3 Recent Buys – KMI, RACE, CSU


A quick update on three purchases in our portfolios. It is getting harder and harder to find good value plays as the market seems be pushing the boundaries on the valuation front. With a lot of stocks trading close to 52-week highs, pickings have been pretty slim. However, due to an oversized cash position, I decided to pay up and put some capital to work.

  • First purchase: I added 200 shares of Kinder Morgan Inc (KMI) @ $19.97. I wrote more about my KMI decision during my last iteration in March. Click here to read about the reasoning. The stock yields 5.0% and adds $200.00 in annual dividends.
  • Second purchase: I added 25 shares of Ferrari N.V (RACE) @ $165.35. I wrote more about decision to buy this company earlier in July. Click here to read about the reasoning.
  • Third purchase: I added 6 shares of Constellation Software (CSU.TO) @ $1,252.00. Constellation continues to execute well and aggregate small VMS companies led by a brilliant leadership team. A small dividend is paid (yield of 0.4%), but this is a growth-focused stock.

Full Disclosure: Long CSU.TO, KMI, RACE. Our full list of holdings is available here.

Kinder Morgan Dividend Cut

Kinder Morgan Inc (KMI) announced a 2016 outlook for the company and with that, announced a dividend cut in order to get the cash flow under control. The dividend distribution amount for 2016 is $0.50, down from an annual rate of $2.04, which results in a 75.5% cut. I shared my thoughts on Kinder Morgan yesterday in this article here. The forward yield going forward is 3.18%.

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My Thoughts on Kinder Morgan

Kinder Morgan has been a core holding for a lot of dividend growth investors and I have received a lot of questions from readers about my thoughts on the company and the future prospects.

Kinder Morgan has had a spectacular fall from its peak from $44.71/share in Apr 2015 to $15.82 today (Nov 07 2015). In a way, this shouldn’t have come as a shock – Kinder Morgan has been on a debt binge (just like a lot of other companies out there – so look out for similar outcomes in other companies!) and is now close to $43B in long term debt fueling its growth and investments. The recent ratings downgrade from Moody’s with a negative outlook was a wakeup call for a lot of investors and traders have jumped in to short the stock.

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Kinder Morgan Dividend Increase

Kinder Morgan Inc (KMI) announced a 4.08% increase in its cash dividend! The quarterly cash dividend will increase from $0.49 to $0.51 per share and payable on Nov 13, 2015 to shareholders on record as of Nov 02, 2015. The annual dividend rate goes up from $1.96 to $2.04. Yield going forward is 6.49%. This is Kinder Morgan’s 15th dividend raise since going public in Feb 2011.

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