Things may become strained here as we move closer towards guidance for Q2 which (on a calendar basis) ends on the end of this month of June.
We've been brought to expect a distribution in the amount of 39 cents ($1.56 per year). However, in my opinion it would be a mistake to count on it holding up, given uncertainties surrounding the whole energy sector currently. Too, it should be recalled (can any of us forget our disappointment when the earlier distribution cut was NOT restored as we were led to expect?)
As I study the scene, I cannot dismiss a strengthening possibility of there being a second cut in distribution. At $12/unit, the current distribution of $1.56/yr. amounts to a straight-ahead distribution of 13% which means the actual yield is well above because 4 39-cent payouts bring the unit price to $13.56 which reflects a current yield of more than 13% after compounding for sequential quarters with payouts.
There aren't many stocks out there paying at that level. If the unit price fails to rise, bringing the distribution more in line with the general market for a stock such as this one, then it tells me that investors are seeing at least what I am and possibly more.
What it boils down to for me is this:
With roughly six weeks to go before guidance, anything can happen and probably will. It is extremely important NOW that the more aggressive dividend/distribution hunter maintain some dry powder to be used if and when management declares a further cut. It could easily force a valuation drop of 20% in my opinion. And it would be a huge shame, finding yourself unable to take advantage of another firesale auction.
Six weeks is a veerrry long time! High frequency traders and their computer have lots of patience as they're not driven by emotion. Please---keep some cash (dry powder) close to the vest. I know how this stock works, been in it long enough to think like NGL thinks. I'm not encouraging anybody to buy, so please don't think of this as my imploring others to extend themselves because of any ulterior motive you might presume. I am holding back from adding, myself!
This is my own set-up at the moment:
I have orders to add 100 units of NGL at $11.50, $11.25 and an order for 200 units at $11.00. These are all GTC orders with a month-long timeline attached, affording me opportunity to tweak along the way.
This doesn't mean I expect those orders to execute, only that I sense opportunity here and I don't want to become my own fool. It's for this reason I ask that you examine possibilities from all angles to get the most bang for your bucks. We're in this together and I'm as confident as ever that we'll be making some very serious coin.
