Shares of Kinder Morgan were plunging in Monday’s session after Jefferies analyst Christopher Sighinolfi released a new report calling for the company to reduce its dividend to $0.01 per quarter through 2017. The report has also triggered a sell-off throughout the MLP space as fears of a wave of yield cuts have spread throughout the market.

The Proposal

Sighinolfi believes that Kinder Morgan should take a page from the book of 2012 acquisition El Paso, which reduced its dividend to $0.01 per quarter to weather the previous downturn in oil process back in 2009. “Specifically, we believe a reduction in KMI’s dividend to 1 cent/qtr through 2017, reinstated to $2 in 2018 with 5% annual growth through 2020, will enable KMI to fully fund its capex without any equity issuance, de-lever its BS & retain IG credit,” he explained.

Jefferies maintained its Hold rating on the stock, but drastically reduced its price target from $33 to $15.

Market Reacts

Shares of MLP stocks throughout the market were plummeting…

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