This 7%-Yielding Dividend Stock Is Becoming More Sustainable
Kinder Morgan (NYSE: KMI) has one of the highest dividend yields in the S&P 500 at 7%. While payouts that high might seem suspect, the natural gas pipeline giant has worked hard to ensure it's sustainable. It has taken steps to enhance its financial profile while expanding into more sustainable energy markets.
These factors make Kinder Morgan look like a great stock for income-focused investors to buy and hold long term.
Kinder Morgan has always generated very stable cash flow. This year, roughly 67% of its earnings will come from take-or-pay contracts or hedging agreements, which lock in that revenue. Meanwhile, another 26% of its earnings come from fee-based contracts. While they have exposure to volume risk, it's paid a fixed fee regardless of energy prices. The final 7% are more volatile commodity-based earnings.
Source Fool.com
