Why This 4.3% AI Energy Dividend Looks Safer Than Ever

Economic Outlook - Unemployment has reached 4.3%, the highest since early 2021, indicating a potential recession as employers are pulling back on hiring [3][4] - Automation, particularly AI, is replacing white-collar jobs, which may impact consumer spending in a service-driven economy [4] Energy Demand and AI - The demand for electricity in the U.S. is surging due to AI, with records set for energy consumption in July as data centers operate continuously [5] - Texas is a key player in the AI and energy boom, attracting major tech companies due to its favorable tax environment and abundant energy resources [5][6] Infrastructure and Pipelines - The Electric Reliability Council of Texas (ERCOT) projects a need for 139 gigawatts (GW) of new electricity by 2030, a 62% increase in five years [6] - New data centers are primarily reliant on gas-fired power plants, which benefits pipeline companies as demand for natural gas rises [7] Regulatory Environment - Federal policies are currently supportive of drilling and pipeline infrastructure, favoring the expansion of energy capacity [8] - Kinder Morgan (KMI) stands to benefit from this environment, with faster approvals and lower legal costs for pipeline projects [9] Kinder Morgan's Financial Outlook - Kinder Morgan operates 79,000 miles of pipelines, handling about 40% of U.S. natural gas production, positioning it well for increased demand from AI [9] - The company has consistently increased its dividend since 2018, with expectations of $5 billion in distributable cash flow for 2025 against $2.6 billion in dividend obligations [10][11] - With dividends requiring just over half of its cash flow, Kinder Morgan is well-positioned for potential payout hikes, making its 4.3% yield appear safe in the current economic climate [11]