalization stocks, so you’ll be hard-pressed to find the next Under Armour (symbol UA) on the list.

Companies that can pay dividends without much financial stress offer the most upside. These businesses tend to be solidly profitable, have a manageable amount of debt, and should be able to increase their dividends consistently, giving investors a raise each year. Keeping those factors in mind, we found four stocks and one exchange-traded fund that look compelling from both a growth and an income perspective: ABM Industries (ABM), City Holding (CHCO), Escalade (ESCA) and ProShares Russell 2000 Dividend Growers ETF (SMDV).

Source: Kiplinger.com

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We recommended COP on 5/10/2012 at a price of $53.47. COP is back to the price at which we recommended it. With no capital loss on the buying price and a gain of dividends, we recommend investors realign their portfolios with less energy and more biotech. With oil prices recently hitting a six-month low, COP is expected to give a poor EPS in 2016.

Dividend.com also wants to admit that we were a bit late in removing the energy names from the BDS list. We did not forecast the sharp and rapid decline in oil, however, it’s better late than never. Typically we do not make reactionary decisions – such as a volatile movement in oil – but we do believe that the lower oil prices will persist for some time and that it will take firms like COP a relatively long time to recover – if they can.

Source: Dividend.com

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Dividend Investing: Is This Real Estate ETF Smarter?

Posted by D4L | Wednesday, September 02, 2015 | | 0 comments »

The prospect of rising rates has weighed on ETFs holding real estate investment trusts (REITS) in 2015. IShares U.S. Real Estate (ARCA:IYR) has fallen 0.2% year to date. But it's a top performer among sector equity exchange traded funds over the past 15 years, with an average annual 10% gain. Real estate is increasingly important to investment success for financial advisors and investors. It's seen as a distinct asset class, offering both capital appreciation and potential for income. That's why it's poised to become the 11th S&P sector next year. Currently, it's an industry group that falls within the financial sector.

Guggenheim S&P 500 Equal Weight Real Estate (ARCA:EWRE) offers a novel twist to investing in real estate. It's the first "smart beta" ETF among 19 products in the category. Most of its peers follow market-cap-weighted indexes, meaning larger stocks have a bigger weight in the portfolio. Smart beta products employ an alternative indexing method. In the case of EWRE, each of its 25 holdings gets an equal stake of assets. No one stock is more important than another.

Source: Investors.com

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