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ENB vs. KMI: Predictable Cash Flows or LNG-Driven Growth?
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Key Takeaways
Enbridge earns 98% of EBITDA from regulated assets or take-or-pay contracts, ensuring stable cash flow.
Kinder Morgan's growth is tied to LNG demand, supported by its 66,000-mile natural gas pipeline network.
ENB trades at a premium valuation, backed by steady dividends and a C$32B secured capital program.
Enbridge Inc. (ENB - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) are two leading midstream energy companies, known for their stable business model and relatively lower exposure to commodity price volatility and volume risks. The stability is getting reflected in the price chart of both companies. Notably, over the past year, Enbridge has jumped 29.3% compared with the 33.9% surge of Kinder Morgan.
One-Year Price Chart
Image Source: Zacks Investment Research
However, before getting to the investment conclusions, we need to analyze the business fundamentals and outlook of both pipeline majors.
ENB’s Predictable Model, KMI’s LNG Growth
On its second-quarter 2025 earnings call, Enbridge stated that it generates as high as 98% of earnings before interest, tax, depreciation and amortization (EBITDA) from midstream assets that are backed by long-term take-or-pay contracts or regulated returns.
By a take-or-pay agreement, the shippers have agreed to pay fees even if they do not use the assets’ capacity. This provides ENB with the safety net to generate stable cash flows for shareholders, irrespective of the business environment. In other words, Enbridge’s business model is not vulnerable to volume and price risks.
Enbridge thus has a highly predictable cash flow business model. In fact, with rock-solid long-term contracts with predictable earnings, the midstream energy giant’s creditworthiness remains high. Thus, ENB will be capable of investing in growth capital projects at favorable terms, which will generate additional cash flows.
Kinder Morgan also generates stable fee-based revenues from its midstream assets. Notably, KMI is well-positioned to generate stable cash flows since it has a pipeline network, spanning 66,000 miles, to transport huge natural gas volumes in the United States. Thus, the fate of KMI’s business is related to demand for LNG feed-gas volumes.
Enbridge’s Dividend Payment More Consistent
Enbridge generates stable cash flows, which enable it to return handsome capital to shareholders. Over the past three decades, the company has rewarded shareholders with consecutive dividend hikes. Now, can the trend continue?
Importantly, ENB also has a secured capital program of C$32 billion, comprising projects related to liquid pipelines, gas transmission, renewables and gas distribution & storage. Thus, Enbridge is likely to generate incremental cash flows and hence will continue to reward shareholders in the coming days. In fact, ENB stated on its second-quarter earnings call that in the coming five years, it will be returning in the band of $40 billion to $45 billion. Currently, ENB’s dividend yield is 5.53%.
Image Source: Zacks Investment Research
Kinder Morgan’s story, however, is somewhat different. On Jan. 20, 2016, the company announced its decision to cut dividend payments by roughly 75%, which clearly indicates that its business model is not as steady as ENB, even though LNG-driven growth could drive its future growth.
ENB vs. KMI: Which is a Better Stock?
Coming to the valuation story, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 15.74X. This is above KMI’s 14.16X. Thus, investors are willing to pay a premium price for ENB, which is quite justified, considering the predictable business model and consistent shareholder rewards.
As for Kinder Morgan, those who have already invested can retain the stock, considering the clean energy demand and LNG growth story attached to its business outlook. KMI carries a Zacks Rank #3 (Hold).
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ENB vs. KMI: Predictable Cash Flows or LNG-Driven Growth?
Key Takeaways
Enbridge Inc. (ENB - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) are two leading midstream energy companies, known for their stable business model and relatively lower exposure to commodity price volatility and volume risks. The stability is getting reflected in the price chart of both companies. Notably, over the past year, Enbridge has jumped 29.3% compared with the 33.9% surge of Kinder Morgan.
One-Year Price Chart
However, before getting to the investment conclusions, we need to analyze the business fundamentals and outlook of both pipeline majors.
ENB’s Predictable Model, KMI’s LNG Growth
On its second-quarter 2025 earnings call, Enbridge stated that it generates as high as 98% of earnings before interest, tax, depreciation and amortization (EBITDA) from midstream assets that are backed by long-term take-or-pay contracts or regulated returns.
By a take-or-pay agreement, the shippers have agreed to pay fees even if they do not use the assets’ capacity. This provides ENB with the safety net to generate stable cash flows for shareholders, irrespective of the business environment. In other words, Enbridge’s business model is not vulnerable to volume and price risks.
Enbridge thus has a highly predictable cash flow business model. In fact, with rock-solid long-term contracts with predictable earnings, the midstream energy giant’s creditworthiness remains high. Thus, ENB will be capable of investing in growth capital projects at favorable terms, which will generate additional cash flows.
Kinder Morgan also generates stable fee-based revenues from its midstream assets. Notably, KMI is well-positioned to generate stable cash flows since it has a pipeline network, spanning 66,000 miles, to transport huge natural gas volumes in the United States. Thus, the fate of KMI’s business is related to demand for LNG feed-gas volumes.
Enbridge’s Dividend Payment More Consistent
Enbridge generates stable cash flows, which enable it to return handsome capital to shareholders. Over the past three decades, the company has rewarded shareholders with consecutive dividend hikes. Now, can the trend continue?
Importantly, ENB also has a secured capital program of C$32 billion, comprising projects related to liquid pipelines, gas transmission, renewables and gas distribution & storage. Thus, Enbridge is likely to generate incremental cash flows and hence will continue to reward shareholders in the coming days. In fact, ENB stated on its second-quarter earnings call that in the coming five years, it will be returning in the band of $40 billion to $45 billion. Currently, ENB’s dividend yield is 5.53%.
Kinder Morgan’s story, however, is somewhat different. On Jan. 20, 2016, the company announced its decision to cut dividend payments by roughly 75%, which clearly indicates that its business model is not as steady as ENB, even though LNG-driven growth could drive its future growth.
ENB vs. KMI: Which is a Better Stock?
Coming to the valuation story, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 15.74X. This is above KMI’s 14.16X. Thus, investors are willing to pay a premium price for ENB, which is quite justified, considering the predictable business model and consistent shareholder rewards.
Hence, investors should bet on Enbridge right away, which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
As for Kinder Morgan, those who have already invested can retain the stock, considering the clean energy demand and LNG growth story attached to its business outlook. KMI carries a Zacks Rank #3 (Hold).