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Kinder Morgan’s Q1 Earnings Meet Estimates

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KMI’s earnings rose

Kinder Morgan (KMI) reported its first-quarter results after the markets closed yesterday. The first positive thing about Kinder Morgan’s Q1 results is that its EPS beat consensus estimates and its net income and distributable cash flow rose. The company announced EPS of $0.24, which met consensus estimates for the quarter. Kinder Morgan’s net income rose 15% YoY, and its distributable cash flow rose 10% YoY.

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Kinder Morgan’s earnings growth during the quarter was driven by higher contributions from its Natural Gas Pipelines segment. The segment’s gas transport volumes rose 14% and gathering volumes grew 21% YoY.

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25% dividend increase

The second positive point about Kinder Morgan’s results is a 25% sequential dividend increase. As planned, Kinder Morgan raised its dividend for the quarter to $0.25 per share from $0.2 per share in Q4 2018. At the current price, the increased dividend implies a yield of ~5.1%. In comparison, Enterprise Products Partners (EPD) is trading at a yield of ~6.0%. Williams Companies (WMB) and ONEOK (OKE) are trading at yields of 5.3% and 4.9%, respectively.

However, Kinder Morgan’s dividend increase was accompanied by a rise in its debt. Investors didn’t like that, and the stock traded lower in the after-hours session yesterday. Additionally, Kinder Morgan expects marginally lower EBITDA in 2019 than budgeted.

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