The AI Boom Could Empower This 4.3%-Yielding Dividend Stock to Add Another $10 Billion in Fuel to Its Growth Engine

Kinder Morgan (KMI) is experiencing a significant operational turnaround, reporting strong Q3 results with adjusted EBITDA up 6% and EPS up 16%, primarily driven by its natural gas pipeline segment. The company's expansion project backlog has surged to $9.3 billion, largely in natural gas, fueled by increasing demand from LNG terminals, power generation for AI data centers, and new manufacturing. This robust backlog, alongside potential additional projects exceeding $10 billion and a new refined products pipeline venture, positions KMI for accelerated earnings growth through 2030, supporting its 4.3%-yielding dividend and potentially generating strong total returns for shareholders.

Analysis

Kinder Morgan (KMI) reported a significant operational turnaround, with Q3 adjusted EBITDA up 6% year-over-year and adjusted EPS soaring 16% to $0.29, accelerating from prior flat periods. This strength stemmed primarily from a 10% earnings jump in natural gas pipelines, driven by increased volumes to LNG terminals and new contracts. KMI's expansion project backlog has surged to $9.3 billion from $1.4 billion in 2021, largely fueled by surging gas demand from AI data centers.

The $9.3 billion backlog, predominantly natural gas projects, provides significant visibility into KMI's future earnings growth through Q2 2030. CEO Kim Dang highlighted an "exceptionally promising" outlook, citing the most robust opportunity set in company history, including plans to deliver 12 Bcf/d of gas to LNG terminals by 2028 and exploring over 10 Bcf/d for the U.S. power sector. An additional $10 billion in gas projects could be approved.

A partnership with Phillips 66 for the Western Gateway Pipeline diversifies KMI's long-term outlook into refined products, with potential commercial service by 2029. This accelerated earnings growth, fueled by the substantial project backlog and future opportunities, is expected to support KMI's 4.3%-yielding dividend, which has increased for eight consecutive years. This combination of income and growth positions Kinder Morgan for "high-octane total returns."

Key Decisions for Investors

• Investors should consider Kinder Morgan (KMI) for long-term growth and income portfolios, given its accelerating earnings, robust $9.3 billion project backlog, and attractive 4.3% dividend yield.
• Monitor the execution of KMI's natural gas pipeline projects, particularly those driven by AI data center and LNG demand, as well as the potential approval of an additional $10 billion in gas projects.
• Evaluate the strategic diversification provided by the Western Gateway Pipeline partnership with Phillips 66, which could enhance KMI's long-term refined products segment growth.