Could Kinder Morgan Inc.’s Stock Buyback Program Just Be for Show?
Kinder Morgan (NYSE: KMI) unveiled some nice surprises when it reported second-quarter results earlier this month. Not only did the pipeline giant announce plans to provide investors with a 60% dividend increase next year and 25% annual increases in both 2019 and 2020, but its board authorized a $2 billion share repurchase program. Driving the decision to buy back shares instead of providing even larger dividend increases is the company's current valuation, which is much cheaper than rivals.
That said, just because Kinder Morgan's board has authorized a buyback, doesn't necessarily mean the company will repurchase any shares. That's because, from a pure value-creation standpoint, buying back its stock might not be the best use of that $2 billion. Here's a look at why it's possible that the authorization might go unused.
Image source: Getty Images.
Source: Fool.com
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