Kinder Morgan, Inc. (KMI) is one North America’s largest energy infrastructure companies; the company specializes in owning and managing oil and gas pipelines and terminals, notes Marty Fridson, editor of Fridson/Forbes Income Securities Investor.

KMI has an interest in and/or operates approximately 83,000 miles of pipelines and 141 terminals. The company’s pipelines transport natural gas, refined petroleum products, crude oil, condensate, and other products.

Its terminals transload and store renewable fuels, petroleum products, carbon dioxide, ethanol, and chemicals. KMI is also a leading producer of carbon dioxide for use in enhanced oil recovery projects. Dividends are qualified and taxed at the 15%-20% rate.

The company’s investment grade debt ratings reflect its significant scale, high-quality natural gas pipelines, and stable fee-based cash flow. The company has the flexibility to self-fund its capital spending and distributions.

Business risk profile is excellent, as is KMI’s competitive position. KMI reported 2Q 2022 adjusted net income of $621.0 million or $0.27 per share, matching analysts’ estimates. Adjusted quarterly results were up 17.4% from a year ago.

Revenues of $5.15 billion easily exceeded estimates of $4.33 billion, as higher refinery utilization rates and a rebound in fuel demand drove momentum. Distributable cash flow was a solid $1.18 billion in 2Q 2022, up almost 15% year-over-year.

We continue to recommend KMI common shares for medium-risk taxable portfolios. With this corporate update, we are raising the fair value price for KMI common stock to $25.00 from $22.50.

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