Brookfield Infrastructure Partners (BIP 0.36%) and Kinder Morgan (KMI -0.32%) are both coming off exceptional years. Brookfield's unit price zoomed 44.8% last year, while shares of Kinder Morgan jumped 37.7%, both of which outperformed the S&P 500's 28.9% gain in 2019. Add in their high-yielding dividends, and the total returns were even more impressive at 51.4% for Brookfield and 44.4% for Kinder Morgan versus 31.5% for the S&P 500.

Given their strong gains last year, income-seeking investors might wonder if either of these high-yielding infrastructure companies is worth buying right now. Here's a look at how they stack up against each other these days.

A twist of pipelines with a bright sunset behind them.

Image source: Getty Images.

Drilling down into the numbers

The first thing investors should analyze, especially for a dividend-focused investment, is the company's financial profile. Here's how these two compare with each other:


Dividend Yield

Credit Rating

% of Cash Flow (Fee-Based or Regulated)

Dividend Payout Ratio

Kinder Morgan





Brookfield Infrastructure Partners





Data source: Kinder Morgan and Brookfield Infrastructure Partners.

As that table shows, Brookfield and Kinder Morgan both boast solid financial profiles, including having investment-grade credit ratings. While Brookfield's is a bit higher, Kinder Morgan is in its best financial shape in years, as its key leverage metric has fallen below its long-term target. Meanwhile, both generate predictable cash flow backed by stable sources like long-term contracts and have conservative dividend payout ratios, with Brookfield currently below its long-term target range of 60% to 70% of its cash flow.

As such, both companies have the kind of financial solidity that dividend investors would want to see in a potential investment.

A glance at their growth prospects

Both companies also have the financial flexibility to expand their infrastructure footprints. In Kinder Morgan's case, it expects to invest about $2 billion to $3 billion in organic expansion projects per year, which should support low-single-digit growth in its cash flow per share. That's what it expects to deliver this year, projecting that cash flow will expand by around 3%. However, it could accelerate that to 5% to 6% if it uses its financial flexibility to repurchase shares or invest in additional expansion opportunities.

Given the company's ability to continue growing its cash flow, it should be able to keep increasing its dividend. This year, it plans to boost its payout by 25% as it increases the percentage of cash flow it distributes to investors. Dividend growth, however, will likely moderate in 2021 to match the per-share expansion of its cash flow.

Brookfield, meanwhile, has used its strong financial profile and the proceeds from asset sales to make several acquisitions, including a North American railroad operator and two data infrastructure businesses. Thanks to those purchases, the company's cash flow per unit will be about 25% higher at the end of the first quarter than its level in June of 2018. On top of that, the company expects strong organic growth this year at the top end of its 6% to 9% annual target range. As a result, Brookfield believes it can grow its dividend at a similar pace as organic growth in the future.

A quick peek at their valuations

Because their equity values surged last year, Kinder Morgan and Brookfield Infrastructure aren't as cheap as they were at the beginning of 2019. In Kinder Morgan's case, its shares currently trade at around $21.50 apiece. With the company expecting to generate $2.24 per share in cash flow this year, it sells for about 10 times cash flow. While that's not as cheap as some pipeline stocks, it's still a relatively attractive price for a financially strong midstream infrastructure company that's growing its cash flow at a decent rate.

Units of Brookfield Infrastructure, meanwhile, currently trade at about $50.50 a piece. With the company projecting an annual earnings run rate of $3.75 per unit by the end of the first quarter, it trades at about 13.5 times its expected cash flow. That's also a relatively attractive value, especially given its faster growth prospects.

Verdict: Brookfield Infrastructure Partners is the better buy

Kinder Morgan and Brookfield Infrastructure are both excellent options for investors seeking a low-risk income stream. However, Brookfield Infrastructure looks like the more compelling buying opportunity these days, given its more attractive growth prospects. Its faster growth rate could give the company the fuel to produce higher total returns than Kinder Morgan in the coming years.