What happened

Shares of Targa Resources (TRGP 1.12%) jumped 11.2% in September, according to data provided by S&P Global Market Intelligence. The midstream company benefited from increasing optimism after two of its largest expansion projects recently started up.

So what

Targa is in the midst of a major expansion phase. The company expects to invest $2.4 billion on capital projects this year, which sets it up for high-octane growth over the next few years. The company finished the largest of those projects in early August when the $2 billion Grand Prix pipeline started up ahead of schedule. With long-term, fee-based contracts backing that project, cash flow started surging in September.

Several pipelines with the sun shining brightly.

Image source: Getty Images.

In addition, energy infrastructure giant Kinder Morgan (KMI 0.40%) finished the Gulf Coast Express Pipeline in late September, which was also ahead of schedule. That project will benefit Targa Resources in two ways. First, as a minority partner, it will receive a share of the predictable fee-based cash flow from the pipeline thanks to the long-term contracts that shippers signed with Kinder Morgan. Second, Targa will benefit from the uptick in natural gas prices in the Permian Basin since that pipeline will help alleviate the region's glut, which weighed on pricing.

With those two major projects starting up, cash flow should soar. That will improve the company's financial profile and increase the long-term sustainability of its 9.1%-yielding dividend.

Now what

Targa Resources has reached an inflection point over the past two months with the start-up of those two key pipelines. They're boosting the company's cash flow, which is enhancing its financial flexibility and the sustainability of its high-yield payout. Because of that, dividend investors are starting to grow more comfortable with the idea of buying Targa as an income investment.