Kinder Morgan To Pay Better-Than-Expected Dividend In 2010
We're big fans of master limited partnerships (MLPs) because they represent conservative avenues to gain exposure to the energy patch while collecting some juicy dividends and excellent tax benefits along the way. In the world of MLPs, one of the best names has been and continues to be Kinder Morgan Energy Partners LP (NYSE: KMP). Kinder Morgan is in the business of transporting natural gas across 14,300 miles of pipelines and other petroleum-related products through another 8,300 miles of pipeline.
Now don't be alarmed by the natural gas exposure. One of the great things about MLPs like Kinder Morgan is that regardless of the price action in nat gas futures, the fuel still needs to be transported from Point A to Point B and this prevents companies like Kinder Morgan from being held hostage to volatility in the futures market. In other words, Kinder Morgan has a predictable and reliable revenue and profit stream.
That means good things for the dividend, which is one of the best reasons to invest in Kinder Morgan. Kinder Morgan recently announced it will pay an annual dividend of $4.40 per unit in 2010. That's up from $4.20 per unit in 2009. Given the current dividend of $4.20, Kinder Morgan currently yields 7.4% per unit.
The new dividend will be approved at Kinder Morgan's board meeting in January. The company is also planning to spend $1.5 billion on expansion plans and small acquisitions next year.
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