Kinder Morgan's (NYSE: KMI) stock has been pummeled over the past three years, nearly getting cut in half. What's surprising about that plunge is the fact that the underlying cash flow from the company's predominately fee-based assets has barely budged, falling from a peak of $2.14 per share in 2015 to an expected $1.99 per share this year, or about 7%. Because of that, the stock's valuation has fallen from a rich 19.8 times distributable cash flow to a mere 9.8 times, which is dirt cheap for a pipeline stock.
Further, even as cash flow remained stable, the company undertook a slew of strategic initiatives to strengthen its balance sheet and secure outside funding for future growth projects. Because of that, the company's leverage ratio has come down while it has increased the visibility of its growth prospects. That put the company in the position to open the taps on shareholder distributions next year. The net result is that Kinder Morgan offers investors who buy today the potential to grab a fast-growing dividend at a rock-bottom price, which makes it a screaming buy in my opinion.
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Source: Fool.com