Kinder Morgan Dividend Increase

Kinder Morgan Inc (KMI) announced a 4.08% increase in its cash dividend! The quarterly cash dividend will increase from $0.49 to $0.51 per share and payable on Nov 13, 2015 to shareholders on record as of Nov 02, 2015. The annual dividend rate goes up from $1.96 to $2.04. Yield going forward is 6.49%. This is Kinder Morgan’s 15th dividend raise since going public in Feb 2011.

“We are pleased with KMI’s steady third quarter results that cover our 16 percent dividend increase to $0.51 per share. We remain on track to meet our full-year dividend target of $2.00 per share with substantial excess cash coverage despite continued challenging conditions in the energy sector,” said Executive Chairman Richard D. Kinder. “While we are largely insulated from commodity price impacts due to our predominately take-or-pay supported cash flows, we are not totally immune.

“As a company, we remain focused on our goals to continue to return cash to our shareholders in increasing amounts, to maintain our investment grade ratings and leverage targets while funding our business in the most efficient and economical way possible. We believe an appropriate response to the challenging current equity markets is to identify alternative funding sources that help us meet our goals and have a lower expected long-term cost of capital than our common equity. We have identified alternative sources and have selected one of these to pursue, as appropriate, to meet our equity funding requirements for the balance of 2015 and for the first half of 2016. This would eliminate our need to access the common equity markets through mid-next year. Additionally, while we are at the beginning of our budget process for 2016, we currently expect to increase our declared dividend for 2016 by 6 to 10 percent over the 2015 declared dividend of $2.00 per share. We expect this range will provide the flexibility for us to meet our dividend and have excess cash coverage.” More details from the press release can be found here.

My portfolio consists of 104 shares of KMI, which increases my annual dividends from $203.84 to $212.16, an increase of $8.32.


9 thoughts on “Kinder Morgan Dividend Increase

  1. Cha ching! Apparently the board have faith in longtime prospect of energy. Great to know. I’m not turning down on 4% raise. I have yet received a raise from my job, but the businesses I own is paying me pretty money.

    • Yup…I wasnt expecting a 4% raise this quarter and was expecting a 2% raise like the previous quarters. Interestingly the forward div raises have been lowered from 10% to a range now of 6-10%. Still a great div growth rate even at the lower end for a 6.5% yielder


  2. I have been a bit concerned on KMI, because the yield is reaching risky levels, and the industry as a whole is not doing well. It appears they will be buying a company to sustain growth or earnings. If that doesn’t pan out, what is the real future of KMI?

    • Thanks for stopping by and the comment, El. I am not too concerned about teh whole industry – as the fee-based industry is a great business model. The payout is huge and they are tapping into the future earnings. Loving the constant pay raises though


  3. While I am certainly thrilled for a 4% raise (easiest pay raise I will ever get), I have to echo El’s concerns about their coverage of the dividends. What’s the payout ratio? I imagine it’s pretty high right now.

    ARB–Angry Retail Banker

    • Hi ARB,
      I agree…that the payout is quite high and they are sending more future cash to investors and aggressively at that. I was tempted to add today, but I have a full position and I think I will stick with it and see where things go.

      Love the regular pay raises

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