Kinder Morgan Cuts Dividend

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  1. Kevin Beck says:

    One of the reasons KMI transformed into a regular corporation was because of the rules required to operate as an MLP; namely, that they had to distribute 90+% of their earnings each year. This allowed for very little retention of funds, making debt and equity issues as the only way to grow. Their conversion allows them to retain earnings, rather than distribute all to the unit-holders.

    An issue that needs to be considered for future MLP investors is whether the business is intent on just making itself into a larger entity, or are they more interested in operating with what they have already. By operating under the MLP model, one entity cannot have it both ways. And if conditions allow for the illusion in the future that one can have it both ways, that will be the warning that it’s time to look for the lifeboats again.


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