Kinder Morgan Cuts Dividend; Stock Down

(RTTNews) - Kinder Morgan Inc. (KMI) announced that its board has approved a plan pursuant to which it expects to pay quarterly dividends of $0.125 per share to its common stockholders ($0.50 annually), down from its current quarterly level of $0.51, beginning with the fourth quarter 2015 dividend payable in February 2016.

KMI closed Tuesday trading at $15.72, down $0.70 or 4.26%. In after hours, the stock further dropped $1.02 or 6.49%.

The company stated that the dividend enables it to use a significant portion of its large cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future and maintain a solid investment grade credit rating. KMI anticipates enough retained internally generated cash flow to fund all of the required equity contribution projected for 2016 and a significant portion of its debt requirements.

The company has reviewed its expected investments in 2017 and 2018 and believes that its stable and growing internally generated cash flow will allow it to continue to fund the equity portion of its capital budget without the need to access the equity market.

It anticipates meeting all of the rating agencies' requirements to remain investment grade, and expects a net debt/EBITDA ratio of 5.5 for 2016 and anticipates reducing that ratio in subsequent years.

The company has completed its budget process for 2016 and expects distributable cash flow or DCF available to its equity holders of slightly over $5 billion, an increase of approximately 8 percent over 2015.