If you are watching Kinder Morgan (NYSE: KMI) And its 4.1% dividend yield, you should also consider Enterprise product partner (NYSE: EPD) And its 6.8% distribution yield. But the reason for liking the venture on Kinder Morgan is only partially to do with yield, especially if you are a dividend-centric investor. Here you need to make decisions between these two midstream giants.

What do Kinder Morgan and Enterprise do?

From the perspective of a large picture, Kinder works in both Morgan and enterprise products partners energy sectorThe region is known to be unstable, which has a huge impact on the financial consequences of the most energy companies in oil and natural gas prices. But not all energy companies, as the Kinder Morgan and Enterprise are largely taking toll, which charge to transfer oil and natural gas worldwide.

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Essentially, these midstream players sit between upstream (energy production) and downstream (chemistry and purification). PipelinesStorage, and transport assets. They generate reliable fees, with the price of goods moving through their systems are less important than the demand for services provided by them. And even when the energy prices are low, the demand for energy is high. So both Kinder Morgan and Enterprise have attractive and reliable business models which are otherwise unstable industries.

From this point of view, the Kinder Morgan and enterprise are very similar. When they talk about the size of their asset portfolio, they are very similar, which are the largest in North America. In fact, both are businesses Market caps $ 60 billion to $ 70 billion range. But they are not interchangeable.

Why most investors will probably like enterprises

Midstream investment is usually considered for reliable income stream they provide to investors. The elevated dividend yields of both Kinder Morgan and Enterprise are part of that story. However, there is a back history that investors should not ignore.

In 2016, the energy sector was undergoing a difficult period. The enterprise increased its distribution. Kinder Morgan cut his distribution by 75%. To be fair, this was the right step for the company, but this income was a terrible result for investors. The actual problem, however, is that a few months before the cut, the management was guiding for a dividend increase of more than 10%.

Rash -free cash was used to strengthen the balance sheet of Kinder Morgan and invest in development opportunities. So the cut strengthened the business, with management finally the dividend growth got back on the track. But there was a problem here too. It set an aggressive dividend growth schedule and then reduced the scheme during the Koronwirus epidemics during the difficult energy market in 2020. In other words, Kinder Morgan has reduced dividend investors during each of the most recent energy industry. Enterprise raised its distribution marginally in 2020, but it is basically what he has done for years.

Wrong in favor of caution would be the best option for most investors

In fact, at this point, Enterprise has increased its distribution year for 26 consecutive years and in the year. Kinder Morgan feels that it is in better financial and commercial size today than in 2016. And the dividend of 2020 was missing, even at that time given uncertainty. But if it is able to believe how the management team of investment is with you, then what is important for you, enterprise will be a better investment option. And when you are on it you will collect a high yield.

Should you currently invest $ 1,000 in Kinder Morgan?

Consider before you buy stock in Kinder Morgan:

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