(KMP) Kinder Morgan Energy Partners, L.P. (NYSE: KMP)
petroleum products, and CO2. It's a very steady business, and has a good degree of insulation from short-term price swings
in the commodities it moves. Still, over time, as energy prices rise, the rates that pipeline companies charge tend to rise too.
In this case, so does the stock price.
annually.
is a pipeline company. It stores and transports natural gas, oil and For the last 10 years KMP has delivered a total return of nearly 20.8% compounded The company first caught my attention last summer when Insiders bought more than 54,000 shares (actually, they're
called units with these LPs) despite their being near an all time high. The big boys knew what they were doing.
KMP has delivered a total return of 15.4%, while the S&P 500 and Dow have dropped 15%.
relative to the market.
To be strictly accurate, the Insiders didn't buy these units, but rather their sister units,Kinder Morgan Management, which
pay their dividends in additional units, rather than in cash.Nearly 13% of these units outstanding are held by Insiders.But if
you're like me, you'd rather take your money up front, especially in this kind of market.
In the last year, That's a 30% spread in performance, Despite the run-up in price since last year, the units actually now have a higher current yield
the company has raised the dividend in each of the last 4 quarters.What's more, that's not at all unusual. KMP has
raised its dividend in 3 or 4 quarters of most of the last 10 years, and raised it at least once per year in all of them.
The case for energy investments remains strong.While $125 oil will slow (not stop) worldwide demand growth, the use
of natural gas as a substitute is growing.Even with the recent rise in prices, it is still far cheaper than oil for industrial uses, such
as utilities, and it's cleaner.Moreover, it's significantly cheaper here than abroad, which should continue to increase its importance
as America strives for energy independence.
— a whopping 6.7%. That's because In the quarter ended June 30, earnings per unit increased 81%. In addition to all these factors, KMP has been steadily expanding its geographic reach. Soon it will be able to efficiently and
economically deliver gas from the booming Rocky Mountains fields, all the way to the energy-hungry Northeast—its biggest
market. Part of the extension was completed in January, boosting earnings, as expected. The rest of it should be finished by
this time next year, delivering more gas to the Northeast, and more cash to unit holders.
As a tax-advantaged limited partnership, KMP is not taxed at the corporate level. Your share of the profits is considered
your personal income.You
you to exploit this arrangement.
can buy it in tax-deferred accounts.You may want to consult your tax advisor for the best way for Buy Kinder Morgan Energy Partners up to $60.
$55.96 (08/07/08)
