KMI announces earnings after the close today.
KMI has the largest natural gas pipeline complex in the US Over 70,000 miles for natural gas..
I believe natural gas will continue to displace coal for electricity generation AND become a huge export product to the World. As we build and develop more export terminals for LNG, KMI's future remains solid , not parabolic by any means, but a real product WITH GROWING Domestic and GLOBAL DEMAND.
KMI usually increases their dividend in April, but has preannounced a desire to increase it one cent for the last three quarters of 2022.
I'm therefore using the anticipated but not yet confirmed dividend rate of 1.08 (current) plus the three cents for Q2 thru Q4 = 1.11 total.
Today I have sold 10 $15.00 puts on KMI January 20 2023 for $1.15. If assigned to me that would be a net purchase price of $13.85. If assigned that would yield $1.11/13.85 = 8.01%
If not assigned, I have used my account equity to gain $1150.00 cash in my account. $1,150/$13,850 = 8.30% yield over 11 months. that creates an annualized return 8.30% / .9067 = 9.16% annualized return.
Both of those alternatives fit my investment goals.
It adds $1150.00 to my account and I use $13,850 of my account equity collateralized for 11 months. If assigned to me, I'll allocate $13,850.00 dollars of my future dividend revenue stream plus the $1150.00 received today and buy 1000 shares of KMI for a continual dividend of $1111.00 a year which will yield 8.01 % on my adjusted cost.
As KMI swings up and down, I'm OK with either alternative. This type of investing takes the fear out of the trade to me.
If KMI misses earnings, I'll gladly double down with another 10 or 20 more puts. shooting for $3500 in cash and a $45,000 future expenditure in January 2023.
Bob |
