Is Kinder Morgan Inc a Buy for Investors Now?

Foolish specialists debate whether Berkshire Hathaway's recent purchase of Kinder Morgan is a sign for individual investors to buy as well.

Motley Fool Staff
Motley Fool Staff
Feb 27, 2016 at 8:20AM
Energy, Materials, and Utilities

It was recently made public that Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) snapped up over 26 million shares of Kinder Morgan (NYSE:KMI) -- but the famous investment company isn't exactly operating on the same level as a most investors.

In this clip, Sean O'Reilly, Taylor Muckerman, and Tyler Crowe talk about whether or not the stock is a buy for the ordinary investor, and which energy companies are most exciting at the moment.

A transcript follows the video.

This podcast was recorded on Feb. 18, 2016. 

Sean O'Reilly: So, nobody at this table, to my knowledge, is a billionaire investor. So, sometimes, what those guys by is a little bit different than what we can buy. But, Leland is curious, and I'm sure we're all curious, is the stock a buy for the rest of us mere mortals? (laughs) 

Taylor Muckerman: I know it's been recommended in the last couple months by a lot of services here at the Fool.

O'Reilly: Yeah, a lot of people here at the Fool like it. 

Muckerman: So, I would say, for the average investor, it could be a buying opportunity. Yeah, you look at the price increases over the last week or so, and you might get scared thinking you missed it, but then you look at where it used to be --

O'Reilly: It's so low still.

Muckerman: And it's like, wow, there's still 50-60% upside to where we have to get to.

O'Reilly: Cool. Tyler, you've been liking them too, haven't you?

Tyler Crowe: I'm more attracted to them now than I was a while ago. I'm still --

O'Reilly: You liked the dividend cut, didn't you?

Crowe: I did. I think it puts them in a better place. But at the same time, I'm still actually a bigger fan, if I'm going to go out and buy a major pipeline company, I'm going to go by Enterprise Products Partners (NYSE:EPD) right now.

O'Reilly: You and Enterprise, man. (laughs) 

Crowe: They were in a position where they capture themselves maintained during the high times.

O'Reilly: They were not aggressive.

Crowe: Not as aggressive, and now they're reaping the benefits of that. And if you look at the dividend difference, Enterprise is trading at well over 7% dividend yield right now --

O'Reilly: For something that's rock solid.

Crowe: Still getting rock-solid coverage on that dividend payment. And 5% quarterly increases, almost like clockwork. They've been doing it for 19 years now.

O'Reilly: Awesome.