Should You Buy Kinder Morgan Before April 30? | The Motley Fool (2024)

The natural gas pipeline giant is an income-producing machine.

Investors interested in Kinder Morgan (KMI -0.64%) should make a note of April 30. It's an important date for those interested in receiving the natural gas giant's lucrative dividend.

Here's a closer look at why that date matters for dividend investors and what the longer-term future holds for the pipeline stock and its high-yielding dividend.

Payday is coming

Kinder Morgan recently declared its latest dividend. The natural gas infrastructure company will make its next quarterly dividend payment of $0.2875 per share on May 15. However, investors interested in receiving that dividend must be shareholders of record by market close on April 30. You don't need to do a thing if you already own shares; you'll automatically receive its next payment. On the other hand, if you've been considering investing in Kinder Morgan to start earning dividend income, you'd need to buy shares by the end of this month to receive its next payment. Otherwise, you won't see your first dividend payment until next quarter.

The company's upcoming dividend payment is noteworthy. Kinder Morgan recently increased its payout to an annualized rate of $1.15 per share, up about 2% from last year's rate. That's its seventh straight year of increasing the payment. With the stock recently trading at around $19 per share, Kinder Morgan's dividend yield is above 6%. That's significantly higher than the S&P 500 index's current yield of 1.4%. Put another way, every $1,000 invested into Kinder Morgan stock would generate more than $60 of annual dividend income, compared to around $14 for an S&P 500 index fund.

While you'd need to buy Kinder Morgan stock by the end of this month to receive its upcoming dividend, you don't need to rush out and buy shares if you're not ready. The company makes dividend payments every quarter, so there will be plenty more to come.

Plenty of fuel to keep paying dividends

Kinder Morgan should have no problem continuing to pay dividends. It generates very stable cash flow. Roughly 68% of its cash flow is from take-or-pay contracts or hedging agreements, meaning Kinder Morgan gets paid the full rate regardless of market conditions. Meanwhile, long-term, fee-based contracts back the bulk of its remaining cash flow. While they have some volume sensitivity, they limit its exposure to commodity price volatility. Those features drive Kinder Morgan's view that it will generate about $5 billion, or $2.62 per share, of distributable cash flow this year, up about 8% from last year.

With its dividend payment set at $1.15 per share, Kinder Morgan has a very conservative dividend payout ratio of around 51%. That will enable it to retain roughly half of its stable cash flow to fund expansion projects and maintain its strong balance sheet. The company expects to end the year with a 3.9 times leverage ratio, putting it toward the lower end of its 3.5x to 4.5x target range. That low leverage ratio gives Kinder Morgan the flexibility to opportunistically repurchase shares or make an acquisition.

The company also has a growing backlog of high-return expansion projects to grow its cash flow in the coming years. Kinder Morgan ended the first quarter with $3.3 billion of projects that should enter service over the next few years, a net $300 million increase from the end of last year. Meanwhile, the company sees plenty of expansion opportunities still ahead, fueled by growing demand for natural gas from catalysts like LNG and AI. It also has ample financial flexibility to continue making needle-moving acquisitions, like last year's $1.8 billion deal for STX Midstream. The company's growth-focused investments will increase its cash flow, giving it more fuel to continue raising its dividend payments.

An income stock for the long haul

Kinder Morgan will make its next dividend payment in May. While that means investors will need to own shares by the end of this month to collect that payment, there's really no rush. Kinder Morgan's stable cash flow, strong financial profile, and visible growth prospects suggest it should have the fuel to continue paying dividends for years to come. That makes it a great stock to buy for those seeking a long-term income stream.

Matt DiLallo has positions in Kinder Morgan. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool has a disclosure policy.

Should You Buy Kinder Morgan Before April 30? | The Motley Fool (2024)


Is Kinder Morgan stock a buy? ›

An income stock for the long haul

Kinder Morgan's stable cash flow, strong financial profile, and visible growth prospects suggest it should have the fuel to continue paying dividends for years to come. That makes it a great stock to buy for those seeking a long-term income stream.

How to invest in Kinder Morgan? ›

Kinder Morgan does not offer a direct investment program and KMI must be bought through a broker or through our transfer agent Computershare.

Is KMI a good stock to buy now? ›

KMI Analyst Recommendation Trends

In the current month, KMI has received 3 Buy Ratings, 4 Hold Ratings, and 0 Sell Ratings. KMI average Analyst price target in the past 3 months is $20.00.

Is KMI a safe investment? ›

Kinder Morgan (NYSE: KMI) offers investors a big-time income stream. The natural gas pipeline giant currently yields 6.4%, which is one of the highest payouts in the S&P 500 (where the average is 1.4%). Despite its high yield, Kinder Morgan offers one of the safest income streams in that broad market index.

How is KMI dividend taxed? ›

Kinder Morgan, Inc.'s dividends paid in 2022 are return of capital for U.S. tax purposes. Based on information available at the time of this posting, distributions made during 2022 are non-dividend distributions and treated as a return of capital.

Does Kinder Morgan pay monthly dividends? ›

Kinder Morgan, Inc.'s ( KMI ) ex-dividend date is April 29, 2024 , which means that buyers purchasing shares on or after that date will not be eligible to receive the next dividend payment. Kinder Morgan, Inc. ( KMI ) pays dividends on a quarterly basis. The next dividend payment is planned on May 15, 2024 .

What kind of dividend does Kinder Morgan pay? ›

Kinder Morgan, Inc.'s (NYSE: KMI) board of directors today approved a cash dividend of $0.2775 per share for the first quarter ($1.11 annualized), payable on May 16, 2022, to stockholders of record as of the close of business on May 2, 2022. This dividend is a 3% increase over the first quarter of 2021...

What is the price prediction for Kinder Morgan? ›

Based on short-term price targets offered by 16 analysts, the average price target for Kinder Morgan comes to $20.38. The forecasts range from a low of $17.00 to a high of $23.00. The average price target represents an increase of 8.29% from the last closing price of $18.82.

What is the 5 year forecast for JP Morgan stock? ›

JPMorgan Chase stock price stood at $193.28

According to the latest long-term forecast, JPMorgan Chase price will hit $200 by the middle of 2024 and then $250 by the middle of 2025. JPMorgan Chase will rise to $300 within the year of 2026, $350 in 2027, $400 in 2028, $450 in 2030 and $500 in 2033.

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