Energy infrastructure provider Kinder Morgan, Inc. (NYSE: KMI) reported second quarter 2017 earnings of 14 cents per share from continuing operations in-line with the Zacks Consensus Estimate but decreased 6.7 percent from 15 cents reported a year ago.
Total revenue for the quarter jumped 7.1 percent year over year to $3,368 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $3,122 million.
Higher contribution from Elba Express pipeline along with improved CO2 volumes supported the second quarter results. Increased contribution from the liquid terminals and successful initial public offering of its Canadian business, together with the Elba, Utopia and SNG joint ventures also contributed to the growth. It was partially offset by higher expenses and the negative impact on tariff rates of Colorado Interstate Gas Company pipeline following the rate case settlement in 2016.
Kinder Morgan is known for two things - it helped found but later abandoned the MLP business model and slashed dividends by 74 percent in late 2015, just weeks after it said that it could grow dividends by 6 to 10 percent. Since then, the company has kept dividends flat. Yesterday, Kinder Morgan released its second quarter results in which it declared a quarterly cash dividend of $0.125 per share, or $0.50 per share on an annualized basis, which is in-line with the previous payout. The company is offering a dividend yield of 2.54 percent, as per yesterday's closing price.
However, Kinder Morgan also said that starting from the first quarter in 2018, it will increase the annual dividend to $0.80 per share. From there, the company expects to increase the payout by 25 percent per year to $1.00 per share in 2019 and $1.25 per share in 2020. In other words, the company has promised to grow dividends by 2.5-times by the end of the decade. At the latest share price, the 2020 dividend translates into a yield of 6.35 percent.