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Kinder Morgan: Don't Feel Kindered

May 06, 2020 10:14 AM ETKinder Morgan, Inc. (KMI)AMLP, XLE47 Comments


  • Kinder Morgan released its first quarter results, showing a solid performance.
  • The dividend was increased, although not by as much as originally planned.
  • Shares continue to look attractive.
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Article Thesis

Kinder Morgan (NYSE:KMI) has announced a dividend increase for 2020, although it was a smaller hike compared to what management had guided for in the past. The current crisis and its unprecedented impact on global energy markets were not foreseeable for management, though, which is why investors can't really blame management for the smaller-than-forecasted dividend increase too much.

Kinder Morgan is seeing a negative impact from the oil price crash, but the company is well-positioned to weather the current storm. Its balance sheet will not suffer too much, and a recovery of oil markets during the second half of the year should help bring Kinder Morgan's ability to generate strong cash flows back to pre-crisis levels in the not too distant future.

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Kinder Morgan's First Quarter Results And The Impact Of Low Oil Prices

A month ago with Kinder Morgan at $13.40, we penned the article No More Kindering. The firm is now priced 9% higher, and, more importantly, it has released one of the first earnings reports and conference calls in the midstream sector. We therefore thought it would be worthy of reviewing. We are not only looking at whether Kinder Morgan is still a buy, but also for what clues it might give us regarding the rest of the midstream sector. Source: Stock Rover

Kinder Morgan primarily is a natural gas pipeline company that has fee-based contracts, thus, the majority of its business is not dependent on what oil prices and oil consumption look like. There are, however, also business units that are impacted by oil consumption and commodity prices, primarily its CO2 segment and its refined products segment.

Through the impact that lower oil consumption and lower oil prices have on these segments, Kinder Morgan did see a hit to

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This article was written by

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Analyst’s Disclosure: I am/we are long KMI. 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.

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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