Kinder Morgan cuts dividend by 74% to conserve cash

CHICAGO (Bloomberg) -- Kinder Morgan Inc., the biggest North American oil pipeline operator, cut its 2016 dividend by 74% as the free-fall in crude markets reduced cash flow needed to cover payments on $41 billion of debt.

Kinder Morgan stockholders will receive a payouts totaling 50 cents per share next year, the Houston-based oil and natural gas shipper said Tuesday in a statement. As recently as Nov. 18, the company was promising investors a 6 percent to 10 percent increase from the $2 per share it budgeted for this year, which would have meant payouts of $2.12 to $2.20.

It’s the first time since 2011 that the pipeline giant co- founded by Texas billionaire Rich Kinder in 1997 has reduced its dividend. The stock has plunged by half since Oct. 21, when the company began scaling back promises to raise dividends in 2016. On Dec. 4, Kinder Morgan said $5 billion in expected 2016 distributable cash flow may be diverted to operations from dividends.

Energy and commodity companies from oil drillers to rig owners to coal miners have sacrificed dividends to conserve cash amid supply gluts and collapsing markets.