Portfolio Manager Gregg Abella of Investment Partners Asset Management says Kinder Morgan Inc (NYSE:KMI) is currently paying down debt and rightsizing its balance sheet, which should put the company in position to pay a better dividend going forward.
Kinder Morgan is previously a high flyer in the MLP space. They subsequently converted into a C-Corporation, but it is one of the larger, if not the largest midstream and downstream energy companies, meaning oil and gas pipelines and storage.
In January, the company held an analyst day to lay out its plans for the coming year, and while the energy sector has been a real downer for the last two and half years, the company is using this opportunity to use its own internal cash flow to pay down debt and rightsize its balance sheet. It is doing all the right things to maintain its dividend-paying capacity and remain an investment-grade credit.
And we think that over time, that strategy will pay off and that the ability for them to pay a better dividend going forward, in the years to come, will probably start to become evident in the later part of this year or early part of next year.