Kinder Morgan Inc (NYSE:KMI) has raised its dividend for the sixth straight year as it credited its Natural Gas Pipelines and Terminals business segments for generating strong earnings.
The energy infrastructure company reported a 9% decline in revenue to $3.89 billion for the three months to March 31, 2023. Net income rose 1.8% to $679 million but adjusted earnings fell 7.8% to $675 million, resulting in adjusted earnings per share of $0.30, down 6%.
Its board approved a first-quarter cash dividend of $0.2825 per share, up 2% from 1Q 2022, noting that it also repurchased approximately 6.8 million shares for $113 million during the quarter.
“Shareholders continue to benefit from our long-standing corporate strategy: maintaining a strong investment-grade balance sheet, internally funding expansion opportunities, paying an attractive and growing dividend, and further returning value by repurchasing our shares on an opportunistic basis,” CEO Steve Kean said in an earnings statement.
Good progress on pipeline systems
During the quarter, the company said it made good progress on two capital-efficient expansions to its natural gas pipeline systems, with one expected to add roughly 550 million cubic feet per day (MMcf/d) of capacity to the Permian Highway Pipeline (PHP) system through additional compression with minimal new pipeline build.
It said the second will increase the capacity and reliability of services to key business partner Con Edison by upgrading and adding compression facilities on the Tennessee Gas Pipeline (TGP) system in a critical region of the country.
Kean noted that as the US Congress debates much-needed reform of infrastructure permitting, the current system makes it difficult to permit new natural gas pipelines in much of the US, making Kinder Morgan’s existing natural gas pipeline systems more valuable.
“With a large portion of our existing natural gas pipeline network in Texas and Louisiana, we also benefit from our ability to expand to meet growing demand in the most infrastructure-friendly region of the country,” he added. “In addition, our Products Pipelines and Terminals business segments benefit from built-in escalators in their tariffs and contracts.”
The company’s shares were 1.4% down at $17.23 in late morning trade.
Contact the author at stephen.gunnion@proactiveinvestors.com