In my weekly Fool column "Get Ready for the Fall," I run's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:


Recent Price

CAPS Rating
(out of 5)

Bull Factor

Kinder Morgan Management  (NYSE:KMR)




Western Digital  (NYSE:WDC)




Itau Unibanco  (NASDAQ:ITUB)




Medifast  (NYSE:MED)







Companies are selected from the "New 5-Year Highs" list published on MSN Money on Monday. CAPS ratings from Motley Fool CAPS.

"Everybody loves a winner"
So people tell me, but as I scan the ranks of five-year high-hitters up above, opinions on these stocks appear to be all over the map. Priceline and Medifast get low marks despite their higher projected growth, while lower expectations seem to help Itau Unibanco and Western Digital rate higher. Where, I ask you, is the "pay for performance" in that?

Strangest of all, though, is the top-ranked stock on the list. Kinder Morgan Management sells for a sky-high valuation of 80 times earnings, pays no dividend (or does it...?), yet walks away with CAPS' tippety-top rating -- a full five stars. The love here is obvious, but can anyone explain it?

The bull case for Kinder Morgan Management
CAPS All-Star mateub makes our first attempt at an explanation in this pitch dating from last year: "[Kinder Morgan Management] paid out $4.08 in dividends for 2008 on a ~ $40 stock. They have oil pipelines, which even with reduced demand, should hold up reasonably well as a business. Indeed, KMR expects to pay out $4.20 in dividends next year. Anyone else want 10% yield right now?"

keith134 does, and writing just a month later, argued: "This MLP is currently mispriced severely because of credit market fears and fears about commodity price exposure. Hold and enjoy the 10%+ dividend with significant share price appreciation when fears abate."

Now hold up just one cotton-pickin' minute! Dividend this, dividend that -- everybody's talking about this great dividend, but if you look on Yahoo! Finance, there's no indication the company pays any dividend at all. What gives?

Kinder Morgan gives ... 10%
ossm1 kindly unravels the mystery for us in this post dated March 2009: "[Kinder Morgan Management] pays 10% in an unusual way. It pays in stock so there is no tax due until the stock is sold. ... Most research tools, boards, screens, etc ... don't know how to classify this payout. ... So many of them don't report any dividend for the stock. If it pays 10% in a nontaxable fashion and then the stock price appreciates 5%/year that is 15% total return which isn't bad which is why I think that the total return will beat the market while the price may not."

Aha! Now it all becomes clear. So the company does in fact pay a dividend -- it's just that this particular dividend is "invisible," being paid in stock rather than in cash. But invisible though it may be, Kinder Morgan's dividend is certainly tangible. In a recent press release, the company announced plans to pay out $4.40 in share "distributions" this coming year, which amounts to an 8.8% yield.

Incidentally, for purposes of comparison -- and also for the purpose of making it a bit easier to figure out the yield on this stock -- Fools might want to keep an eye on a related company, Kinder Morgan Energy Partners (NYSE:KMP), whose cash payouts mirror the stock-based distributions at Kinder Morgan Management. Priced higher than its sister company, Kinder Morgan Energy Partners yields a bit less (7.4%), but still compares favorably to the dividends on offer at rival pipeline operators like Spectra Energy (NYSE:SE) or Enterprise Products Partners.

Both of these competitors sell for lower P/Es than do the Kinders, granted, but if price is no object and you're buying these companies primarily for the income they can generate for you ... the Kinder Morgan family looks tough to beat.

Time to chime in
Of course, that's just my opinion. If you've got a better stock idea in mind, we've got a place to pitch it. So don't be shy, click on over and tell us all about it.

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