03-19-2014, 08:54 PM
Does anyone here own KMI or any of the Kinder Morgan family? I own KMI and am thinking about adding some more here. At this years projected dividend, the yield is over 6% and growth in the dividend has been in the low double digits to high single digits. One of the best things about KMI I feel is how much the owner buys shares. He owns several billion dollars worth.
Only thing holding me back is the lack of clarity when looking at their numbers. Things just aren't as clear as looking at the cash flows or balance sheet of a PEP. I know the pipeline/MLP industry has some unique accounting, but it has been around for decades without much problems. Financially, their growth appears to comes with a lot of debt(EV/EBITDA > 11) and with not much cash on hand, if there is a major economic crisis in the works, they could be in trouble. I want my companies to consistently growing and paying a dividend, yes, but I also want their equity(aka book value) per share to be rising. I know much of the added debt recently was due to the "takeover" of El Paso Pipelines (I am unsure on how the gained IDRs are valued on the balance sheets?), but I suppose Kinder believes it was well worth risk to add a quality asset like El Paso.
Will KMI take time to "repair" the balance sheet or will they be in perpetual growth mode, which the former would make this an excellent DGI pick imo, but the latter will undoubtably lead to disaster as some point. Is the risk worth the reward here? Are other pipelines on your radar?
Only thing holding me back is the lack of clarity when looking at their numbers. Things just aren't as clear as looking at the cash flows or balance sheet of a PEP. I know the pipeline/MLP industry has some unique accounting, but it has been around for decades without much problems. Financially, their growth appears to comes with a lot of debt(EV/EBITDA > 11) and with not much cash on hand, if there is a major economic crisis in the works, they could be in trouble. I want my companies to consistently growing and paying a dividend, yes, but I also want their equity(aka book value) per share to be rising. I know much of the added debt recently was due to the "takeover" of El Paso Pipelines (I am unsure on how the gained IDRs are valued on the balance sheets?), but I suppose Kinder believes it was well worth risk to add a quality asset like El Paso.
Will KMI take time to "repair" the balance sheet or will they be in perpetual growth mode, which the former would make this an excellent DGI pick imo, but the latter will undoubtably lead to disaster as some point. Is the risk worth the reward here? Are other pipelines on your radar?