Williams vs. Kinder Morgan: A Dividend Showdown

Alright, fellow income investors, let's dive into the world of dividends and compare two heavy hitters in the midstream energy sector: Williams Companies (WMB) and Kinder Morgan (KMI). Both companies have been on a dividend growth spree, but which one is the better choice for your portfolio? Let's find out!

First things first, let's take a look at the dividend payout ratios and growth rates for both companies.

As you can see, both companies have similar dividend payout ratios and growth rates. However, Kinder Morgan offers a higher dividend yield, which is attractive for income-focused investors. Additionally, Kinder Morgan's expected dividend growth in 2019 and 2020 will result in a yield of around 7.5%, making it an even more appealing choice for long-term investors seeking income.

Now, let's talk about the growth prospects and expansion plans of these two companies. Both Williams and Kinder Morgan have attractive growth prospects and expansion plans, but Williams' dividend growth rate and long-term earnings growth target may give it an edge in terms of overall investment appeal for income-focused investors.



Williams has a large backlog of expansion projects currently under construction, which should add to its bottom line through the end of the decade. The company expects to spend about $1.8 billion on growth capital projects this year, with a long-term earnings growth target of 5% to 7% per year. Williams' dividend growth has been more robust in recent years, with a 5% compound annual rate over the past five years, including a 5.3% increase for 2025.

On the other hand, Kinder Morgan has a large set of expansion opportunities, with over $5 billion added to its long-term capital project backlog in recent months, increasing it by 60% over the past quarter to more than $8 billion. The company expects to spend about $2.3 billion on growth capital projects this year, with expansion projects having in-service dates through 2029. Kinder Morgan's earnings growth rate has reaccelerated over the past year, and it should really start hitting its stride in 2027 when the first of three major natural gas pipeline projects enters commercial service.

So, which company comes out on top in this dividend showdown? Both Williams and Kinder Morgan have attractive growth prospects and expansion plans, but Kinder Morgan's higher dividend yield and expected dividend growth make it a more appealing choice for long-term investors seeking income. Additionally, Kinder Morgan's reaccelerating earnings growth rate and higher projected dividend yield could make it more appealing for those seeking a higher income stream in the future.

In conclusion, if you're looking for a reliable and attractive dividend stock in the midstream energy sector, Kinder Morgan is the better choice. Its higher dividend yield, expected dividend growth, and reaccelerating earnings growth rate make it an excellent option for income-focused investors. So, go ahead and add Kinder Morgan to your portfolio, and watch your dividends grow and flow!