Assessing the Sustainability of Kinder Morgan Inc's Upcoming Dividend
Kinder Morgan Inc (KMI, Financial) recently announced a dividend of $0.29 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-29. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Kinder Morgan Inc's dividend performance and assess its sustainability.
What Does Kinder Morgan Inc Do?
Kinder Morgan is one of the largest midstream energy firms in North America, with an interest in or an operator on about 82,000 miles in pipelines and 139 storage terminals. The company is active in the transportation, storage, and processing of natural gas, crude oil, refined products, natural gas liquids, and carbon dioxide. The majority of Kinder Morgan's cash flows stem from fee-based contracts for handling, moving, and storing fossil fuel products.
A Glimpse at Kinder Morgan Inc's Dividend History
Kinder Morgan Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Kinder Morgan Inc's Dividend Yield and Growth
As of today, Kinder Morgan Inc currently has a 12-month trailing dividend yield of 6.05% and a 12-month forward dividend yield of 6.16%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Kinder Morgan Inc's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 8.00% per year. And over the past decade, Kinder Morgan Inc's annual dividends per share growth rate stands at -2.70%.
Based on Kinder Morgan Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Kinder Morgan Inc stock as of today is approximately 8.89%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Kinder Morgan Inc's dividend payout ratio is 1.05, which may suggest that the company's dividend may not be sustainable.
Kinder Morgan Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Kinder Morgan Inc's profitability 7 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Kinder Morgan Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Kinder Morgan Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Kinder Morgan Inc's revenue has increased by approximately 9.90% per year on average, a rate that underperforms than approximately 61.05% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Kinder Morgan Inc's earnings increased by approximately 16.20% per year on average, a rate that underperforms than approximately 55.91% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.70%, which underperforms than approximately 46.88% of global competitors.
Next Steps
In conclusion, while Kinder Morgan Inc's dividend payment history has been consistent, investors should monitor the dividend growth rate, payout ratio, profitability, and growth metrics closely. The current payout ratio may raise concerns about sustainability, but the company's solid profitability rank and positive net income history provide some reassurance. Growth metrics, although mixed, still position Kinder Morgan Inc favorably among its competitors. As value investors consider their positions, they should weigh these factors to determine if Kinder Morgan Inc's dividends align with their investment goals. Will Kinder Morgan Inc continue to provide a steady stream of income for its shareholders? Only time will tell, but the data available offers a comprehensive foundation for making an informed decision.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
