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Buh-Bye, Kinder Morgan

May 04, 2020 8:17 AM ETKinder Morgan, Inc. (KMI)568 Comments
Mike Nadel profile picture
Mike Nadel


  • After a long, somewhat tortured relationship, I finally have sent Kinder Morgan packing.
  • It had gotten difficult to defend KMI as a viable holding within my DGI portfolio.
  • For 5 years now, KMI has been a loser in both total return and dividend growth.

Time for me to practice what I preach: See ya, Kinder Morgan (NYSE:KMI) - I wish I could say it’s been great knowing you.

Last week, in advance of KMI’s quarterly earnings presentation, I strongly urged prospective investors to ignore hype about a projected 25% dividend raise. My point was that folks should buy shares only if they believe the company’s long-term prognosis is excellent - in other words, for the same reason any investor should acquire a stake in any business.

In the comment stream, many readers confidently predicted that KMI would follow through with its 25% dividend hike. Alas, they were wrong, as the company declared only a 5% increase. So, for the second time in 4½ years, Kinder over-promised and under-delivered. At least this time - unlike in 2015 - there wasn’t a 75% dividend cut.

Some commenters expressed anger at having been “kindered” again. Meanwhile, many KMI-loving shareholders made excuses for Chairman Richard Kinder and his management team.

How could they possibly have foreseen a global pandemic? ... They never really “promised” a 25% raise; they merely had “issued dividend guidance” or “made projections.” ... They’re not the only company ever to have done this. ... They still raised the dividend 5% during a pandemic, even as many companies have cut or eliminated dividends. ... Etc., etc., etc.

As I responded to those folks, I realized that I had even less use for Kinder in my portfolio than I had thought. Simply, I felt I could do better. So rather than just keep stating my case, I did something about it.

As you can see by the above executed order, I liquidated what was left of my KMI position on Friday, May 1. Thus ended my long, and somewhat tortured, history as a Kinder Morgan shareholder.

This article was written by

Mike Nadel profile picture
"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." - John D. RockefellerWell, a FEW other things give me pleasure, but I get where he was coming from.+++I manage two real-money portfolios at DividendsAndIncome.com:++ Income Builder Portfolio: https://dividendsandincome.com/income-builder-portfolio/++ Growth & Income Portfolio: https://dividendsandincome.com/mike-nadels-grand-twins-college-fund/

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I do still own very small KMI and GE positions within the DG50 portfolio.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (568)

How remembers when Rich Kinder came on Jim Cramer's Show and Jim's head had to be extracted from Rich's buttocks?
A good illustration that past returns do not guarantee future ones...
Mike Nadel profile picture

Yep. And since I dumped KMI, it's total return is a not-horrible 22.5%. Of course, the RTX that I replaced it with (seekingalpha.com/...) has had a total return of 50.3%.

GameBuzz profile picture
@Mike Nadel That’s what they call “opportunity cost.” Good move!

Good for you! lol

Mozman profile picture

Kinder me once shame on you. Kinder me twice shame on me. Why invest in a company that devours its own investors?

JWAYMOO profile picture

@Mozman, Mike & others:

I was Kindered in 2014 when he merged KMP, his MLP, back into KMI with a taxable exchange that caused an unexpected 290K income increase that year. I sold my 3000 shares prior to the merger at $97.73, which I had bought in 2008-2009 at an average of $52.65, but the cost basis was nearly zero because of distributions. Yes, I made a nice profit, but that was not my plan. I had planned to keep KMP and receive its income until it became part of my estate and passed to my children. I eliminated all MLPs from my portfolio by the end of 2015. My portfolio now consists of all CEFs.
Mike Nadel profile picture


I also have put MLPs in my rear-view mirror.

I understand that others like them, and that's cool. Lots of ways to make money in the market. I simply do not need MLPs to reach (and actually exceed) all of my goals.

Continued good fortune to you.

@JWAYMOO Same same, but still own and happy with EPD. Kinder and his Kind don't give a hoot about their loyal investors.
Paper_stax profile picture

I finally decided to break off my relationship with oil altogether. I've held oil sticks since the Kodiak days, though that's not an extremely long time ago, a decade of underperformance is long enough.

Mike Nadel profile picture


I still hold CVX. Otherwise ... likewise.

I have owned KMP/KMI since 2004 and sold my 5000 shares in 2020. I sold it at 15.57 and bought EPD at 17.33. Today EPD is trading at 21.56 and KMI at 14.96. EPD pays a dividend at 1.80 and KMI at 1.05. Nothing more needs to be said. Facts are facts. Numbers don't lie. EPD/MMP long and bye bye KMI.

Mike Nadel profile picture


Continued good fortune with your EPD.

wigan4 profile picture

@Raiderjkwong I'm with you. I hold EPD and MMP. As long as they crank our their 'collective' 9% tax deferred distribution I'm good. That's equal to a taxed return of 11% and there's a role for that in my portfolio.

Phil in OKC profile picture

I can understand the frustrations for those who were "Kinder-ed" five years ago. But buying high and selling low, before the full recovery of the midstream pipeline sector, does not make sense to me. The depth and breadth of the quality of the Kinder equity is beyond refute. What many may have missed is the dividend growth over the past five years of 16%. The past year, even with the Covid black swan was a healthy 5%. Better days are ahead for this heavily moated pipeline company, and selling out now may be something one looks back on and regrets.

Mike Nadel profile picture

@Phil in OKC

We'll see. Investors have been waiting many years for "better days" with KMI. For all my friends who have continued to hold KMI, I hope the next 6 years are a lot better than the last 6 have been.


Proven half a year later

Mike Nadel profile picture


It's actually been almost 10 months now. Since I sold KMI, its total return has been about 2%. The company I replaced it with, RTX, is up about 23%.

But the Kinder sycophants who got the vapers when I said I was dumping KMI are still probably clutching their pearls.

Thanks for noticing.


@Mike Nadel I tried my hand w/ MMP. Unrequited love from these energy players it seems, though the market will eventually get back to the basics, eventually...

GameBuzz profile picture

@Mike Nadel Two percent? That’s double what my bank is paying. Woo hoo! 😂😂

@Mike Nadel You sell KMI and I'll be on the other end scooping 'em up!!! Love it man!!
Mike Nadel profile picture

Didn't you read the article? Sold a long time ago ... and the stock I replaced it with has outperformed it.

Have a lovely day.

In that case, get the rest of your readers to sell.
georgefelix75 profile picture
@Mike Nadel Replace with what?
Meanwhile.....KMI just keeps rising. I get to enjoy my 70% gain.
Mike Nadel profile picture

Interestingly, I just looked at my brokerage account.

Yep, KMI is up 22.24% since I sold it. That's quite a gain.

RTX, the stock I bought with the proceeds of my KMI sale, is up 22.94%.

Not that the short-term performance of either company means a dang thing right now ... but if you're gonna try to make some grandiose proclamation, at least do so with full knowledge.

GameBuzz profile picture
Wish I had sold it a couple days ago when it hit resistance...just wasn’t paying attention and my stupid broker limits the amount of alerts I can set! I really need to switch.
What full knowledge? just because you traded one stock for another and it went up after you sold the first one, you call that full knowledge? Full knowledge of what???

Here's full knowledge for you: Since you published this article, I've enjoyed a 23% return on my KMI investment. 56% based on my average cost basis. Only that KMI has fallen over the last 2 trading sessions along with the rest of the market. but his one is a keeper, along with my fat investment in it's neighbor EPD. And you think your bearish articles will deter me from enjoying a industry blue chip that has taken a beating this year? Not!
Mr. Nadel's comments read like an obituary! Since you have publicly shot the beast why not just bury it and move on? Leave the rest of us to suffer in peace?
Mike Nadel profile picture


For the last 3+ weeks, all I have done is respond briefly to others' comments on this article.

But if you want to consider them "obituaries," that is your right.

I haven't been reading your stuff for the last 3 weeks. So I don't know if they were all negative as well.
Remember when Jim Cramer was flying high? He brings Rich Kinder on his show who assures Jim that things are going to be great..until they weren't. It was one of the low lights of Cramer's show and he never forgave Kinder for lying to his audience.
Pinguino Investments profile picture
There's a reason people now use "to Kinder" as a verb. "We got Kindered" means "The CEO assured us the dividend was not only safe, but that it would keep rising -- and then it was cut/suspended." That will be Richard Kinder's legacy -- a verb using his name employed when a CEO lies.
Retired Fernando profile picture
For many, "to get kindered" will be remembered as what happens when novice or/and naive investors do not buy companies based in their own findings and due diligence (because don't care or don't know how to do it), but put their money where CEOs and promoters says.
I also said goodbye to KMI this month!
stever88 profile picture
@Mike Nadel
@Capt Jack Daniels
@Eric Landis
Thank you for the feedback.
Be Safe
45530026 profile picture
As a long-term holder of Kinder stock, there is very sadly the psychological aspect of having to change your mindset. I bought a few hundred shares of KMR back in 2003/4 at 40, and people tend to forget that the way it was structured was the dividends had to be folded back into the stock so there were no tax issues. As the stock went to 80, a lot of people (like me) thought we had found a "set it and forget it" stock, wait 20 years, and see how it could fund a good chunk of our retirement.

People also forget that Kinder was seen as a genius in that out of the ashes of Enron he had bought for next to nothing the "useless" pipeline assets since all the "real" money was in making bets on software. (Maybe a lesson in there in a few years.)

I tried to hedge my bets with the new KMI and sold about 40%, since I had made good money, but I still saw it as a long-term play. As things began to play out, my brain simply could not register the change until it was so far down it made sense to just say "all it can do is go up from here," which is still a psychological mindset.

As they say, date but do not marry your stocks.
Mike Nadel profile picture

Thanks for sharing your interesting investing voyage with KMI.

lsuavecito profile picture
>>As they say, date but do not marry your stocks.<<

The Gospel!
Don't fall in love with them cuz they can't/won't love U back.
DT160 profile picture

Thank you for sharing your thoughts.
And, I'm thinking of buying a much bigger position than you had originally.
Mike Nadel profile picture
Attaboy @Illius

That'd show me.
Mike Nadel profile picture
Hi Everybody.

My article on the stock I bought with proceeds from my KMI sale is now available on SA:


Thanks to all for reading and/or commenting.

Mozman profile picture
Kinder me once shame on you. Kinder me twice shame on me.
Meanwhile, KMI just continues to trend upwards. Lol. Gimme some more moolah!! Gimme dem divvies!!
Mike Nadel profile picture

You might be right.

Then again, KMI was "trending upwards" when it got to the low-$20s in the summer of 2019 -- long before anybody ever heard of COVID-19, and long before Russia and the Saudis started fighting like 6-year-olds -- but it hasn't sniffed $23 in ages.

While I might advise an investor not to spike the football after a couple of decent weeks, you be you. We all need reasons to celebrate these days.

@Mike Nadel I don't care if I have to wait for this one to sniff $23. I picked up a boatload of this one at $10.79 average cost. As long as it don't go bankrupt or cut its dividend to $0, I'm happy to own it for ages. :)
Mike Nadel profile picture

Seriously, congratulations on that. I have a hard time believing it will have been a bad investment for you, so you deserve credit.

Unfortunately, the vast, vast, vast majority of KMI shareholders are so far underwater they might never see the surface.

Have a good one.

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