Shares of Kinder Morgan (NYSE: KMI) trade right now at a dividend yield of 6.1%. The stock surely offers an attractive spread over U.S. 10-year Treasuries, which are yielding around 1.6%. But before getting lured by the high yield, it is important to understand the company's prospects. Let's look at its recent performance, and its expected growth in the coming years.
In the last five years, Kinder Morgan has generated steady EBITDA as well as stable cash from operations. The company's bottom line was also largely in the black over this period. This steady performance can be attributed to its fee-based, long-term contracts.
Around 68% of the company's earnings are backed by take-or-pay contracts. Such contracts entitle Kinder Morgan to get payments from shipper customers, regardless of actual throughput on its assets. Kinder Morgan's interstate gas pipelines are largely reserved under such contracts.
Source Fool.com