3 Reasons to Hold On to This Pipeline Giant's Stock

Kinder Morgan has a reasonable valuation, a decent balance sheet, and a covered and growing dividend.

May 27, 2014 at 2:47PM

The Kinder Morgan family of companies is an energy pipeline giant made up of four publicly traded securities:

  • Kinder Morgan,(NYSE:KMI), a typical "C"-type company that owns the general partner stake in the group.
  • Kinder Morgan Energy Partners (NYSE:KMP) and El Paso Pipeline Partners (NYSE:EPB), publicly traded limited partner units that own and operate much of the pipeline infrastructure controlled by the group.
  • Kinder Morgan Management (NYSE:KMR), a publicly traded limited liability company responsible for managing the group.

In the video below, portfolio manager Chuck Saletta explains the three reasons why he's happy to hold on to the shares of Kinder Morgan bought for the real-money Inflation-Protected Income Growth portfolio.

Top dividend stocks for the next decade
Kinder Morgan originally earned its spot in this real-money portfolio in large part because of its dividend. The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby.

Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Graphic showing how the four parts of Kinder Morgan fit together:


Source: Kinder Morgan investor presentation dated May 22, 2014. Full-size image on slide 3.

And here are the debt-to-equity ratios for the four different stock-like securities in the Kinder Morgan family

CompanyDebt to Equity Ratio
Kinder Morgan, Inc 1.3
Kinder Morgan Energy Partners 1.3
El Paso Pipeline Partners 2.1
Kinder Morgan Management 0.0

To follow the iPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the iPIG portfolio, click here. To see the iPIG portfolio's online tracking spreadsheet, click here.

Chuck Saletta owns shares of Kinder Morgan and Kinder Morgan Management, LLC. The Motley Fool recommends El Paso Pipeline Partners and Kinder Morgan. The Motley Fool owns shares of Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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