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Kinder Morgan is the countries largest pipeline company in the US.
It has recently reduced its dividend to be able to internally fund and expand its operations - primarily the transporting of natural gas.
With the natural gas resources growing from the innovation of fracking technologies there is a mega trend at work with increasing uses of natural gas.
These growth areas are the result of four long term growth categories:
Electrical generation that is replacing coal fired plants with that of natural gas
Exporting of Natural gas to Mexico
Industrial use of natural gas in making hydro carbon based products
The exporting of LNG to world markets.
KMI currently has the largest distribution network in the US.
KMI sees a huge growing demand for more pipelines to serve the above four growth sectors.
The need for additional capital has forced a reduction of the dividend so that funds can be raised internally.
The application of these funds have been diverted from dividend streams to future growth projects.
I propose that after the expansion phase of their pipeline system is accomplished a strong dividend policy will be reintroduced.
To accumulate KMI shares during this stock price weakness is an opportunistic, but long term investment that will pay dividends into the long term future at above market yields.
The price weakness started when KMI announced it was buying (along with Brookfield Infrastructure)the remaining assets of the troubled Natural Gas Pipeline of North America:
Kinder Morgan, Inc. ( KMI) and Brookfield Infrastructure Partners L.P. (NYSE: BIP, TSX: BIP.UN) today announced a definitive agreement whereby they will jointly acquire, from Myria Holdings, Inc., the 53 percent equity interest in Natural Gas Pipeline Company of America LLC (NGPL) not already owned by them for a total purchase price of approximately $242 million. KMI will pay approximately $136 million and increase its ownership interest from 20 percent to 50 percent, and Brookfield Infrastructure will pay approximately $106 million and increase its ownership from approximately 27 percent to 50 percent. The transaction values NGPL at a total enterprise value of $3.4 billion, inclusive of existing debt.
Kinder Morgan, Brookfield Infrastructure to Acquire Myria Holdings Inc.'s Majority Interest in Natural Gas Pipeline Company of America
At this point Standard and Poors has put KMI on a credit watch and that has caused the reduced dividend - which was needed to shore up KMI credit rating.
This is where present and future LNG ports to export LNG are located - well within KMI'S pipeline presence.
This is a description of the assets bought by KMI and Brookfield:
One can easily see that Kinder has added to their existing network a 9200 mile pipeline that is well situated to grow Mexico exports and LNG exports as well as electrical generation plants and industrial plants for converting hydrocarbons to many products.
Once again this is a long term plan, and huge in scope.
It will be a long term dividend growth retirement plan for me.
I encourage others to join in the study of this expansion and critique weaknesses that may be mentioned.
LETS MAKE SOME LONG TERM MONEY HERE !!!
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