On Tuesday, Kinder Morgan Energy Partners (KMP), one of the largest midstream (pipeline) energy companies in North America and a core Dividend Growth portfolio holding, announced expectations for 2014. Kinder Morgan Energy Partners expects to:
Declare cash distributions of $5.58 per unit for 2014, an approximate 6 percent increase over its 2013 budget target of $5.28 per unit and an approximate 5 percent increase above its current expectation of $5.33.
Generate approximately $6.4 billion in business segment earnings before DD&A (adding back KMP’s share of joint venture DD&A), an increase of approximately $750 million over the 2013 forecast.
Distribute over $2.5 billion to its limited partners.
Invest approximately $3.6 billion in expansions (including contributions to joint ventures) and small acquisitions. Almost $720 million of the equity required for this investment program is expected to be funded by KMR share dividends.
Valuentum’s Take
We expect to update our dividend report on the pipeline transportation master limited partnership shortly and continue to believe Kinder Morgan Energy Partners represents a core position in the portfolio of our Dividend Growth Newsletter. We’re huge fans of Kinder Morgan Energy Partners’ stable fee-based cash flow (more than 80% of its business) and note that its asset footprint is unmatched. It remains one of our favorite income ideas, and we would not be surprised if we see upside to the expected distribution in 2014.
Related Firms: KMI, KMR, EPB