Daily Stock Pick: January 25th, 2022

Stocks ticked lower in early trading following yesterday’s dramatic reversal. The S&P 500 reversed course after plunging nearly 4% into correction territory during regular trading Monday, only to finish the session with a 0.28% gain as investors enthusiastically snapped up shares into the closing bell. 

While many are looking for bargains amid high-growth tech names that have suffered double-digit losses in 2022, why not consider something that’s been performing well?

Today we’ve got our spotlight on value stocks – one name in particular that has done relatively well so far in 2022, despite the overall market’s downturn. The stock also comes with an attractive dividend that’s on track for growth in 2022.   

Kinder Morgan, Inc. (KMI) is one of North America’s largest energy infrastructure companies with an interest in 85,000 miles of natural pipeline and 152 terminals. The company’s pipeline transports natural gas, hydrogen, biodiesel, refined petroleum, crude oil, and more. The company also stores various materials like gas, coal, and steel at its terminals. It has around 72,000 miles of natural gas pipelines and is the largest natural gas pipeline operator in the U.S., moving about 40% of natural gas consumed.  

So far this year, KMI has been outperforming the market with a nearly 6% increase YTD, whereas the S&P 500 is down more than 8%, and it’s not difficult to understand why investors are keen on KMI these days. Kinder Morgan has a long-standing reputation as a pillar of stability with consistent cash flow that it uses to pay an attractive dividend while investing in expansion.  

Currently, KMI is looking to put capital to work in emerging businesses in the low-carbon energy transition. In 2021, it purchased renewable natural-gas producer Kintrex Energy, and it’s producing several logistics hubs for alternative fuels, slated for completion in 2022, which should provide new sources of earnings growth.  

KMI’s forecast has it on track to generate enough cash flow to cover its 6% dividend — which it intends to increase by another 3% this year — and its entire $1.3 billion expansion program, with about $870 million left to spare. The company said it could use up to $750 million of that money on attractive opportunities, including repurchasing its shares. 

Motley Fool’s Matthew DiLallo pointed out that Q4 was another “boringly predictable quarter” for Kinder Morgan. The company reported 27c EPS, where the analyst community was expecting 25c per share along with a slight revenue beat. Considering the current atmosphere, maybe “boringly predictable” isn’t such a bad thing.   

Where to invest $1,000 right now...

Before you consider buying Kinder Morgan, you'll want to see this.

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