Not all changes succeed. But if they do, then it would be a nice thing. Still, Kinder Morgan (NYSE: KMI), a former pipeline winner, definitely fits into the second category. After encountering bad times during the oil meltdown, Kinder Morgan has moved up back and the latest session gives evidence how far it has gone up. And the success is bigger and bigger every day as the stock continues to grow. Just pay attention to two newest punches of declining debt and selling a problematic asset. The turnaround is constantly becoming larger by removing itself from two serious problems.
For shareholders, KMI has not stopped executing and is lastly on the path of coming back to the old days of big glory. Some large dividend growth might be seen on the horizon as well.
The energy fall in 2015/2016 affected Kinder Morgan quite hard, and that is no secret. Lower prices for natural gas and crude oil reduce the Kinder Morgan cash flows. Furthermore, the rates of capital necessary to fund the company’s large and massive projects become more expansive at the same time. And it is also no secret that KMI needed to reduce the exceptionally good dividend and reject the master limited partnership supplements to finish the year successfully.
However, it was then while this is now. Kinder Morgan is once more on the route to reach higher overall working results.
Increasing levels have already helped the company moves up the dividend by growing 80% at the beginning of this year. The second quarter encounters a lot of additional positive changes to the overall financial picture.
When it comes to gas delivering, Kinder Morgan still pushes out of the park. Amounts in natural gas-based lines remain to be big and noticed some serious and large double-digit growths during the last several months. Kinder Morgan made a success with a decision to focus more on fee-based income in the last three years. But it has been also receiving help on the commodity sensitive assets. The natural gas processing parts and carbon dioxide segment have both reached better prices and that helped their positions.
After all, the increasing results have moved into bigger cash flows. Also, Kinder Morgan succeeded to see a distributable net income of $1.1 billion, which was 9 percent growth from the last year, and closely $700 million more than the company needed to finance the dividend payout during that quarter.
Lucky for them, KMI turnaround is really working. The focus on declining costs, debts and increasing cash flows begin to show real results. The investors already noticed the main dividend rise and there is also a potential to see more of them in the future. But the best part definitely is in the fact that Kinder Morgan is not living on its laurels.
Canadian KMI’s Trans Mountain pipeline has been a spike in the company’s side for a while. This pipeline has also been a reason for some protests in recent years. It is especially true in the case of the trouble facing counterpart TransCanada (TSE: TRP) and its pipeline in Keystone. A development strategy for the Trans Mountain pipeline has faced many problems since 2013.
After all, the pipeline was becoming the main issue for Kinder Morgan. And with the company’s strong focus on moving down and keeping it easy, Kinder Morgan sold the pipeline to the Canadian government. For the firm’s efforts, Kinder Morgan officially traded the country’s subsidiary, and the company is going to get about $3.4 billion in cash.
After resolving the main issue with this pipeline and protecting its stock of potential fall, KMI wants to use the money to decline the firm’s debts even further. That move will most likely increase its total cash flow. In the end, less cash for debts mean more cash for shareholders, and that is a positive outcome. Also, the company is planning to sell its part in Canada, and this might happen in the future. If it occurs, the debt would fall additionally.
It is a good time to buy Kinder Morgan stock, and this is definitely a different sphere for the company. When the oil priced fell three years ago, KMI was declining its dividend and its stock was encountering serious problems. At first, it seemed like Kinder Morgan was moving toward a complete financial disaster. Now, the company is stronger than at any time in the past, and it is only getting better.
Thanks to the pipeline selling in Canada, Kinder Morgan is going to see even more success in the future.
The maintained cash flow above expectations, the company’s dividend price and debt lowering currently make this stock a big time buy. And with a 4.50% yield and earnings ratio of about 20, Kinder Morgan looks valued for investors to make a right move and take advantage of this success.