Unfortunately KMI cut their dividend by 75%, earlier this week.
This was a reason for me to sell all my shares, yesterday.
Let's see what happened during my time as a shareholder of KMI.
07/24/15 - bought 19 shares at $34.79 for $661.01
08/14/15 - Received $7.91 in dividends
11/13/15 - Received $8.24 in dividends
12/09/15 - Sold 19 shares at $15.91 for $302.29
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Net loss: $342.57
This transaction is my first loss since I started this DGI strategy, almost 1,5 year ago.
To learn a lesson..
To me, it is important to learn something from this loss.
However, I'm having troubles determining what I could have done differently, in order to prevent this loss. The easy answer: you shouldn't have bought KMI. With today's knowledge, that's absolutely right, but I didn't have today's knowledge back in July.
Was it the company's high debt ratio that should have raised the alarm? Was it bad to buy stocks in KMI, when all oil related companies suffered major losses in stock prices? Are commodities in common bad for a long term growth portfolio?
Anyone with thoughts on this?
One thing remains very clear: a long dividend streak does not provide any guarrantees!
Thanks for reading!
For different reasons, but still similar to the ARCP pain many in the DGI community felt I am curious to see how many will react to this dividend cut. I believe this is the first post I have read that sold out. May, it looks like are holding on to their positions.
ReplyDeleteHey DivHut,
DeleteThanks for your comment. What you are saying seems to be right, although Dividend Lord sold ihs position as well.
It surprises me, as I have read many exit strategies stating a dividend cut would be reason for somebody to sell his/her position. It was not an easy decision, but you have to keep to your plan for obvious reasons.
This loss covers over 75% of my entire annual dividend income in 2015, so I'm not very happy about it, but keeping it did not seem to be right.
Have a nice day!
DfS
I've seen quite a few bloggers selling their KMI shares and I did as well. It's tough to hold on to a stock where management puts themselves in this position. Forecasting a 10% yoy increase to the dividend for the next 5 years and then cutting the dividend only months later. This just isn't a stock I feel comfortable putting my hard earned money into any more.
ReplyDeleteI couldn't agree more, although selling was tough as well! It's not fun to lose 75% of the annual dividend income in a single transaction, but it proves a very important lesson we all know: investing is not without risk. That's why we difersify and make tough dicisions sometimes.
DeleteBest wishes, DfS