If You Like Kinder Morgan's 6.1%-Yielding Dividend, You Should Check Out This High-Yielding Rival

Core Viewpoint - Williams is positioned to potentially grow its dividend faster than Kinder Morgan in the future, despite Kinder Morgan's higher current dividend yield [1] Kinder Morgan Overview - Kinder Morgan has generated $7.5 billion of adjusted EBITDA, remaining flat compared to 2022 and 2018 [2] - The company has faced challenges, including asset sales to reduce debt, which have decreased its leverage ratio by 26% since 2016 to 3.9 times [2] - Expected growth drivers for Kinder Morgan include completed expansion projects and a $1.8 billion acquisition of STX Midstream, projected to boost adjusted EBITDA by about 8% in 2024 [2][3] - Future dividend increases are expected to be modest, with a projected 2% increase this year [3] Williams Overview - Williams has achieved an 8% compound annual growth rate in adjusted EBITDA since 2018, reaching $6.8 billion [4] - The company has reduced its leverage by 25% since 2018 to a current level of 3.6 times, providing financial flexibility for acquisitions [4][5] - Williams plans to invest $3.4 billion in growth capital projects over the next two years and has a backlog of projects to support growth through 2027 [4] - The company has made $6.1 billion in acquisitions since 2021, including a recent $2 billion purchase of a natural gas storage portfolio [5] Dividend Growth Comparison - Williams has grown its dividend at a 6% compound annual rate since 2018, including a 6.1% increase earlier this year [6] - With a lower dividend payout ratio of 2.3 times coverage in 2024 compared to Kinder Morgan's approximately 2 times, Williams is positioned for mid-single-digit dividend growth [6] Investment Perspective - Kinder Morgan is suitable for investors seeking a high-yielding and reliable income stream with modest growth [7] - Williams, while offering a lower yield, is growing earnings and dividends faster, potentially leading to higher total returns over the long term [7]