A look at their growth profiles
Another factor to consider is their ability to increase their high-yielding dividends. Williams has grown its dividend at a 5% compound annual rate over the past five years, including by 5.3% for 2025. This year will mark Kinder Morgan's eighth straight year of dividend growth. However, it has been increasing its payment at a more modest 2% annual rate in recent years.
Both companies have a lot of growth coming down the pipeline. Williams expects to spend about $1.8 billion on growth capital projects this year. Meanwhile, it has a large backlog of expansion projects currently under construction that should add to its bottom line through the end of the decade.
Kinder Morgan also has a large set of expansion opportunities. It expects to spend about $2.3 billion on growth capital projects this year. Meanwhile, it has added over $5 billion to its long-term capital project backlog in recent months, increasing it by 60% over the past quarter to more than $8 billion. These projects also have in-service dates through 2029.
Expansion projects should give these pipeline companies the fuel to continue growing their cash flows and dividends. Williams is targeting 5% to 7% annual earnings growth over the long term, which could fuel a similar rise in its dividend. Meanwhile, Kinder Morgan's earnings growth rate has reaccelerated over the past year. It should really start hitting its stride in 2027, when the first of three major natural gas pipeline projects enters commercial service.
Kinder Morgan stands out
Williams and Kinder Morgan both pay high-yielding dividends backed by their irreplaceable natural gas infrastructure. However, Kinder Morgan offers dividend investors a higher yield backed by a similarly strong financial profile. While it has grown its payout at a slower rate in recent years, it should reaccelerate in the future as the company completes its current expansion wave. It offers more income now and in the future, making it the better dividend stock to buy right now.
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