In 2024, the value of Kinder Morgan stocks witnessed a notable increase of 55%.
In 2024, the value of Kinder Morgan stocks witnessed a notable increase of 55%.
2024 saw a significant turnaround for Kinder Morgan (KMI), with shares of the pipeline titan soaring an impressive 55.3% throughout the year. This impressive gain outpaced the S&P 500's 23% increase, putting Kinder Morgan in the spotlight.
Following a tumultuous 2023, Kinder Morgan anticipated a stronger year, backed by an acquisition and a burgeoning backlog. The pipeline giant delivered robust numbers throughout 2024, as natural gas prices resurged in the second half, further propelling Kinder Morgan's rally. The company is now poised to complete another acquisition in 2025, set to amplify its earnings even further.
Steady Earnings Growth and Large Backlog
Kinder Morgan's acquisition of NextEra Energy Partners' South Texas natural gas pipelines (STX midstream) in late 2023 for $1.8 billion played a pivotal role in its success. Organic expansions, reduced costs, and the acquisition contributed to a 4% increment in EBITDA and a 5% surge in adjusted EPS during the nine months ending September 30.
Notably, Kinder Morgan's impressive project backlog swelled to $5.1 billion by the third quarter from a paltry $3 billion at the end of 2023. While natural gas dominated the backlog, Kinder Morgan also invested in low-carbon energy sources such as renewable natural gas and renewable diesel.
Prospects for 2025 and Beyond
Kinder Morgan has recently inked a deal with Outrigger Energy to acquire natural gas gathering and processing assets in North Dakota for $640 million. The acquisition, slated for completion in the first quarter, is expected to immediately boost Kinder Morgan's earnings. This could potentially lead to an upgraded 2025 outlook when Kinder Morgan reports its fourth-quarter earnings on January 22 or during its first-quarter earnings call.
Kinder Morgan's CEO projects a 4% growth in adjusted EBITDA and an 8% increase in adjusted EPS for 2025, attributable to expansion in all segments. Over 60% of Kinder Morgan's cash flows stem from natural gas, while the rest comes from other businesses like refined products pipelines, terminals, and carbon dioxide operations.
As Kinder Morgan brings expansion projects online and integrates newly acquired assets into its business, its cash flows are anticipated to expand, supporting higher dividends. Management is confident in raising the dividend for the eighth successive year in 2025, making Kinder Morgan an attractive investment prospect for 2025 and beyond.
[1] Source: Yahoo Finance[2] Source: Investopedia[3] Source: SEC Filings[4] Source: CNBC
In light of Kinder Morgan's successful 2024, the company is considering reinvesting some of its earnings into strategic financial opportunities. By allocating funds towards smart investments in the finance sector, Kinder Morgan aims to further boost its income streams and shareholder value.
Furthermore, Kinder Morgan's financial team has been exploring various investment avenues to ensure long-term growth. They have identified opportunities in the renewable energy sector, recognizing that investing in sustainable solutions can not only contribute to environmental consciousness but also yield attractive returns in the future.