Kinder Morgan Growth Prospects Get Attention


Kinder Morgan Energy Partners ( KMP ) has been up every day since July 16, when it reported earnings, looked forward to expansion plans in response to growing U.S. fossil-fuel production, and increased its dividend.

Earnings of 49 cents a share were flat compared with a year ago. Yet the year-ago quarter included $558 million in gains due to the remeasurement of Kinder Morgan's stake in the Eagle Ford Gathering, a hub for the transportation of natural gas.

The company owns 80,000 miles of pipelines and 180 terminals that transport and store crude oil, natural gas, gasoline, jet fuel, ethanol, coal, petroleum coke and steel. The company thinks of itself as a giant toll road that collects a fee for its service and avoids the risk of fluctuating commodity prices.

The company has benefited from the expansion of domestic shale drilling and the prospect of exports of U.S. natural gas and oil.

CEO Richard Kinder said in a conference call that his company has identified $17 billion in expansion and joint-venture investments.

Kinder Morgan landed at the top of IBD's Dividend Leaders screen, which factors in dividend yield and growth rate, EPS and Relative Price Strength Ratings, and earnings and dividend stability. It screens out thinly traded stocks that lack earnings and dividend.

At the same time it reported earnings, Kinder Morgan announced it was raising its quarterly dividend 5% to $1.39 a share, which works out to a 6.6% annual yield.

The next dividend is payable Aug. 14 to shareholders of record July 31.

In 2000, the company paid an 85-cent quarterly dividend.

The company has a five-year annualized EPS growth rate of 16% with an Earnings Stability Factor of 8 on a 0 to 99 scale where low numbers correspond to steady earnings growth.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: KMP

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