JP Morgan Alerian MLP Index ETN (AMEX: AMJ) is one of the most liquid instruments out there in the world of MLP investing, but another competing interest is a closed-end fund that employs some leverage called Kayne Anderson MLP Investment Company (NYSE: KYN). The Alerian ETF closed up 1-cent at $36.39 against a 52-week range of $31.52 to $41.68, while the Kayne Anderson fund closed up 5-cents at $29.64 against a 52-week range of $22.87 to $33.10.
24/7 Wall St. has been monitoring the MLP sector routinely in an attempt to monitor whether or not these high payouts can continue to rise without the issuance of new shares on such a routine basis. MLPs have been raising their per share (unit) payouts, with some as income and some as a return of capital that is taxed differently than traditional dividends.
If there is any slowdown of the rising payout trends, it is not evident today. Kayne Anderson just increased its quarterly distribution by almost 2% to $0.5275 per share for the quarter ended May 31, 2012 versus $0.5175 per share one quarter ago (and up 6% from the same quarter a year ago). And as for that tax situation, this still remains: “It is anticipated that a significant portion of this distribution will be treated as a return of capital for tax purposes.”
This was listed as the seventh consecutive increase for the Kayne Anderson holders, but the Alerian (AMJ) ETF has had more sporadic and up and down quarterly payouts. We took a look at the top holdings of the fund and saw that the breakdown was as follows:
- Enterprise Products Partners LP (NYSE: EPD) is 9.4% of the weighting in the Kayne Anderson fund and it has also been raising its payout through time.
- Kinder Morgan Management LLC (NYSE: KMR) is 7.3% of the Kayne Anderson fund and it has continued to lift its payouts as well.
- Kayne Anderson recently showed that its allocation of investing assets is as follows: Midstream MLP (70%), MLP Affiliate (9%), General Partner MLP (6%), Shipping MLP (5%), Propane MLP (2%), Upstream MLP & Income Trust (3%) and Coal MLP & Other (5%).
MLP growth may depend upon new share issuances, and maybe the not. Either way the payouts are rising yet once again.
JON C. OGG