Key Takeaways
- Realty Income yields 6.1%, and Kinder Morgan yields 3.7%, and both raised their dividends this year.
- Kinder Morgan covered its dividend 2.1x with distributable cash flow in fiscal 2025, and 2.3x on 2026 consensus.
- Realty Income paid out 75% of its AFFO in fiscal 2025, but it carries more debt, at 5.7x net debt to EBITDA against Kinder Morgan’s 4.1x.
- Kinder Morgan’s $9.6 billion project backlog and Realty Income’s $10 billion investment plan for 2026 are the things to watch.
Kinder Morgan (KMI) raised its quarterly dividend 2% to $0.2975 per share in July. Realty Income (O) made its own move in June with its 115th consecutive quarterly dividend increase, and in August it raised its 2026 AFFO guidance.
Kinder Morgan yields 3.7% and covers its payout more than twice over, while Realty Income yields 6.1% and pays every month. If I could hold only one for the next 10 years, which one gets my dividend dollars?
| Metric | Kinder Morgan (KMI) | Realty Income (O) |
|---|---|---|
| Dividend yield | 3.7% | 6.1% |
| Dividend growth, fiscal 2020–2025 | 2.2% a year | 2.9% a year |
| Coverage measure | Distributable cash flow coverage | AFFO payout ratio |
| Coverage, fiscal 2025 | 2.07x | 75% |
| Coverage, fiscal 2026 consensus | 2.33x | 73% |
| Net debt/EBITDA (LTM) | 4.11x | 5.74x |
| Interest coverage (LTM) | 2.98x | 2.35x |
Source: TIKR, Oct. 9, 2026. Each company’s coverage is on its own measure.
Kinder Morgan: wide coverage, small raises
Kinder Morgan’s gas network is running busy right now. In the second quarter of 2026, transport volumes rose 7%, and gathering volumes rose 26% from a year earlier, helped by LNG deliveries, exports to Mexico, and demand from power plants.
Because it’s a pipeline, Kinder Morgan is judged on distributable cash flow coverage, which came in at a comfortable 2.07x in fiscal 2025 and is 2.33x on 2026 consensus. The forward jump rests on a strong first half, with management now expecting to beat its budget by more than 5% on adjusted EBITDA.
The chart makes the cushion easy to see. Distributable cash flow per share stayed between $2.00 and $2.42 every year from fiscal 2016 to fiscal 2025, while the dividend rose from $0.50 to $1.17…
That $0.50 came after a cut: Kinder Morgan paid $1.60 per share in fiscal 2015. It has raised the dividend every fiscal year since 2018, but only by 2.2% a year from fiscal 2020 to fiscal 2025.
Management says its cash flows “fund virtually all of our project backlog internally, support a growing dividend and maintain a strong balance sheet.” The coverage backs that up, and July’s 2% raise shows where the dividend ranks: the $9.6 billion backlog gets the cash first. The risk to that backlog is whether it gets permits and approvals for its expansion projects on time.
Realty Income: the bigger check, every month
Kinder Morgan sends its cash to the pipelines first, while Realty Income puts the dividend at the center of its mission, which is to “deliver dependable monthly dividends that increase over time.” As a REIT, Realty Income is judged on its AFFO payout ratio, which came in at a well-covered 75% in fiscal 2025 and is 73% on 2026 consensus.
The chart backs up that mission. AFFO per share rose every year, from $2.88 in fiscal 2016 to $4.28 in fiscal 2025, and the payout ratio eased from 83.0% to 75.2% over the same years…
The company says it has raised its dividend “for over 31 consecutive years.” In August, management raised its 2026 AFFO per share guidance to $4.44 to $4.45 and its investment target to $10.0 billion.
The risk is debt. Net debt runs 5.74x EBITDA, against 4.11x at Kinder Morgan, and Realty Income’s growth depends on the capital markets.
So which dividend wins?
Realty Income gets my dividend dollars for the next 10 years.
Let each dividend keep growing at its own five-year rate, and Realty Income pulls away. A $10,000 stake in it pays $610 this year and about $790 in year 10, which works out to a 7.9% yield on the cash you put in. The same stake in Kinder Morgan pays $370 now and about $450 in year 10. Over the decade, Realty Income pays about $6,964 against $4,086, and at these rates Kinder Morgan’s income never catches up.
I think Realty Income can keep that pace. It keeps a quarter of its AFFO in reserve, its AFFO per share grew in every year on the chart, and I’m not paying up for it, either…
At 12.1x forward AFFO, it trades below its five-year average of 14.7x and close to the low of 11.4x it hit in October 2023.
To be fair, Kinder Morgan’s dividend is plenty safe. Coverage runs better than two times over, the debt is lower, and the gas business is growing. Still, over 10 years I’d rather own the dividend that starts bigger, grows faster, and has 31 years of raises behind it.
Of course, Realty Income still has to fund $10 billion of investments this year, $9 billion of it on its own balance sheet. Its cost of capital is the number to watch.
So what is Realty Income 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 Realty Income 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.
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!
