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At this point in time Kinder Morgan Energy Partners LP (NYSE:KMP) may provide the best investment potential of the largest energy MLP choices. The Kinder Morgan focus on steady growth, the diverse asset holdings of KMP and the near 6% dividend yield currently put KM Energy Partners a little ahead of the large cap MLP competition.

Kinder Morgan Energy Partners has a current market cap of $28.5 billion. This puts KMP in second behind $47 billion Enterprise Product Partners LP (NYSE:EPD). Coming in at a distant third is Williams Partners L.P. (NYSE:WPZ) with a market value of $17.8 billion. All three companies draw the bulk of their revenue from natural gas or natural gas liquids pipelines and storage and all three have been and will continue to be very good investment prospects.

Kinder Morgan Assets

One advantage of Kinder Morgan Energy Partners is the diverse asset holdings and resulting semi-non-related streams of income. A recent presentation shows 38% of earnings from natural gas pipelines, 20% from CO2 oil production, 15% from products pipelines, 16% from product terminals and 7% from the transport and sale of CO2.

Capital spending plans for future growth cover all of the different asset classes. Kinder Morgan Energy Partners will see additional growth in the natural gas pipeline sector as assets from the El Paso Corporation acquisition are dropped down from Kinder Morgan Inc. (NYSE:KMI) into the limited partnerships.

Dividend Growth

KMP Dividend Chart

KMP Dividend data by YCharts

The three big energy MLP companies have rewarded investors with steady dividend growth as noted in this chart. The projected $4.98 per unit in distributions for 2012 is an 8% increase on the 2011 payout. This growth is significantly better than the 5% dividend growth rate of the previous 3 years from Kinder Morgan Partners. One area of consistency is that KMP has met or exceeded its distribution forecast 11 out of the last 12 years. In 2006, the distributions totaled $3.26 instead of the forecast $3.28.

The KMP distribution rate should increase for each of the final two quarters of 2012. This means that investors buying at the current share price will earn at a 6% annual rate and then growing from there. The 6% yield is the main advantage of KMP currently over Enterprise Product Partners. EPD currently yields under 5%. The higher yield from KMP may be due to the flat share price so far this year, while the EPD share value has increased by 15%.

With the current 6% yield and the steady long-term growth provided by the Kinder Morgan group of companies, Kinder Morgan Energy Partners looks to be the most attractive of the three big MLP stocks. Also, for IRA investors, Kinder Morgan Management, LLC (NYSE:KMR) is a KMP clone except the dividends are paid in additional KMR shares resulting in no IRA problematic K-1 or UBTI.

Additional Reading: Williams Partners Increases Dividend, Lowers Near-Term Guidance

Enterprise Product Partners Sitting In The Middle Of A U.S. Energy Resurgence

Source: Kinder Morgan Energy Partners Provides Both Attractive Yield And Growing Dividend