KMI: The End of an Era

By | December 15, 2015

Kinder Morgan Inc (NYSE:KMI) was one of the biggest and successful pipeline companies out there.The company, previous traded as KMP as a MLP, was one of the top recommended stocks by many analysts. It was once thought to be one of the best stocks to hold for dividend income and appreciation.

KMI hit a 52-week high of $44.71 in April of this year, and has gone down a fast, slippery slope since then. The stock has fallen almost 65% from the 52-week high to now $16, as of close on December 14, 2015. And the stock does not seem to catch any stops.

One of biggest signal that KMI is in trouble is that they have surrendered their prize possession, the consistent and stable dividends. They have decided to cut more than 75% of the dividend, from 51 cents/quarter a share to 12.5 cents/quarter.

Too bad, I have gotten myself in a dividend trap again, and I could not believe it’s KMI. I have holdings of KMI in my IRA Portfolio, because I had thought that their dividends would be stable. But we now know, it’s no longer the case. The value of my KMI position has dropped significantly.

Unfortunately, this is deja vu for me. I have seen this happened already with Seadrill Ltd (NYSE:SDRL) and LinnCo LLC (NASDAQ:LNCO). I was crushed earlier by those dividend traps. Now I’m put in the same position again with KMI. What should I do? I can sell it right now for a big loss like I did with SDRL and LNCO, but my prior losses have depleted most of my IRA Account. Or I can wait for KMI to rebound when oil rebounds, but judging from the oil news now, it will be a long wait.

What will you do you if you are holding KMI shares?

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