Key Takeaways
- Kinder Morgan raised its quarterly dividend 2% in July, and Energy Transfer raised its distribution for the 19th consecutive quarter.
- Energy Transfer yields nearly 7%, against about 4% for Kinder Morgan, and has grown its payout faster over the past five years.
- Both are judged on distributable cash flow coverage, where Kinder Morgan’s 2.1 times in 2025 beat Energy Transfer’s 1.8 times.
- Consensus has both cushions widening in 2026, to about 2.3 times and 2.1 times, after strong second quarters.
It’s a good year to be in the natural gas business – high energy prices are bolstering stocks like Kinder Morgan (KMI) and Energy Transfer (ET) as they work to build out more capacity. Both raised their dividends this year thanks in part to steady increase in demand…yet Energy Transfer yields nearly twice as much.
So which is the better dividend stock?
You’d think it would be kind of obvious just based on the yield, but it’s more complicated than that. After all, it’s not just about how big the dividend is today – but (A) how sustainable it is, and (B) how much it could grow from here.
| Metric | Kinder Morgan (KMI) | Energy Transfer (ET) |
|---|---|---|
| Dividend yield | 3.9% | 6.8% |
| Annual payout | $1.19 a share | $1.36 a unit |
| Dividend growth, 5 years | 2.2% a year | 7.8% a year |
| Record | 8 straight fiscal years of higher dividends | 19 consecutive quarterly increases |
| DCF coverage, 2025 | 2.07x | 1.78x |
| DCF coverage, 2026 consensus | 2.33x | 2.13x |
| Net debt / EBITDA | 4.11x | 3.98x |
Source: TIKR, Oct. 5, 2026, and the companies’ own releases.
Kinder Morgan’s steady engine
Kinder Morgan is mostly a natural gas story right now. In the second quarter, its gas transport volumes rose 7% and its gathering volumes rose 26% from a year earlier.
That business funds a comfortably covered dividend: 2.07 times in 2025, and 2.33 times on consensus for 2026. The 14% rise in DCF per share follows a strong first half, and the company now expects to beat its own budget by more than 12% on adjusted EPS. “Given our results through the first half of the year and our confidence in the outlook for the remainder of 2026, we are increasing our guidance,” CEO Kimberly Dang said on the call. (Last year’s final consensus matched the actual.)
Over the past decade, DCF held steady as the dividend climbed…
DCF stayed between $2.00 and $2.42 a share every year, while the dividend rose from $0.50 to $1.17.
Growth is the weak spot. The dividend grew 2.2% a year over five years, and at its 3.9% yield, a $10,000 investment pays about $390 a year now and about $474 in year 10 if past growth rates hold.
Energy Transfer’s bigger check
Energy Transfer benefits from the same gas demand, and it’s also setting records in natural gas liquids and crude. In the second quarter, NGL transportation volumes rose 13% and crude volumes rose 4%. Energy Transfer is a master limited partnership, so it pays distributions on units, and holders get a K-1 tax form.
Its coverage was a thinner but still solid 1.78 times in 2025, and consensus has 2.13 times for 2026. The second quarter backs up that 23% jump in DCF per unit: DCF attributable to partners rose 32% to $2.59 billion. (Last year’s final consensus came within 2% of the actual.)
The longer record is bumpier…
Distributions fell from $1.22 a unit in 2019 to $0.63 in 2021. Since 2022, DCF has held near $2.40 a unit while the distribution rose from $1.00 to $1.34, so the cushion has narrowed.
At its 6.8% yield, $10,000 pays about $680 a year now. That’s good, but given their (recent!) history of cutting the dividend, it’s important to recognize that they’ve shown much less commitment to steadily growing the dividend. And of course, Energy Transfer is facing permitting challenges on projects such as Desert Southwest and Green Chile.
So which dividend wins?
Ultimately, despite my reservations…Energy Transfer is the better dividend stock. It pays nearly twice the yield, has grown its payout faster in good times, and still covers it about twice over on 2026 consensus. Both companies have solid balance sheets.
Even at 3% a year, roughly the pace of its latest raise, Energy Transfer’s $680 grows to about $887 in year 10. That’s nearly twice Kinder Morgan’s $474. At these rates, Kinder Morgan’s income never catches up.
Kinder Morgan still has a strong case. Its cushion is wider, its DCF has barely moved in a decade, and it has raised its dividend eight years running. For investors who prize a steady check over a bigger one, it’s the safer pick.
Of course, Energy Transfer’s 2026 coverage rests on DCF per unit rising 23%. If the second half doesn’t keep up, its cushion stays nearer last year’s 1.78x.
So what is Energy Transfer stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Energy Transfer could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
