Natural-gas-pipeline company Kinder Morgan
Hard to believe? Aren't energy companies supposed to be cyclical in nature?
In general, they are, because commodities such as heating oil, gasoline, and diesel, and the stock prices of the companies that extract and process them, all vary with the price of oil. But Kinder Morgan, which acts as a toll collector on the natural-gas expressway, doesn't get dragged into that mess. It don't make them no nevermind how much a barrel of sweet light crude or a cubic meter of natural gas costs. If you want to move it through their pipes, you have to pay the fee.
That's a good business model for Kinder, and yesterday's earnings numbers reflect that. In 2004, operating revenues -- revenues for the actual work Kinder Morgan does, as opposed to the money it takes in by virtue of its ownership stake in sister company Kinder Morgan Energy Partners
Earnings from its partner in profits, KMEP, also increased considerably year-over-year: up 20%. Overall, Kinder Morgan's net income from all sources, after tax, leapt up from $381.1 million in 2003 to $522.1 million in 2004 -- a 37% increase. Throw in some very modest share dilution, and earnings per diluted share still checked in 35.7% higher than the previous year, at $4.18 per.
Oh, and did I mention the dividend? Yeah, Kinder Morgan's one of those old-fashioned companies that pays those. Shareholders of this company received $2.25 per share in dividends, in addition to a 20% increase in the value of the shares themselves over the course of 2004. What's that? You say Kinder Morgan's being a bit stingy with its dividend? Well, there's just no pleasing some people.
Very well. Just for you, Kinder Morgan further announced yesterday that it's bumping up its dividend payout from $2.25 to $2.80 for 2005. At the $72.50 its shares are currently fetching, that equates to a 3.9% dividend payout, or better than twice the S&P average.
Take all of the above, and compare it with Kinder Morgan's closest competitor by size, Williams Companies
Check the Foolish pipeline for more news on Kinder Morgan in:
- A Gem in the Pipelines?
- Kinder Morgan's Wonder Boy
- Buy Coal for Christmas?
- Kinder Morgan Steps Up
- Kinder Morgan's Attraction
F ool contributor Rich Smith has no position in any of the companies mentioned in this article.