Is January a good month for buying Kinder Morgan shares?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 27, 2020
  • Kinder Morgan announced that it would probably increase the dividend by 3% in 2021
  • The company expects to generate $2.1B in attributable net income in 2021
  • Kinder Morgan shares could be a very good investment option

Kinder Morgan (NYSE: KMI) shares have weakened from $21 below $10 since the beginning of the 2020 year, and the current price stands around $13.8. Kinder Morgan recently announced that it would probably increase the dividend by 3% in 2021, and with a $31B market capitalization, this stock is not expensive, in my opinion.

Fundamental analysis: The board expects the 2021 dividend to be $1.08 per share

Kinder Morgan is one of the largest energy infrastructure companies in North America that specializes in owning and controlling oil and gas pipelines. Kinder Morgan shares could be a very good investment option; the dividend yield is around 7.5%, making the stock attractive for income investors.

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Kinder Morgan reported Q3 results in October; total revenue has decreased by 9% Y/Y to $2.92B while Q3 GAAP EPS was $0.20 (missed by $0.01). Total revenue has decreased below the expectations (+ $10M), and the company declared a $0.2625/share quarterly dividend, which is in line with previous.

Kinder Morgan recently announced that it would probably increase the dividend by 3% in 2021 as the company expects to generate $2.1B in attributable net income in 2021, $2B more than its 2020 forecast. The company also reduced its expenses in 2020, but it plans to invest $800M in expansion projects in 2021.

“We expect the board to declare a fourth quarter 2020 dividend of $0.2625 per share or $1.05 annualized, consistent with previous quarters in 2020. Based on our budgeted DCF per share generation detailed below, the board expects the 2021 dividend to be $1.08 per share (annualized), a 3% increase from the 2020 dividend,” said KMI Executive Chairman Richard D. Kinder.

Kinder Morgan is currently forecasting EBITDA of ~$7 billion for 2020, but the stock price has weakened more than 35% since the beginning of the 2020 year. This EBITDA forecast is down only 8% versus the original prediction before the pandemic.

With the market capitalization of $31B, this stock is still undervalued relative to its competition, and maybe now could be a good time to invest in Kinder Morgan shares.

Technical analysis: Kinder Morgan shares could be a very good investment option

Kinder Morgan is facing the current covid crisis relatively well, and this company remains attractive for long-term oriented investors.

Data source: tradingview.com

The critical support levels are $13 and $12; $15 and $17 represent the resistance levels. If the price jumps above $15, it would be a signal to buy Kinder Morgan shares, and the next target could be around $17. On the other side, if the price falls below the $12 support level, it would be a firm “sell” signal and a trend reversal sign.

Summary

Kinder Morgan is facing the current covid crisis relatively well, and this company remains attractive for long-term oriented investors. Kinder Morgan announced that it would probably increase the dividend by 3% in 2021 as the company expects to generate $2.1B in attributable net income in 2021.

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