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Kinder Morgan is one of the largest midfield activists in North America.
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Enterprise Products Partners is one of the largest midfield operators in North America.
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One of these two mid -stream giants has a better track record of investors who pay reliably for sticking around.
If you look at Morgan's children (NYSE: KMI) and its dividend product of 4.1%, you should also consider Enterprise product partners (NYSE: EPD) and its 6.8%distribution product. But the reason for favoring an initiative for Kinder Morgan is only partly involved in the product, especially if you are a dividend -oriented investor. Here's what you need to know to decide between these two mid -stream giants.
From a big picture perspective, Kinder Morgan and Enterprise Products partners operate in the energy sector. This sector is well known for being interchangeable, thanks to the huge impact that oil and natural gas prices have on the financial consequences of most energy companies. But not all energy companies, as Kinder Morgan and Enterprise are largely taking tolls, charging fees for moving natural oil and gas worldwide.
Basically, these midfielders sit between the river upstream (energy production) and the downstream (chemicals and refining). The pipelineStorage, and transport assets they own producing reliable fees, with the price of the goods moving through their systems far less important than the demand for the services they provide. And energy demand tends to be relatively high even when energy prices are low. So Kinder Morgan and Enterprise have attractive and reliable business models in what is otherwise interchangeable.
From this point of view, Kinder Morgan and Enterprise are very similar. They are also very similar in the size of their asset portfolios, which are among the largest in North America. In fact, both businesses have market caps in the range $ 60 billion to $ 70 billion. But they are not interchangeable.
Mid -stream investments are generally considered for the reliable income flow they provide to investors. The high dividend product of Kinder Morgan and Enterprise are part of that story. However, there is a back history that investors should not ignore.
In 2016, the energy sector was going through a difficult time. Enterprise increased its distribution. Kinder Morgan broke his 75%distribution. To be fair, it was the right move to the company, but it was a terrible result for income investors. The real problem, however, is that only a couple of months before the break, management guided for a dividend increase by as much as 10%.