Title: Anticipating Continued Dividend Growth for Kinder Morgan in 2025
Kinder Morgan, the natural gas pipeline juggernaut (KMI 1.64%), has unmistakably outlined its anticipated financial trajectory for the upcoming year. The pipeline titan anticipates its profitability to persistently climb, empowering it to amplify its dividend once more. This payout, currently yielding more than 4%, will rest on a rock-solid foundation in 2025.
Let's delve deeper into Kinder Morgan's predicted 2025 landscape.
Steady upward momentum
Kinder Morgan foresees generating an approximate $8.3 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025. This projection equates to a 4% leap from its 2024 forecast of $8 billion (a 5% surge from 2023's level). Added to this, Kinder Morgan envisions its adjusted earnings swelling by 8% to $1.27 per share (a 9% jump from the current 2024 estimate of $1.17 per share).
The lion's share of Kinder Morgan's growth will stem from its gas pipeline and energy-transition ventures segments. These sectors have seen a plethora of capital projects recently, such as the $158 million enhancement of the Kinder Morgan Texas Pipeline system, completed in October 2024, and the $283 million first phase of the Evangeline Pass project, commissioned in July. Moreover, Kinder Morgan is set to conclude its Autumn Hills renewable natural gas facility this month. Furthermore, the company wrapped up a small $54 million expansion of its Geismar River Terminal in the fourth quarter of 2024.
Kinder Morgan has further gas pipeline projects on the horizon for 2025. The $154 million expansion of the Kinder Morgan Tejas Pipeline should enter service in two stages throughout 2025. Meanwhile, the company plans to complete the remaining phase of its $670 million Evangeline Pass project in July 2025. Kinder Morgan also has a small SFPP pipeline expansion slated for commercial service in 2025's Q3.
Plenty of fuel for dividend growth
Kinder Morgan's escalating earnings will enable it to maintain its dividend rise. The company plans to declare $1.17 per share in dividends for 2025 ($0.2925 per quarter). This mark denotes a 1.7% escalation compared to the $1.15 per share in dividends ($0.2875 per quarter) in 2024. This would correspond to the company's eighth consecutive rise in its dividend.
Kinder Morgan will have ample financial resources to continue its dividend ascent. The company anticipates generating sufficient cash to cater to its shareholder payout and capital spending, while preserving a robust balance sheet. Kinder Morgan expects to close 2025 with a 3.8 times leverage ratio. This number represents a decrease from 4 times at the end of 2024 and falls within its 3.5 times to 4.5 times target range. This improved financial position enables Kinder Morgan to explore new acquisition or expansion opportunities.
Kinder Morgan anticipates investing $2.3 billion into organic capital projects in 2025, primarily funded with internally generated cash. This amount is around $400 million beyond its 2024 forecast.
These capital investments will bolster projects slated to enter service between 2025 and 2028. Kinder Morgan currently has $5.1 billion of organic expansions in its pipeline. Notable projects include a $1.7 billion expansion of its Southern Natural Gas pipeline joint venture, scheduled for 2028 in-service, and a $161 million investment in expanding the Gulf Coast Express Pipeline, with a mid-2026 planned completion date. These expansions will empower Kinder Morgan to continue elevating its dividend in the coming years.
Moreover, Kinder Morgan's current pipeline of projects could expand exponentially over the subsequent 12 months. During its Q3 conference call, the company revealed that it is witnessing an abundance of potential future expansion opportunities, driven by surging demand for natural gas from power plants and AI data centers. With its strong financial standing, Kinder Morgan is poised to secure additional expansion projects in 2025, so as to reinforce and expand its growth trajectory, thereby providing more fuel for dividend growth.
Another flourishing year ahead
Kinder Morgan anticipates lasting growth in 2025. This optimism is fueling its resolve to continue augmenting its dividend. This steady upward trend should persist, given the current expansion projects in the pipeline and under development. Thanks to this, Kinder Morgan should be capable of continually furnishing its investors with a lucrative and escalating income stream, positioning the organization as an optimal income-generating investment option for the long term.
In light of its anticipated earnings growth, Kinder Morgan plans to increase its dividend payout to $1.17 per share in 2025, representing a 1.7% rise from its 2024 dividend. The company's financial resources, expected to surpass $2.3 billion, will primarily come from internally generated cash, allowing for both dividend increases and capital spending while maintaining a robust balance sheet.
[Steady upward momentum, Plenty of fuel for dividend growth, Another flourishing year ahead] contain the words: ['finance', 'money', 'investing', 'dividend', 'profitability', 'earnings', 'growth', 'investment', 'capital', 'Balance sheet', 'expansion opportunities', 'potential future expansion opportunities', 'surging demand', 'AI data centers']
