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Anyone own or buying KMP or SDRL?
Old 02-21-2013, 08:33 AM   #1
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Anyone own or buying KMP or SDRL?

I've been looking at these two for a couple of months.

KMP-Kinder Morgan Energy partners is an MLP paying a dividend of over 5%. Trading around 88.20.(52 week 74.15-90.60) They announced a new stock offering yesterday to generate cash. Consequently it is retreating a bit. Down to 86.20 in pre-market. It is up over 10% year to date. I actually bought and then sold it back in early January as I was unsure of the MLP status. I think KMP paid the first and possibly the 2nd 2013 divi before Dec so their next one is not until June.
Am interested in the MLP's for my taxable account since the dividend is not taxable and instead reduces your basis.

Have also thought about SDRL-Seadrill. Pays a 8.8% dividend. Currently trading at 37.10 and is 36.88 in pre-market. (2 week range is 31.37-42.34)
Was beaten up a bit earlier.

I may wait a bit, but wondered if others owned these or have considered buying recently.
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Old 02-21-2013, 08:57 AM   #2
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Have considered both just never pulled the trigger on them, KMP always seems to get above my entry point on it. I did pickup a couple of MLPs back in the november sell off.
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Old 02-21-2013, 09:35 AM   #3
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Been in KMP for a number of years. Dividend is healthy and continues to rise. They are also on an asset buying spree which does produce some hiccups in the stock price. Today's pull back may be a good place to get in though. I have a limit order in at $86.00 but doesn't look like I'm going to get that price.

K-1's are a pain in the rear but I do love the dividend and the tax status of MLP's. Last dividend payment was 2/15/13. Next will be 5/15/13.
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Old 02-21-2013, 10:10 AM   #4
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Thanks for the input!

RockyMtn...back in early Jan or maybe it was Dec, KMP was at 79.05. Huge 10%+ run up Jan/Feb. When they have issued more units in the past, has the price dropped more than the almost 2% we are seeing today? I sure hate that I missed the price of 79! I'm watching closely!
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Old 02-21-2013, 10:17 AM   #5
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MLPs can be interesting, except for their K-1 forms and complicating tax matters. I prefer to put them in an IRA, provided their UBTI is under the limit.
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Old 02-21-2013, 10:28 AM   #6
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Don't recall 2% drops as a result of more shares being issued in the past. The stock can be somewhat volitale. $79 last December, $75 last June, and it was at $90 last March. No crystal ball here...I usually nibble here and there on pullbacks. 10% ytd and 6% last three months is good by me although it pales in comparison to my HFC which is up 15.3% ytd and 20.4% last three months.
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Old 02-21-2013, 10:45 AM   #7
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I don't think there's anything wrong with SDRL. I owned it for a couple of years but sold a couple of months ago. Good dividends; I just didn't like the volatility. As a company, it seems solid.
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Old 02-21-2013, 10:56 AM   #8
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Originally Posted by GrayHare View Post
MLPs can be interesting, except for their K-1 forms and complicating tax matters. I prefer to put them in an IRA, provided their UBTI is under the limit.
Interesting GrayHare....from what I've read most recommend not putting it in an IRA I presume because they already have some tax advantage status with the way they distribute, reducing cost basis and not creating a fully taxable event.
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Old 02-21-2013, 10:59 AM   #9
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Originally Posted by RockyMtn View Post
Don't recall 2% drops as a result of more shares being issued in the past. The stock can be somewhat volitale. $79 last December, $75 last June, and it was at $90 last March. No crystal ball here...I usually nibble here and there on pullbacks. 10% ytd and 6% last three months is good by me although it pales in comparison to my HFC which is up 15.3% ytd and 20.4% last three months.
Thanks RockyMtn. I think I may wait a bit still. As you said the price has moved around a fair amount and I'd rather get it a bit lower. Besides, I do want to wait until this sequestration thing is resolved. Chances are that can may be kicked down the road again.
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Old 02-21-2013, 11:02 AM   #10
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I own some KMP. I bought it when the price dipped to $77 last November. I also own some KMI.
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Old 02-21-2013, 11:41 AM   #11
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I own some KMP. I bought it when the price dipped to $77 last November. I also own some KMI.
Good entry point! I was thinking about KMI too! Both sides of the coin so to speak. It's dividend is not as good but since it is the Master of their subsidiaries....and Kinder himself owns most of it I think the stability is there.
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Old 02-21-2013, 12:20 PM   #12
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Just sold my KMP this week to take profit before recent downturn wiped out gains. Nice dividends on KMP. Will most likely re-enter a trade if the govt can get their act together soon and stop messing up the market.
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Old 02-21-2013, 12:41 PM   #13
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I've held KMR for years. It's PIK (payable in kind) so it avoids the K1 tax structure. My broker sells off the partial shares so it produces a little cash each quarter too.

Richard Kinder, the CEO, pays himself $1/yr and receives distributions like the rest of the partners (shareholders).
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Old 02-21-2013, 01:16 PM   #14
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Like SDRL here but sold out in late December after they moved up their initial 2013 DIV payment to 2012. Will take another look see in the spring
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Old 02-21-2013, 03:34 PM   #15
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Like SDRL here but sold out in late December after they moved up their initial 2013 DIV payment to 2012. Will take another look see in the spring
Same here. Given the high dividend, I would only own this in a tax deferred or tax free account, if possible.
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Old 02-21-2013, 06:32 PM   #16
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Thanks to all who replied. As I said before, I'm closely watching all of them including KMR, KMI, KMP, SDRL...etc. Good to get input from others!
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Old 02-21-2013, 08:33 PM   #17
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Quote:
Originally Posted by eridanus View Post
I've held KMR for years. It's PIK (payable in kind) so it avoids the K1 tax structure. My broker sells off the partial shares so it produces a little cash each quarter too.

Richard Kinder, the CEO, pays himself $1/yr and receives distributions like the rest of the partners (shareholders).
I also have owned KMR for several years. EEQ is another MLP pipeline that distributes shares inlieu of distributions.

Plus there are several other MLPs in my portfolio. The great thing about MLPs is that once you have one that you have the PIA factor with for the K-1s at tax time, the 'marginal (time) cost' of adding just one more MLP to the portfolio isn't that great...at least, that's what I keep telling myself!
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Old 02-22-2013, 03:33 AM   #18
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Own (KMI) in my dividend income portfolio:

Dividend Income Investing.com

No hassle with the k-1 issue at tax time. Already seen one increase in the dividend. Strong projected growth.

I also just picked up a few shares of (LNCO), which also has no K-1 issue at tax time. They are also projecting strong forward growth.

These are a small part of my portfolio, but the yields are nice.

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Old 02-22-2013, 05:35 AM   #19
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I ended up buying some KMP a few years back. I noticed a number of high net worth clients all held positions in pipelines - figured it would be a good buy and it has done well for me.

As was mentioned before, you may want to look at keeping it in an IRA if you aren't familiar with dealing with a K-1 during tax time.
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Old 02-22-2013, 06:05 AM   #20
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MLP's as a group tend to be good investments in my experience. The K-1's need for tax filing can be a bit complicated and some have a history of being issues late. Often they will issue a preliminary one by APril 15 then revise it later in the summer.
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