Kinder Morgan Disappoints on Dividend
No Dividend Hike Coming for Kinder Morgan Shareholders
New York, NY — Kinder Morgan Inc (NYSE:KMI) shares plunged after the energy infrastructure company in North America disappointed investors who were expecting a higher dividend this year as the company tries to raise cash and reduce its debt.
Kinder shares were down three percent today, trading at $21.38 during early trading in New York.
Kinder pledged to pay a $0.125 quarterly dividend next month ($0.50 annualized) and signaled that level of payout won’t increase before the end of 2016. After slashing its dividend by 75% in December, Kinder executives said last week that the company’s cash position is improving so quickly that they may soon be able to resume boosting payouts.
Kinder reported second-quarter net income of $333 million, unchanged from the second quarter of 2015, and distributable cash flow of $1.050 billion versus $1.095 billion for the comparable period in 2015. The decrease in distributable cash flow for the quarter was primarily attributable to lower contributions from the “CO2” segment primarily due to lower commodity prices, higher preferred stock dividends, and higher cash taxes. (Source: “Kinder Morgan Declares Dividend of $0.125 for Second Quarter 2016,” Media & Investor Center, July 20, 2016)
“We are also pleased with KMI’s operational performance for the quarter despite continued volatile market conditions,” stated the earnings statement on the company web site. “We continue to expect our 2016 distributable cash flow in excess of our dividends will exceed our 2016 growth capital expenditures, eliminating our need to access the capital markets to fund growth projects in 2016.” (Source: Ibid.)
The second-quarter results exceeded analysts’ estimates but were followed by Kinder executives’ comments to investors that they were closing in on a debt target that would enable heftier payouts to stockholders.