I bought 36 shares of Kinder Morgan, Inc. at $35.10. This is my first investment in Kinder Morgan which has been a long time coming. I decided to buy shares of the general partner instead of the limited partner for the higher dividend growth. KMI intends to boosts dividends by 12% per year through 2015 which is obviously a very high rate. This stock is currently paying about a 4% yield to boot.
To be honest it's very difficult to value KMI. I'm not exactly sure if I'm over paying or under paying. What I do know is that I want to own a slice of this company, and I like the yield it's currently paying. CEO and founder, Richard Kinder, owns about a quarter of all KMI shares. His annual salary is $1 with no stock options or bonus incentives. The reason he oversees the company is to make wise decisions that will increase his dividend stream and the value of his stake. The guy is a multi-billionaire and knows what he's doing. If it's good enough for Richard it's good enough for me!
In the past year Kinder Morgan acquired El Paso pipelines which I see as being beneficial to KMI. So now we're looking at KMP, KMR, and EPB all paying incentive distribution rights to KMI. Right now it looks like they need to finish asset drop downs, but I wouldn't be surprised if we see more acquisitions in the future. According to the website, it's currently the third largest energy company in North America with total enterprise value greater than 100 billion. I'm taking that to mean only XOM and CVX are bigger. They operate 75,000 miles of pipeline throughout the US and Canada.
I'll be on the lookout for opportunities to increase this position and I might add KMP as well.