Thursday, July 20, 2017

Dividend Increase – Kinder Morgan Inc. (KMI)

Yesterday Kinder Morgan, Inc. announced that it expects to declare an annual dividend of $0.80 per share for 2018, a 60 percent increase from the expected 2017 dividend. The first 2018 increase is expected to be the Q1 2018 dividend. Additionally, the company plans to increase its dividend to $1.00 per share in 2019 and $1.25 per share in 2020, a growth rate of 25 percent annually. Finally, the board authorized a $2 billion share buyback program, which represents approximately 5 percent of KMI’s current market capitalization.

Before 2016, the company made a bold statement and guided for 6% to 10% dividend growth through 2020. However, Kinder Morgan ran into some trouble with its debt and in an effort to conserve capital and maintain an investment grade rating, it ended up slashing its dividend by 75%, with the yield on shares plummeting, from over 10% to less than 3%. Time will show, if management can be trusted to keep its word this time!

If the planned increase is realized, with current price $ 19.67 (yesterdays close), this raise brings their dividend yield to 4.07%. 

I hold my shares despite the cut in the dividend at the end of 2015 and now I own 200 shares of KMI. If this plann happens, I am a little skeptical, this will increase my portfolio's projected annual net dividend income by $ 44.70 and rises my YOC to 2.43%.

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You can follow the development of my dividends here.

Thanks for stopping by!

1 comment:

  1. This is excellent news if it happens! Hope it happens and it is not too fast and radical dividend growth in relation to EPS and debt.