Kinder Morgan Inc (NYSE:KMI) and Enterprise Products Partners L.P. (NYSE:EPD) are two of the largest oil and natural gas midstream players in the United States. Kinder Morgan is set to see explosive dividend growth over the next three years -- the hike in 2018 is expected to be 60%! Enterprise, meanwhile, will probably increase its distribution around 5% a year. But Enterprise is still the better dividend stock -- here's why.    

1. What you're getting now

Enterprise Products Partners currently yields around 6.4%. Kinder Morgan yields about 2.6%. But Kinder Morgan has announced plans to increase the dividend from $0.50 per share per year to $0.80 per share per year in 2018, a 60% boost. It will follow that up with 25% increases in 2019 and 2020. After all of the announced dividend changes are implemented, the disbursement will have grown from $0.50 per share per year to $1.25 in just three short years.    

A man turning valves on a natural gas pipeline

Image source: Getty Images.

That's pretty impressive dividend growth. But here's the problem: If you take today's stock price and use the $1.25-per-share annual-dividend number, the yield on Kinder Morgan would be roughly 6.4% -- after all three hikes. You would have to wait until 2020 before Kinder Morgan's yield would match what you can get today from Enterprise Products Partners, an equally large and diversified midstream giant.

2. It's about trust

The second reason Enterprise is the better income option is that you can count on it increasing its distribution 5% each year between 2018 and 2020. That's roughly the annualized increase it's rewarded investors with over the past decade, regardless of economic conditions. Five percent may not sound exciting, but it bests inflation, which has historically grown at around 3% a year.  

EPD Dividend Per Share (Quarterly) Chart

EPD Dividend Per Share (Quarterly) data by YCharts.

But Enterprise's distribution history goes back much longer than 10 years. The company has increased its disbursement annually for 20 consecutive years, with quarterly hikes in each of the last 52 quarters. Enterprise's dividend increases have been small but consistent all along. Kinder's planned massive dividend increases, on the other hand, come after a 75% dividend cut in 2016. And even after the three expected increases, the dividend won't be back to the level it was before investors took a dividend haircut.

Projecting dividend growth out for three years is great, but Kinder has broken past promises of hiking dividends. Just a couple of months before it cut the dividend, Kinder Morgan was telling investors to expect a dividend increase in 2016, and talking about its commitment to returning value to shareholders via steady dividend increases. That didn't pan out, because falling energy prices and a heavy debt load left Kinder scrambling to find enough cash to keep investing in its growth projects. It found the cash by cutting the dividend.    

Another worrying factor is that while Kinder's leverage has come down from its peak, the company is still more highly leveraged than Enterprise:

EPD Financial Debt to EBITDA (TTM) Chart

EPD Financial Debt to EBITDA (TTM) data by YCharts.

Notably, Enterprise managed to work through the energy downturn without a distribution cut. It spent roughly $18 billion on growth projects and three opportunistic acquisitions. And while its distributable cash flow grew slowly, it was enough to provide at least 1.2 times coverage for its growing distribution each and every year. That's the type of performance that builds trust.  

The tortoise and the hare

I probably sound like I hate Kinder Morgan, which isn't true at all. The company is a giant with broad diversification. But if an investor can get a better yield today from equally large and diversified Enterprise Products Partners L.P., a partnership that's proven it can live up to its commitments (and keep rewarding shareholders via distribution growth), why would anyone take on the risk that Kinder might force investors to take a haircut again?

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.