Kinder Morgan (KMI) stock has underperformed the energy sector year-to-date. Kinder Morgan is down 21% year-to-date, whereas the Energy Select Sector SPDR ETF (XLE) is down 11%. In comparison, the SPDR S&P 500 ETF (SPY) (SPX-INDEX) is up 14% year-to-date. Kinder Morgan has also underperformed its peers on a total return basis including dividends.
Over the last five-year period, KMI’s total returns stood at -38%. This is in contrast with positive total returns of its midstream peers ONEOK (OKE), Targa Resources (TRGP), and Enterprise Products Partners (EPD) over the same period. OKE, TRGP, and EPD generated total returns, including dividends, of 61%, 12%, and 23%, respectively, in the past five years.
As the graph above shows, Kinder Morgan generated the worst returns among peers under consideration over a one-year period as well. Over the last three years, Kinder Morgan generated returns of -52%. Only TRGP underperformed KMI during this period.
The Energy Select Sector SPDR ETF generated total returns of 8% over the last five years. Its total returns over the last three-year and one-year periods were negative.
Notably, Targa Resources, Enterprise Products Partners, and XLE were in the red in the past five years. However, their dividends contributed to their positive total returns during this timeframe. Kinder Morgan’s dividend cut in 2015 significantly lowered its yield. At the same time, it severely impacted the stock’s performance, bringing down its total returns.
In this series
In this series, we’ll analyze Kinder Morgan’s operational performance, its earnings, distributable cash flows, leverage, and capital expenditures. We’ll also discuss the growth drivers for the stock. So far, we’ve discussed how Kinder Morgan performed over the last five years. We’ll go back a bit further in the next part of this series.