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ET vs. KMI: Which Pipeline Stock Deserves a Spot in Your Portfolio?
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Key Takeaways
Kinder Morgan shows higher 2025 earnings growth estimates than Energy Transfer.
KMI has lower debt to capital, stronger ROE and a slightly better interest coverage ratio.
Both benefit from stable midstream demand, but KMI's dividend stability enhances its appeal.
The Zacks Oil & Gas – Production & Pipelines plays a crucial role in ensuring the nation’s energy security and economic stability. The U.S. depends on a vast and efficient pipeline network to move hydrocarbons from key production hubs — such as the Permian, Bakken and Marcellus basins — to refineries, export facilities and end users.
The long-term outlook for this sector remains favorable, supported by steady domestic energy demand, expanding liquefied natural gas exports and the continued transition by utilities from coal to natural gas. Energy Transfer (ET - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) are among the key operators in the midstream space, offering investors exposure to energy transport and storage, along with solid income potential.
The pipeline industry stands to gain from supportive regulations, ongoing modernization initiatives and technological innovations aimed at improving efficiency and lowering emissions. In an era of global energy uncertainty, U.S. pipeline infrastructure has taken on growing strategic importance, particularly in supplying energy to international allies. Operators in this space typically generate stable, fee-based revenues through long-term contracts, offering strong protection against fluctuations in commodity prices.
Energy Transfer is a diversified midstream company with operations spanning crude oil, NGLs, refined products and natural gas pipelines, along with storage and processing facilities. It also has a strong presence in the Permian Basin. The firm operates the Dakota Access Pipeline and owns interests in export terminals, giving it an expansive footprint and additional avenues for cash generation.
Kinder Morgan offers a stable investment opportunity supported by its extensive midstream network, which is largely concentrated in natural gas and backed by long-term, fee-based contracts that generate steady cash flows. The company’s prudent capital management, solid dividend and strategic investments in renewable natural gas strengthen its resilience and underpin moderate growth prospects. Overall, KMI remains attractive to income-oriented investors seeking dependable returns and minimal exposure to commodity price volatility within North America’s essential energy infrastructure sector.
With U.S. hydrocarbon production on the rise, the demand for midstream services continues to stay robust. Against this backdrop, let us take a closer look at the fundamentals of these two stocks to determine which one presents a stronger investment opportunity at this time.
KMI & ET’s Earnings Growth Projections
The Zacks Consensus Estimate for KMI’s 2025 and 2026 earnings per share moved up 11.3% and 5.08%, respectively.
Image Source: Zacks Investment Research
The same for Energy Transfer’s 2025 and 2026 earnings per unit has increased year-over-year by 7.03% and 10.32%, respectively.
Image Source: Zacks Investment Research
Debt to Capital
The oil and gas midstream industry is capital-intensive. The firms operating in this space need to borrow to fund their capital projects. At present, ET’s debt to capital is 57.16% compared with KMI’s 50.45%.
Return on Equity
Return on Equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
KMI’s current ROE is 8.57% compared with ET’s 11.08%.
ET & KMI’s Dividend Yield
Dividends are recurring payments distributed by a company to its shareholders, offering investors a tangible return on their investment. They serve as a key indicator of a company’s financial strength and stability, often reflecting robust cash flow and steady earnings performance.
Currently, the dividend yield for ET is 7.8%, while the same for Kinder Morgan is 4.52%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.48%. KMI’s dividend is more stable and sustainable, given ET’s history of distribution cuts.
Times Interest Earned Ratio
The Times Interest Earned (“TIE”) ratio is a key solvency metric that evaluates a company’s capacity to meet the long-term financial obligations, particularly its ability to cover interest expenses on outstanding debt.
KMI’s current TIE ratio is 3, a tad higher than ET’s 2.9. A healthy ratio indicates that both firms can comfortably meet their debt payment obligations.
Price Performance
ET’s units have gained 2.1% in the past year compared with KMI’s rally of 8.2% and the Zacks Oil -Energy sector’s return of 4.6%.
Image Source: Zacks Investment Research
Rounding Up
Energy Transfer and Kinder Morgan are strategically investing in their infrastructure to expand operations and successfully transfer hydrocarbons from the production region to their end users. Both firms will benefit from the Federal Reserve's decision to further lower interest rates.
KMI’s better earnings growth projection in 2025, lower usage of debt to run operations, a tad better TIE ratio, more sustainable dividend and better return make it attractive.
Given the above discussion, KMI, which currently has a Zacks Rank #3 (Hold), has a clean edge on ET, which carries a Zacks Rank #4 (Sell).
Image: Bigstock
ET vs. KMI: Which Pipeline Stock Deserves a Spot in Your Portfolio?
Key Takeaways
The Zacks Oil & Gas – Production & Pipelines plays a crucial role in ensuring the nation’s energy security and economic stability. The U.S. depends on a vast and efficient pipeline network to move hydrocarbons from key production hubs — such as the Permian, Bakken and Marcellus basins — to refineries, export facilities and end users.
The long-term outlook for this sector remains favorable, supported by steady domestic energy demand, expanding liquefied natural gas exports and the continued transition by utilities from coal to natural gas. Energy Transfer (ET - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) are among the key operators in the midstream space, offering investors exposure to energy transport and storage, along with solid income potential.
The pipeline industry stands to gain from supportive regulations, ongoing modernization initiatives and technological innovations aimed at improving efficiency and lowering emissions. In an era of global energy uncertainty, U.S. pipeline infrastructure has taken on growing strategic importance, particularly in supplying energy to international allies. Operators in this space typically generate stable, fee-based revenues through long-term contracts, offering strong protection against fluctuations in commodity prices.
Energy Transfer is a diversified midstream company with operations spanning crude oil, NGLs, refined products and natural gas pipelines, along with storage and processing facilities. It also has a strong presence in the Permian Basin. The firm operates the Dakota Access Pipeline and owns interests in export terminals, giving it an expansive footprint and additional avenues for cash generation.
Kinder Morgan offers a stable investment opportunity supported by its extensive midstream network, which is largely concentrated in natural gas and backed by long-term, fee-based contracts that generate steady cash flows. The company’s prudent capital management, solid dividend and strategic investments in renewable natural gas strengthen its resilience and underpin moderate growth prospects. Overall, KMI remains attractive to income-oriented investors seeking dependable returns and minimal exposure to commodity price volatility within North America’s essential energy infrastructure sector.
With U.S. hydrocarbon production on the rise, the demand for midstream services continues to stay robust. Against this backdrop, let us take a closer look at the fundamentals of these two stocks to determine which one presents a stronger investment opportunity at this time.
KMI & ET’s Earnings Growth Projections
The Zacks Consensus Estimate for KMI’s 2025 and 2026 earnings per share moved up 11.3% and 5.08%, respectively.
Image Source: Zacks Investment Research
The same for Energy Transfer’s 2025 and 2026 earnings per unit has increased year-over-year by 7.03% and 10.32%, respectively.
Image Source: Zacks Investment Research
Debt to Capital
The oil and gas midstream industry is capital-intensive. The firms operating in this space need to borrow to fund their capital projects. At present, ET’s debt to capital is 57.16% compared with KMI’s 50.45%.
Return on Equity
Return on Equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
KMI’s current ROE is 8.57% compared with ET’s 11.08%.
ET & KMI’s Dividend Yield
Dividends are recurring payments distributed by a company to its shareholders, offering investors a tangible return on their investment. They serve as a key indicator of a company’s financial strength and stability, often reflecting robust cash flow and steady earnings performance.
Currently, the dividend yield for ET is 7.8%, while the same for Kinder Morgan is 4.52%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.48%. KMI’s dividend is more stable and sustainable, given ET’s history of distribution cuts.
Times Interest Earned Ratio
The Times Interest Earned (“TIE”) ratio is a key solvency metric that evaluates a company’s capacity to meet the long-term financial obligations, particularly its ability to cover interest expenses on outstanding debt.
KMI’s current TIE ratio is 3, a tad higher than ET’s 2.9. A healthy ratio indicates that both firms can comfortably meet their debt payment obligations.
Price Performance
ET’s units have gained 2.1% in the past year compared with KMI’s rally of 8.2% and the Zacks Oil -Energy sector’s return of 4.6%.
Image Source: Zacks Investment Research
Rounding Up
Energy Transfer and Kinder Morgan are strategically investing in their infrastructure to expand operations and successfully transfer hydrocarbons from the production region to their end users. Both firms will benefit from the Federal Reserve's decision to further lower interest rates.
KMI’s better earnings growth projection in 2025, lower usage of debt to run operations, a tad better TIE ratio, more sustainable dividend and better return make it attractive.
Given the above discussion, KMI, which currently has a Zacks Rank #3 (Hold), has a clean edge on ET, which carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here