Fiscal 2023 was less lucrative than the previous year. Kinder Morgan, which reported its annual results yesterday, announced distributable cash flow to shareholders of $4.7 billion. This represents a 5% contraction compared with 2022, mainly due to higher financing costs.

The dividend remains well covered and up 2%, with an annualized distribution of $1.13 per ordinary share. In addition, the Board of Directors stepped up share buy-backs, with 31.5 million shares acquired at an average price of $16.56, representing a multiple of roughly eight times distributable cash to shareholders.

During the last quarter, the Group also completed the acquisition of STX Midstream for $1.8 billion. STX's strategic assets link the Texas hydrocarbon production basins to the Mexican coast and border, making them an ideal addition to Kinder's portfolio.

Kinder Morgan operates highly strategic, quasi-monopolistic and non-replicable assets. 40% of US natural gas production passes through its pipelines and terminals, while at least 15% is housed in its various storage facilities; the group also transports 1.7 million barrels of refined products a day.

However, the company's share price has been stagnating for years, a fact that astonishes its Chairman Richard Kinder - who himself holds 11.5% of the capital. The market may well be skeptical about the real lifespan of the company's assets, whose nerve center is in the Texas production basin, and some observers fear that they will be depleted more quickly than expected.

Added to this apprehension is a different interest rate environment. With a ten-year Treasury bond yielding 4.1% and a dividend yield on Kinder Morgan shares of 6.6%, the latter's shareholders are assigning a risk premium of 2.5%. The latter, after all, does not seem illegitimate for a pipeline operator with no real prospects of organic growth.

This lack of growth could be exacerbated by a low share price, since it would prevent Kinder from issuing new shares to finance acquisitions. Acquisitions whose historical return on investment is, moreover, rather disappointing, as evidenced by a distributable cash flow per share that, all in all, has hardly changed since 2018.