Kinder Morgan (NYSE:KMI) Has Affirmed Its Dividend Of $0.2925
The board of Kinder Morgan, Inc. (NYSE:KMI) has announced that it will pay a dividend on the 17th of November, with investors receiving $0.2925 per share. Based on this payment, the dividend yield will be 4.5%, which is fairly typical for the industry.
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. Before making this announcement, the company's dividend was much higher than its earnings. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.
EPS is set to grow by 25.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 76%, which is on the higher side, but certainly still feasible.
View our latest analysis for Kinder Morgan
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from $1.80 total annually to $1.17. The dividend has shrunk at around 4.2% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
Kinder Morgan Might Find It Hard To Grow Its Dividend
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Kinder Morgan has seen EPS rising for the last five years, at 91% per annum. EPS has been growing well, but Kinder Morgan has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.
The Dividend Could Prove To Be Unreliable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for Kinder Morgan (2 are a bit unpleasant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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