January 21, 2009 - KMP announced an increase in its quarterly dividend from $1.02 to $1.05 per unit, a 14% increase over the distribution paid in 4Q 2007. KMP has consistently increased its dividends for twelve consecutive years. The partnership units currently yield 8.50%.
"KMP previously announced that it expects to declare cash distributions of $4.20 per unit for 2009, a 4.5 percent increase over 2008. "We continue to be well positioned for future growth and anticipate that our business segments will generate over $3 billion of earnings before DD&A in 2009," (CEO) Kinder said. "Growth will be driven by the continuation of our substantial capital investment program, which includes both expansions of existing assets along with new projects. As examples, we have three major natural gas projects scheduled to begin service in 2009."
Even if the price of oil or natural gas declines, the business of KMP is not directly affected because it is paid to transport the commodity (energy transfer volume). Furthermore, it has a lot of throughput contracts with its clients. This means that KMP and its clients have contracts that established a minimum amount of the commodity that KMP ought to deliver. Whether or not the clients actually take delivery, they still have to pay KMP the agreed upon price for the delivery. This essentially puts a floor on their revenues.