Kinder Morgan: A Dividend Growth Star Is Born - $KMI

By Albert Alfonso

First, let us discuss the short-term benefits of the merger — higher income. Kinder Morgan is projected to pay dividends of $2.00 per share for 2015, a 16% increase from the expected 2014 dividend of $1.72 per share. . . .

Second, due to its much lower cost of capital and simpler structure, the new Kinder Morgan is expected to post average dividend growth of 10% through 2020. Considering that KMP’s distribution growth had slowed down to 5%, EPB to 1%, and the old KMI to 8%, this level of growth is extremely robust. . . .


Back in April, I initially wrote a string of articles suggesting that Kinder Morgan should merge, I was met with at best skepticism and at worst ridicule. Many of my readers and even other authors thought that such a deal was never going to happen. However, the simple fact of the matter was that all the Kinder Morgan related stocks were trading at HUGE discounts to peers and were likely to continue to do so without intervention. I will admit that I did get the method of the transaction wrong, thinking that KMP would buyout the whole KMI or only the IDRs rather than KMI merging all of them into a single entity.

Thankfully, Kinder Morgan took this bull by the horns and made the merger a reality. The resulting KMI is now a much stronger stock and should be considered a solid buy for any dividend growth investor.

Read the full article here.

KMI Kinder Morgan Inc

About Albert Alfonso

My main investing focus is on finding and analyzing high-yield dividend stocks. I have a strong preference for deep value and/or dividend-growth stocks. I am also currently a student majoring in financial accounting. I have been actively trading stocks since 2009.

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