Richard Kinder continues to prove his critics wrong.
Kinder Morgan’s (KMI) latest earnings shows that dividend and distribution growth is alive and well at the traditionally boring pipeline and midstream giant. Last year, concerns raised by investing newspaper Barron’s along with analysts at Hedgeye Risk Management about KMI stocks cash flows and capex spending sent the leading midstream firm into the toilet.
Well, you can add another quarter of distribution growth on the pile. KMI’s latest earnings showcases why Kinder Morgan is still one of the best midstream firms on the planet.
Another Bang-Up Quarter for KMI
After Hedgeye issued its report back in September on KMP & KMI stock, the key for investors has been the tale of Kinder Morgan’s cash flows and dividends. Well, this is now the third consecutive quarter of solid cash flow growth to counter Hedgeye’s concerns on the midstream giant.
KMI has a vast network of pipelines, terminals and other storage assets — totaling roughly 82,000 miles. That monster network of midstream assets continues to generate higher fees for users. This past quarter was no different as KMI’s focus on natural gas assets — via its buys of El Paso and Copano — has been working flawlessly. Those natural gas pipelines have been a monster source of earnings.
For the latest quarter, Kinder Morgan managed to produce another strong increase to its cash flows. KMI’s cash available to pay dividends increased to a little more than $573 million. That’s a 12% boost year-over-year and helped bump up KMI’s dividend coverage ratio to 1.31 times payout versus last quarter’s 1.12x. This mark also puts KMI back in line with its average coverage ratio for 2013.
On the flipside, Kinder Morgan’s two master limited partnerships (MLPs) also managed some pretty impressive cash flow figures.