This High-Yield Stock's More Conservative Approach Could Pay Big Dividends Down the Road
Kinder Morgan (NYSE: KMI) pays one of the highest-yielding dividends in the S&P 500. At 6.1%, it's several times above that broad market index's average of around 1.4%. The big-time payout is on a very firm foundation, thanks to the company's steady cash flow and conservative financial profile.
The natural gas pipeline giant recently showcased its commitment to maintaining a conservative financial profile by adjusting its targeted-leverage ratio. Here's why that move could pay big dividends for investors in the future.
Kinder Morgan unveiled in its first-quarter earnings report that it's adjusting its long-term leverage target. It's moving the goal from around 4.5 times net debt-to-adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to a range of 3.5 times to 4.5 times. The company noted that this change is more of a reflection of how it has operated over the past several years. It believes this is an appropriate target range for a company that operates high-quality energy-infrastructure assets that produce stable, fee-based cash flow supported by long-term contracts.
Source Fool.com
