Kinder Morgan (NYSE: KMI) recently revealed its financial expectations for the upcoming year. The natural gas pipeline giant foresees its earnings continuing to rise, which will give it the fuel to increase its dividend once again. That payout — which already yields more than 4% — will be on a rock-solid foundation in the coming year.
Here’s a closer look at what Kinder Morgan sees ahead in 2025.
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Kinder Morgan expects to generate $8.3 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) next year. That implies a 4% increase from its forecast of $8 billion for 2024 (about 5% higher than 2023’s level). Meanwhile, the company expects its adjusted earnings to grow even faster, rising 8% to $1.27 per share (after increasing by 9% this year to $1.17 per share).
The natural gas pipeline company expects growth across all its business segments. However, its most prominent growth drivers will be its gas pipeline and energy-transition ventures segments. The company recently completed several capital projects that will provide a boost next year. It finished the $158 million expansion of the Kinder Morgan Texas Pipeline system in October and the $283 million first phase related to its Evangeline Pass project, which entered service in July. In addition, Kinder Morgan expects to complete its Autumn Hills renewable natural gas facility this month. The company also completed a small $54 million expansion of its Geismar River Terminal in the fourth quarter.
The energy company has a couple more gas pipeline projects on track to enter service next year. The $154 million expansion of the Kinder Morgan Tejas Pipeline should enter service in two phases next year. Meanwhile, the company expects to complete the remaining phase of its $670 million Evangeline Pass project in July. Kinder Morgan also has a small expansion of its SFPP pipeline on track to enter commercial service in next year’s Q3.
Kinder Morgan’s growing earnings will enable it to continue increasing its dividend. The company plans to declare $1.17 per share in dividends next year ($0.2925 per quarter). That’s up from $1.15 per share in dividends ($0.2875 per quarter) in 2024 (a 1.7% increase). That would mark its eighth straight year of increasing its dividend.
The company can easily afford to continue increasing its dividend. Kinder Morgan expects to generate enough cash to cover its high-yielding payout and capital spending while maintaining a strong balance sheet. The company anticipates ending next year with a 3.8 times leverage ratio. That’s down from 4 times at the end of this year and in the lower part of its 3.5 times to 4.5 times target range. That gives it the capacity to make additional investments as acquisition or organic expansion opportunities arise.
