Tuesday, April 29, 2008

Kinder Morgan: A Promising Pipeline Play

BusinessWeek has a great write up on one of my favorite dividend stocks Kinder Morgan Energy Partners (KMP). I wrote about KMP on January 7, 2008 in an post called My Favorite Conservative Dividend Stock and the stock is up close to 25% for the year. This is my largest stock holding making up more than 30% of my dividend stock portfolio. I have owned the stock since October 2002 at prices starting around $30 a share. This is a stock I plan to own for at least the next four years.

Do your own research and see what you think about KMP. If you are looking to buy shares, I would look for any weakness in the stock price and try to make purchases in the mid 50's.

I will write tomorrow about my very, very small holding of Wrigley stock and my first non dividend paying stock purchase in several years.

Kinder Morgan: A Promising Pipeline Play
With $7 billion in natural gas projects coming on line within four years, this limited partnership earns S&P's highest investment ranking by Michael Kaye From Standard & Poor's Equity Research

Kinder Morgan Energy Partners (KMP; recent price, 60) carries Standard & Poor's highest investment recommendation of 5 STARS (strong buy) based on total return potential. One of the largest publicly traded pipeline limited partnerships in the U.S., Kinder Morgan has a long-term growth profile that is favorable, in our view. With more than $7 billion in capital projects beginning to come on line over the next four years, the company should benefit from increased natural gas production in the Rocky Mountains and from the growing importance of liquefied natural gas (LNG). Kinder Morgan has among the most visible organic growth and lowest-risk profiles of any master limited partnership (MLP) in our coverage universe.

We expect Kinder Morgan's gas pipelines and terminal operations to be the main earnings drivers, benefiting from the first segment of the Rockies Express Pipeline now in service and terminal operations being helped by expansions and acquisitions. They will benefit from the completion of the East Line expansion project and the increase in ownership to 100% (from 50%) of the Cochin NGL Pipeline from Canada to the U.S.

Company Profile

Houston-based Kinder Morgan was formed in August, 1992. The partnership is one of the largest publicly traded pipeline limited partnerships in the U.S. in terms of market capitalization. In total, it transports refined petroleum products and natural gas through more than 25,000 miles of pipeline. In addition, it operates approximately 165 terminals handling refined products, coal, and other materials.

Kinder Morgan's objective is to expand its portfolio of fee-based energy transportation and storage assets, while increasing the utilization of its existing assets. As a result, we believe it does not face significant risks relating to the short-term movement of commodity prices.

Kinder Morgan has established what we view as an impressive history of increasing cash distributions to common unit holders. Over the past 10 years, the payout has increased at about 17% annually.

The Div Guy owns shares of KMP at the time of this post.

1 comment:


Yes I have heard muh about the company.