The fund’s long-term growth in value for shareholders should be driven by fundraising and platform build-out. In the last quarter, the company raised ~$2.3 billion from close-ended and open-ended funds bringing the yearly total to ~$11 billion. In 2013 it is expected that the company will raise around $10 billion through Opps Fund IX, Principal Opps fund VI, etc. Looking at the company’s history, I am optimistic that it should be able to raise the required amount.
Oaktree Capital has been a performer for its unit-holders and shareholders. The strong incentive income and fund-raising ability makes the current price of this stock a good entry point.
Kinder Morgan
For 4Q12 the company declared dividend of $0.37 per share which was mostly in-line with the consensus estimates. The expected dividend for 2013 comes around $1.57 per share. For the next few years, I see the Kinder Morgan Inc (NYSE:KMI) Complex as a regular source of fee-based income and growth for investors of the company. The Complex includes a collection of midstream assets which connect many of the resource basins and demand centers across North America. The complex provides an opportunity of $12 billion for the upcoming five years in form of natural gas pipelines, terminals, CO2 handling, and Canadian oil pipelines. And, the company has a well hedged position which mitigates the downside side for long-term. Only 20% of its earning is subject to commodity prices.
One of the recent events related to the company was Kinder Morgan Energy Partners LP (NYSE:KMP) acquiring Copano Energy, L.L.C. (NASDAQ:CPNO). Kinder Morgan Energy, Kinder Morgan’s sister concern, acquired Copano with 100% unit for unit exchange. For every unit of Copano, Kinder is offering 0.4563 unit of its own. The value of the transaction is ~$5 billion. Because of the above deal Kinder Morgan Incorporated is giving up its incremental incentive distribution rights (IDR) towards Morgan Energy over next several years. But after netting the IDR effect, Kinder Morgan Incorporated expects accretive cash availability of $25 million in 2014 and $70 million in 2016. This should support the expected higher dividend growth and the investors will receive this incremental cash without deploying any new capital.
The future cash generation ability of the company is intact and despite the fact it will give up IDR for the deal it should still achieve a growth in its dividend payouts.
Conclusion
For all these dividend stocks, ability to generate cash for distribution in future seems sound and the future growth drivers are strong. Fidelity National’s new long-term deals including the one with Webster Bank and other new acquisitions should provide the stock an upside. Oaktree Capital’s income generation from distribution of Opps VIIb fund gives the stock a short-term boost and the long-term position of the company seems strong due to the fundraising in 2013. And, Kinder Complex and accretive cash generation post the Copano deal should help Kinder Morgan Incorporated achieve the goal of high dividend growth in the future.
The article 3 Sweet Spots for Income Investors originally appeared on Fool.com and is written by Madhu Dube.
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