Kinder Morgan (NYSE:KMI) Is Paying Out A Dividend Of $0.2925

Simply Wall St · 04/20 12:23

The board of Kinder Morgan, Inc. (NYSE:KMI) has announced that it will pay a dividend of $0.2925 per share on the 15th of May. Based on this payment, the dividend yield will be 4.3%, which is fairly typical for the industry.

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Kinder Morgan's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, the company was paying out 100% of what it was earning and 88% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

The next year is set to see EPS grow by 33.8%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 73% which would be quite comfortable going to take the dividend forward.

historic-dividend
NYSE:KMI Historic Dividend April 20th 2025

See our latest analysis for Kinder Morgan

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $1.72 in 2015, and the most recent fiscal year payment was $1.17. The dividend has shrunk at around 3.8% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Kinder Morgan's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Kinder Morgan has grown earnings per share at 15% per year over the past five years. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.

Kinder Morgan's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kinder Morgan's payments, as there could be some issues with sustaining them into the future. Strong earnings growth means Kinder Morgan has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Kinder Morgan (of which 1 can't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.