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#1 – Kinder Morgan

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With a dividend yield of 6.4%, the income appeal of Kinder Morgan Energy Partners LP (NYSE: KMP) is obvious. But there’s likely upside for shares in store, too.

In September, Kinder Morgan increased the size of its market-leading subsidiary Kinder Morgan Treating by buying Gas-Chill Inc. The companies build machines and facilities that remove natural gas liquids from the streams of natural gas flowing through pipelines. Gas-Chill builds condensers called mechanical refrigeration units (MRUs) that cool the natural gas enough to separate the liquids, send the gas on its way down the pipeline, and store the liquids for future use.

There isn’t a lot of competition in this space, and the acquisition of Gas-Chill gives KMP even more dominance. KMP shares have outpaced the market about 2-to-1 so far in 2010, and I expect the trend to continue.

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