Details of DTE Energy Spin-off of DT Midstream Shares Confirmed

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Detroit-based utility, DTE Energy had announced the spin-off of its midstream division last year. On Friday, the spin-off details were confirmed in a press release. DT Midstream will start trading on the NYSE from July 1, 2021 under the ticker DTM. Current shareholders of DTE Energy(DTE) as of record date of June 18, 2021 will receive one share of DTM for every two shares of DTE.

Below is an excerpt from the press release:

DETROIT, June 04, 2021 — DTE Energy (NYSE:DTE) today announced that its Board of Directors has declared a pro rata dividend of the outstanding shares of DT Midstream common stock, to be distributed at 12:01 a.m. ET on July 1, 2021, to DTE’s shareholders of record as of 5:00 p.m. ET on June 18, 2021, the record date for the distribution. The distribution is subject to the satisfaction or waiver of certain conditions.

As previously announced, DTE shareholders will retain their current shares of DTE Energy common stock and, on the distribution date, each DTE shareholder will also receive, for every two shares of DTE common stock owned as of the record date, a distribution of one share of DT Midstream common stock. Fractional shares of DT Midstream common stock will not be distributed to DTE shareholders. Instead, the fractional shares of DT Midstream common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in cash payments to DTE shareholders who would otherwise receive a fractional share of DT Midstream common stock.

No action or payment is required by DTE shareholders to receive the shares of DT Midstream common stock or cash in lieu of fractional shares. An Information Statement containing details regarding the distribution of the shares of DT Midstream common stock, DT Midstream’s business and management following the spin-off and other information regarding the spin-off will be made available to DTE shareholders prior to the distribution date.

For U.S. federal income tax purposes, DTE’s U.S. shareholders (other than those subject to special rules) generally should not recognize gain or loss as a result of the distribution of DT Midstream shares, except with respect to cash received in lieu of fractional shares. DTE shareholders are urged to consult with their tax advisors with respect to the U.S. federal, state and local or foreign tax consequences, as applicable, of the spin-off.

“Today’s announcement marks another important milestone toward completing the planned spin-off of DTE’s non-utility Midstream business,” said Jerry Norcia, DTE Energy president and CEO.

“Following the separation, DTE will be a best-in-class predominantly pure-play utility that is well positioned to continue delivering clean, safe, reliable and affordable energy and significant value creation,” Norcia continued. “DT Midstream will also be poised for success and value creation with numerous growth opportunities as a premier, independent midstream company with assets in premium basins connected to major demand markets.”

Beginning on or about June 17, 2021 and continuing until, but not including, the distribution date, it is expected that DT Midstream common stock will trade on a “when-issued” basis on the NYSE under the ticker symbol “DTM WI.” On Wednesday, June 30, 2021, when-issued trading of DT Midstream common stock will end and on Thursday, July 1, 2021, DT Midstream common stock will begin trading “regular way” on the NYSE under the ticker symbol “DTM.” DTE will continue to trade on the NYSE under the ticker symbol “DTE”.

Also beginning on or about June 17, 2021 and continuing until, but not including, the distribution date, it is expected that there will be two markets in DTE Energy common stock. DTE Energy shares that trade in the “regular way” market under the symbol “DTE” will trade with an entitlement to shares of DT Midstream common stock to be distributed pursuant to the distribution. DTE Energy shares that trade in the “ex-distribution” market under the symbol “DTE WI” will trade without an entitlement to shares of DT Midstream common stock. DTE shareholders who sell their shares in the “regular way” market before the distribution date, will also be selling their entitlement to receive DT Midstream common shares in the distribution. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling DTE Energy common stock on or before the distribution date.

Source: DTE Energy

Key points:

  • 1 DTM share for every 2 DTE shares
  • Fractional shares due will be paid in cash
  • Taxes will be due on cash payment for fractional shares
  • No tax implications for US investors for receiving DTM shares
  • Like DTE, DTM also will trade on the NYSE

Disclosure: Long DTE

CSX Corporation: Upcoming 3-for-1 Stock Split

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CSX Corporation, of the major US railroads has announced a stocks split in the ratio of 3:1. This move follows Canadian Railroad Canadian Pacific’s (CP) stock split last month.  When the news release came out on Friday, CSX closed at $99.62 and the 52-week high was $104.87. Below is an excerpt from the announcement:

JACKSONVILLE, Fla., June 04, 2021 (GLOBE NEWSWIRE) — CSX Corporation (NASDAQ: CSX) today announced that its Board of Directors has approved a 3-for-1 stock split to be distributed to shareholders as a stock dividend. Each shareholder of record at the close of business on June 18, 2021, will receive two additional shares of CSX common stock for each share held as of this record date. The new shares will be distributed on June 28, 2021.

The regular, quarterly cash dividend of $0.28 per share payable on June 15, 2021, will not be impacted by the stock split.   Based on the current dividend rate, the post-split quarterly dividend on the company’s common stock would be $0.093* per share.

*On a post-split basis, the dividend will be carried out six decimal places to most closely approximate the current dividend amount.

Source: CSX ANNOUNCES STOCK SPLIT, CSX, 6/4/21

CSX has had 4 stock splits so far. The last split of 3 for 1 was in 2011. Investors holding CSX will see the additional two shares for each share they own on June 28, 2021.

It is possible that the other US railroads – Union Pacific(UNP) and Norfolk Southern Corp(NSC) – may also split their stocks following the trend. Both the stocks are trading at high price levels. Norfolk Southern closed at over $279 and Union Pacific at over $226 on last Friday.

Disclosure: Long CSX, NSC and UNP

Antonov An-225 Mriya – The World’s Largest Aircraft: Video

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The Antonov An-225 Mriya is the world’s largest aircraft ever built. It has six powerful turbo engines and a maximum takeoff weight of 640 tons. In the below video from WELT Documentary, the An225 transports twelve electrical transformers from Chile to Bolivia across the mighty Andes mountains. Another excellent video from this channel showing the power of this amazing plane.

Click to enlarge


 

Source: WELT Documentary via YouTube

Dividend Stocks Are Great To Beat Rising Inflation

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One of the factors that investors are having to deal with this year is Inflation. Soaring demand for goods and services as the economy opens up in the US and shortage of select items are driving prices higher. For example, used auto prices have shot up in recent months due to reduced supply of new autos which in turn was caused by lack of semiconductor chips. Similarly prices of food products are going up as well. Housing prices are in the stratosphere as prices of materials such as timber have increased many fold and also too many investors with too much money have  turned housing into another avenue for speculation. Last month we learned that the Consumer-Price Index in April jumped 4.2% in April from a year earlier, the highest since 2008. From a journal article:

Food prices rose 2.4% from the same month a year ago, including a 3.8% jump in the cost for restaurant meals and other meals away from home. Car and truck rentals surged 82% compared with April 2020, and airline fares leapt 9.6%.

The annual inflation measurements are currently being affected by comparisons with the figures from last year early in the pandemic, when prices dropped steeply a demand collapsed for many goods and services during Covid-19 lockdowns, said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. This “base effect” is expected to influence inflation readings until the summer, she said. For example, gasoline prices soared 50% versus April 2020, though they decreased 1.4% versus March.

Compared with two years ago, overall prices rose a more muted 2.2% in April, on an annualized basis.

The Fed has said that it expects the inflation pickup to be temporary, and a top official on Wednesday said the central bank would need to see more data before changing course on monetary policy. It has said it would hold rates near zero until the central bank’s preferred inflation measure is averaging 2% and full employment has been achieved. A persistent, significant increase in inflation could prompt the central bank to tighten its easy-money policies earlier than planned, or to react more aggressively later, to achieve its 2% inflation goal.

Source: Consumer Prices Jumped as Economic Recovery Picked Up, WSJ, May 13, 2021

The below chart shows the dramatic spike in inflation:

Click to enlarge

Source: Pent-up demand, shortages fuel U.S. inflation, Reuters

It remains to be seen if the current trend is just transitory as the Fed states.

If inflation does keep rising or remains elevated, how to protect your investment from its adverse impacts?

The answer lies in smartly picking and holding dividend-paying stocks. According to research by Fidelity Australia, annualized dividend growth since 1900 has outpaced CPI growth nearly 73% of the time. From the article:

This week’s Chart Room looks at the long-term relationship between dividends and inflation. Periods of inflation can be challenging for income-seeking investors, as inflation eats into the real purchasing power of bond coupons, which are generally fixed at a certain level. By contrast, dividends are a share of the corporate profit pool, and so when profits are rising, they can rise too. This growth means they can increase in line with, or ahead of, inflation, protecting the real purchasing power of these income streams. Since 1900, the 10-year annualised growth in dividends across the S&P 500 has outpaced CPI growth nearly three-quarters (73 per cent) of the time.

Click to enlarge

The market’s recent focus on themes like ‘stay at home’ and, more recently, ‘reopening and reflation’ has seen many stocks which don’t fit into these buckets falling out of favour. We think this is particularly true in defensive sectors like consumer staples, utilities and healthcare, where some high-quality companies with good dividend prospects now look undervalued. For income-focused investors, that means it’s a great time to take the long view.

Source: Why dividends make sense in an inflationary environment, Fidelity Australia

Earlier: 

Related ETFs:

  • iShares Dow Jones Select Dividend ETF (DVY)
  • SPDR S&P Dividend ETF (SDY)
  • Vanguard Dividend Appreciation ETF (VIG)
  • Vanguard High Dividend Yield ETF (VYM)

Disclosure: No Positions

Airbus A350 – Amazing Feat of Engineering in Aviation: Video

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The Airbus A350 jet that started commercial operations in 2015 has exceptional engineering features. The wide-body, long range plane has a maximum range of 16,100 km. With global air travel slowly starting to recover from the pandemic airlines may flying their A350 fleet to meet increasing demand for long distance travel. With that brief intro, below is an excellent video on A350 from WELT Documentary:


 

Source: YouTube

Below is another promo video from Airbus hi-lighting some cool features:


 

Source: Airbus