After moderate share price volatility over the past few years, Kinder Morgan, Inc. (NYSE:KMI) has delivered to its shareholders capital gains of more than 20% and rising dividend income over the past 12 months.
The company’s share price lost more than 70% of its value between April 2015 and January 2016. After nearly doubling in 2016, the share price reversed direction and declined slowly along with the crude oil prices for more than two years. However, the share price has been advancing steadily since the beginning of the year on rising energy prices and KMI’s positive outlook for 2019.
A brief share price growth spurt during the first half of the trailing 12 months bumped the 50-day moving average (MA) above the 200-day MA for the first time in nearly two years, but only briefly. The December selloff dropped the 50-day MA below the 200-day average by December 20, 2019. However, the current year share price uptrend pushed the 50-day average back above the 200-day average before the end of February.
Furthermore, except during one trading session following the first-quarter results release on April 17, the share price remained above both moving averages since the second week of January 2019. This technical indicator, as well as solid first-quarter financial performance and a positive outlook for the remainder of 2019, suggest that the share price uptrend could potentially continue.
On April 17, 2019, Kinder Morgan released its financial results for the first-quarter 2019. Net income available to common stockholders advanced 14.6% year-over-year $485 million in 2018 to the current $556 million figure. The current $0.24 earnings per share (EPS) is more than 9% higher than the $0.22 figure from last year and in line with the analysts’ expectations for the current period.
For full-year 2019, Kinder Morgan expects distributable cash flow of approximately $5.0 billion, The company plans to invest $3.1 billion in growth projects and contributions to joint ventures during the year. Additionally, Kinder Morgan does expect that its internally generated cash should be sufficient to fully fund its dividend payments and most of the company’s discretionary spending in 2019 without the need to access equity markets.
“We are pleased to continue the dividend growth plan that we outlined to shareholders during the summer of 2017,” said Richard D. Kinder, Executive Chairman. “We continue to maintain a strong balance sheet and have been upgraded by two of the three ratings agencies. We are well positioned for a successful 2019 and remain on positive outlook for an upgrade by Fitch later in the year.”
Headquartered in Houston, Texas, and founded in 1936, Kinder Morgan, Inc. operates as an energy infrastructure company in North America through four business segments. The Natural Gas Pipelines segment owns and operates natural gas pipeline and storage systems, as well as natural gas processing and treating facilities. Additionally, this segment also operates natural gas and crude oil gathering systems, as well as natural gas liquids (NGL) fractionation facilities and transportation systems. The Products Pipelines segment owns and operates refined petroleum products, NGL, crude oil and oil condensate pipelines, associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and operates terminals that transload and store refined petroleum products, crude oil, ethanol and other chemicals. Furthermore, this segment also owns and operates storage and transload terminals for bulk products, such as coke, metals and ores. Lastly, the CO2 segment produces, transports and markets carbon dioxide generated from recovery and production crude oil from mature oil fields. This segment also owns interests in oil fields, gas processing plants and a crude oil pipeline system in West Texas. The company infrastructure network comprises more than 150 terminals and approximately 84,000 miles of pipelines.
Following an 18-month slow decline between late 2016 and early 2018, the share price reversed direction and headed higher. Entering the trailing 12-month period on that uptrend, the share price gained 10% in the first six months. However, after another trend reversal, the share price gave back all those gains by the beginning of December. Caught up in the overall market decline at the end of the year, the share price dropped another 12% below its price from the beginning of the trailing 12 months.
The share price reached its 52-week low of $14.17 on December 24, 2018. However, Kinder Morgan’s share price reversed direction once more along with the overall market and headed higher again. The share price recovered all its losses from the beginning of the trailing 12 months by the first week of January 2019 and rose to its October 52-week high by mid-February.
The price advanced further and gained nearly 40% above the December low to close at its new 52-week high of $20.42 on March 21, 2019. After peaking in mid-March, the share price pulled back slightly and also dipped 1.5% to $19.39 in a single trading session following the first quarter results release. However, the share price recovered completely during the following trading session and advanced higher to close on April 22, 2019, at $20.03.
This closing price was just 0.6% short of the March peak. While still nearly 40% lower than it was five years ago, the current share price is 21.5% higher over the trailing 12 months and 38% above the 52-week low from the end of December 2018.
Kinder Morgan’s dividend distributions offset a portion of the 40% share price loss over the past five years and reduced total losses to 28%. However, the share price recovery combined with the company’s rising dividend income distributions for a total return of nearly 16% over the past three years. Additionally, the strong share price growth in 2019 pushed the total returns to more than 27% over the past 12 months.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.
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