Kinder Morgan (NYSE: KMI) currently has a dividend yield of almost 5%. That makes it one of the highest-yielding dividend stocks in the US S&P500where the average is less than 1.5%.
The pipeline inventory The high-yield payout makes it an excellent option for those looking collect dividend income. Here’s a closer look at the dividend payout.
Kinder Morgan currently pays a quarterly dividend of $0.2875 per share, or $1.15 per year. This payment is approximately 2% higher than the previous year’s level. The natural gas pipeline company has increased its payout for seven years in a row, with the last increase coming when it reported its first-quarter results in April.
Although Kinder Morgan has a high dividend yield, it does not have a high dividend dividend payout ratio. The company is on track to pay $2.6 billion in cash dividends this year. That is a little more than 50% of the expected distributable cash flow of $5 billion. The company produces terribly stable cash flow supported by long-term contracts and government-regulated rate structures.
That conservative payout ratio allows Kinder Morgan to retain cash to fund expansion projects and maintain a strong balance sheet. The company currently has $5.2 billion in committed capital projects, about half by which should be put into use at the end of next year. It has that too a big one A $1.7 billion pipeline expansion project that should begin commercial service in late 2028. These projects will increase cash flow, providing more fuel to pay dividends.
Kinder Morgan also has a strong balance sheet. It’s expected leverage ratio will be approximately 3.9 times as large by the end of this year. That is well within the recently reduced long-term target of 3.5 to 4.5. That gives it the flexibility to approve additional expansion projects, make positive acquisitions and opportunistically repurchase shares.
Kinder Morgan’s stable cash flow and conservative financial profile put its high-yield dividend on rock-solid footing. With even more growth on the horizon, it is an excellent option for those looking for a sustainable and steadily rising economy stream of dividend income.
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Matt DiLallo holds positions at Kinder Morgan. The Motley Fool holds and recommends positions in Kinder Morgan. The Motley Fool has a disclosure policy.
What is the dividend payout for Kinder Morgan? was originally published by The Motley Fool
