Title: Kinder Morgan's Stepping Up, Yet Falling Short of Achieving 2020 Dividend Objective
Investors on Wall Street should be wary of the trust issue that plagues the stock market. Buying a stock essentially means trusting a company's management team to make good use of your capital. Some companies manage to earn this trust over time, while others like Kinder Morgan (KMI 1.73%) seem to squander it. As of 2025, Kinder Morgan's quarterly dividend remains at $0.2875 per share, still not reaching its 2020 goal.
A Closer Look at History
On Oct. 21, 2015, Kinder Morgan increased its quarterly dividend to $0.51 per share. However, by Dec. 4 of that year, the company announced a dividend cut to $0.125 per share, obliterating investor confidence. The energy sector was in a downturn at the time, making alternative capital-raising options unattractive. Kinder Morgan quickly rebuilt trust by announcing a plan to return cash to investors in mid-2017. The first increase, in 2018, was a significant 60%. However, the global pandemic in 2020 forced Kinder Morgan to increase the dividend by only 5%, falling short of its 2020 target.
Prudence vs. Trust
Being cautious is understandable given the midstream sector's limited growth opportunities. However, for conservative investors seeking dividend income, Kinder Morgan's repeated failures to meet its promises could be a cause for concern. There are better midstream sector options available.
Enrichment Insights:
Kinder Morgan's (NYSE:KMI) current dividend stands at $0.2875 per share, amounting to a $1.15 annualized dividend and a yield of 3.74% as of January 2025[1][4]. The next dividend payment is due on February 18, 2025, for shareholders who hold the stock before February 3, 2025[1][4].
The reasons for Kinder Morgan's repeated inability to meet certain goals include:
- Earnings misses: The company has experienced quarterly earnings misses, such as Q4 2024, where Kinder Morgan reported an EPS of $0.32, falling short of the expected $0.34, and revenue at $3.99 billion, below the forecasted $4.21 billion[3].
- Commodity prices: Lower-than-budgeted commodity prices have impacted the company's revenue and earnings.
- Production issues: Lower RNG (Renewable Natural Gas) plant production has also contributed to the company's earnings misses.
- High dividend payout ratio: Kinder Morgan's dividend payout ratio is high at 100.88%, implying the company pays out almost all of its earnings as dividends. This could be unsustainable if earnings decline in the future[1][4].
In conclusion, Kinder Morgan's repeated failures to meet financial targets, including its 2020 dividend goal, can be attributed to earnings misses, lower commodity prices, production issues, and a high dividend payout ratio.
Investors looking to invest in the finance sector should consider the financial performance and management of companies like Kinder Morgan before making decisions. For instance, Kinder Morgan's continued struggle to meet its dividend goals, as shown in 2020, may raise concerns for investors looking to invest their money wisely. It's crucial to research and analyze a company's financial history before committing to an investment.
In recent years, Kinder Morgan has faced challenges such as earnings misses, lower commodity prices, and production issues, which have negatively impacted its ability to meet financial targets, including its 2020 dividend goal. This pattern of underperformance may signal potential risks for investors considering investing in Kinder Morgan's stocks for financial gain.
