Will Kinder Morgan Inc's Canadian Troubles Derail Dividend Growth?
This past July, Kinder Morgan (NYSE: KMI) announced plans to significantly increase cash returns to shareholders starting next year. The pipeline giant said it would raise its dividend 60% in 2018 and provide 25% increases in both 2019 and 2020 as well as repurchase up to $2 billion in stock. Fueling this massive return of capital is the company's decision to increase the percentage of cash flow it pays out each year and the $12.2 billion of growth projects it expects to place into service over the next few years.
That said, the company recently experienced a setback on its planned Trans Mountain Pipeline expansion in Canada, which is the largest of those growth projects, at $5.7 billion. That's after Canada's National Energy Board (NEB) told the company's Canadian subsidiary, Kinder Morgan Canada Limited (TSX: KML) to stop some preliminary work on the project, which the company said could delay it by a full year. While there is some concern that this could affect Kinder Morgan's dividend growth plans, it does have some levers to pull that could keep it on track.
Image source: Getty Images.
Source: Fool.com
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