Like a general manager in sports, sometimes you have to tweak the roster to improve your team’s chances for continued success over the long haul. After closing out two positions today (RIG and SDRL), I used some of the freed up capital to invest in in a prospect who’s future seems overwhelmingly bright.
Kinder Morgan Inc. (KMI) is a stock that I believe in. I initiated a position last month, and continued to add shares during the secondary offering. KMI took a dip today, and I got in at a lower price than in any of my previous purchases. Today, I added 60 shares of KMI at a price of $33.83/share.
This brings the grand total up to 153 shares. At the current dividend yield of $0.36, I will be receiving $55.08/quarter, or $220.32/year. Since KMI has already gone ex-dividend, I won’t be receiving a payout for these new shares until February of 2013.
Nevertheless, I am pleased to add more shares to my KMI position. Although the current yield is not as high as SeaDrill’s, I like the long-term dividend growth prospects.
As mentioned in a previous entry, KMI has increased dividends in 4/5 quarters. Management has even communicated their plans to raise the dividend over 12.5% annually until 2015, and 10% long term:
Continuing with the sports analogy, one could say that I traded RIG and SDRL for KMI and a future draft pick (spare capital). For the future draft pick, this time I want to find a candidate who can play strong defense (low risk) and provide solid offense (dividend growth + some price appreciation).
I will take the combination of gold glove caliber defense and high batting average over a home run hitter who strikes out a lot any day of the week. I believe I have a candidate in mind. Let’s just hope Mr. Market will provide the right opportunity!