Trump Pumps Up Pipeline Stocks, and I’m Holding On

Way back on December 11, 2015, I tossed the Kayne Anderson MLP Closed-End Fund (KYN) into my retirement account, back when it was around $14.

President Trump signed orders to expedite the goverment's review of the Keystone XL and Dakota Access pipelines, which is driving up shares of MLP's, with KYN breaking through $20.

KYN's second biggest holding is Energy Transfer Partners (ETP) (19% of the fund), which is building the Dakota Access pipeline.

This is a nice gain, but I'm not selling any.

Why?

Because KYN's 4 most recent quarterly dividends have been returns of capital, not actual income.

That means KYN has been distributing fund assets back to fund owners. So there are no actual income gains — they've all been from price appreciation.

Assuming these pipelines go through, and assuming we see more domestic oil production under Trump, KYN could actually start distributing real income back to shareholders.

That would be a huge catalyst, possibly breaking KYN out of its 8-month channel.

Also, KYN is trading at a mere +0.2% premium to NAV vs. a 3-year average of +3.8%.

That premium has actually gone as high as 16.4% over the past 5 years.

So I'm going to let it ride. It's come a long way but I don't think froth has set in.

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