Interested investors Children Morgane (NYSE:KMI) should note April 30. This is an important date for those who wish to receive the lucrative dividend from the natural gas giant.
Here’s a closer look at why this date matters to dividend investors and what the long-term future holds for investors. pipeline stock and its high-yielding dividend.
Payday is coming
Kinder Morgan recently declared its latest dividend. Natural gas infrastructure company to report next quarterly Dividend payment of $0.2875 per share on May 15. However, investors interested in receiving this dividend must be shareholders of record as of the market close on April 30. You don’t need to do anything if you already own shares; you will automatically receive their next payment. On the other hand, if you are considering investing in Kinder Morgan to start earning dividend income, you will need to purchase shares by the end of this month to receive its next payment. Otherwise, you won’t see your first dividend payment until the next quarter.
The company’s upcoming dividend payment is noteworthy. Kinder Morgan recently increased its payout to an annualized rate of $1.15 per share, up about 2% from last year’s rate. This is the seventh consecutive year that the payment has increased. With the stock recently trading at around $19 per share, Kinder Morgan’s dividend yield is greater than 6%. This is significantly higher than the S&P500 indexes current yield of 1.4%. In other words, every $1,000 invested in Kinder Morgan stock would generate more than $60 in annual dividend income, compared to about $14 for Kinder Morgan stock. S&P500 index fund.
Although you will need to purchase shares of Kinder Morgan by the end of the month to receive its next dividend, you don’t need to rush out and buy shares if you’re not ready. The company pays dividends every quarter, so there will be plenty more to come.
Plenty of fuel to continue paying dividends
Kinder Morgan should have no problem continuing to pay dividends. It generates a very stable cash flow. About 68% of its cash flow comes from purchase or payment contracts or hedging agreements, meaning Kinder Morgan gets paid the full rate regardless of market conditions. Meanwhile, long-term fee-based contracts support most of its remaining cash flow. Although they are volume sensitive, they limit its exposure to commodity price volatility. These characteristics lead Kinder Morgan to believe it will generate about $5 billion, or $2.62 per share, in distributable cash flow this year, up about 8% from last year.
With a dividend set at $1.15 per share, Kinder Morgan has a very conservative dividend payout ratio of around 51%. This will allow it to retain about half of its stable cash flow to fund expansion projects and maintain its strong balance sheet. The company expects to end the year with a rate of 3.9 times leverage ratio, putting it towards the lower end of its 3.5x to 4.5x target range. This low leverage ratio gives Kinder Morgan the flexibility to repurchase shares or make an acquisition opportunistically.
The company also has a growing backlog of high-yield expansion projects to increase its cash flow in the coming years. Kinder Morgan ended the first quarter with $3.3 billion in projects expected to come online over the next several years, a net increase of $300 million from the end of last year. At the same time, the company believes there are still many expansion opportunities ahead, fueled by growing demand for natural gas from catalysts such as LNG And AI. It also has plenty of financial flexibility to continue making large acquisitions, like last year’s $1.8 billion deal for STX Midstream. The company’s growth-oriented investments will increase its cash flow, giving it more fuel to continue increasing its dividend payments.
An income security for the long term
Kinder Morgan will pay its next dividend in May. While this means investors will need to own shares by the end of the month to collect this payment, there’s really no rush. Kinder Morgan’s stable cash flow, strong financial profile, and visible growth prospects suggest it should have the fuel to continue paying dividends in the years to come. This makes it a great stock to buy for those looking for a long-term source of income.
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Matt DiLallo holds positions at Kinder Morgan. The Motley Fool holds positions with and recommends Kinder Morgan. The Motley Fool has a disclosure policy.
Should you buy Kinder Morgan before April 30? was originally published by The Motley Fool
