What Does Kinder Morgan’s Earnings Trend Indicate?

Kinder Morgan’s (KMI) normalized EBITDA grew 8% in 2018. The growth follows a fall of 6% in Kinder Morgan’s EBITDA in 2017. The company’s EBITDA grew 27% YoY (year-over-year) in the fourth quarter. Kinder Morgan’s earnings growth in the fourth quarter and fiscal 2018 was supported by strong growth in the natural gas demand. LNG (liquefied natural gas) exports and demand from the power sector are expected to drive the natural gas demand growth in the long term. The trend should benefit Kinder Morgan.

The above graph shows Kinder Morgan’s EBITDA and DCF (distributable cash flow) over three years.

Kinder Morgan’s DCF grew 6% in 2018 after a 1% fall in 2017. As the above graph shows, Kinder Morgan’s DCF was $1.0 billion–$1.3 billion over the last 15 quarters.

For 2019, Kinder Morgan expects a dividend of $1.0 per share—25% higher than the company’s dividend in 2018. The company expects to use internally generated cash flows to fund its dividends in 2019.

To learn about midstream MLPs’ earnings growth—Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), and MPLX (MPLX)—read, EPD, MMP, MPLX: How Their Earnings Growth Stacks Up.

Next, we’ll discuss Kinder Morgan’s upcoming capital projects. The projects are expected to drive the company’s future earnings growth.