The world is going to need more natural gas. This stock could be a key beneficiary.

The International Energy Agency expects global demand for natural gas to grow over the next two decades, and beyond. Natural gas is a cleaner fuel than coal or oil. It can be easily stored and transported for use, and it is a relatively cheap source of energy.

It is therefore not surprising that natural gas is so popular. And its expected growth bodes well for Kinder Morgan (KMI -1.35%).

The largest gas transport network

With approximately 71,000 miles of pipeline, Kinder Morgan has the largest natural gas transportation network in the United States. And some of the key areas where it operates are poised for significant growth. Natural gas production in the Northeast Basin, Permian Basin and Haynesville Shale is expected to experience robust growth through 2030. Kinder Morgan has delivery capability in all of these regions, meaning it should benefit from this growth. Kinder Morgan also expects Texas and Louisiana to account for more than 95% of natural gas demand growth through 2030. Again, the company has a strong presence in these regions.

In terms of demand sources, liquefied natural gas (LNG) exports and the industrial sector are expected to drive growth in natural gas demand in the United States:

Image source: Kinder Morgan.

As the chart shows, US LNG exports are expected to grow from 9 billion cubic feet per day (bcfd) in 2021 to 22 bcfd by 2030. Kinder Morgan delivered about 6.2 bcfd in the first quarter of this year. It forecasts that this volume could reach 8 to 12 billion cubic feet per day by 2030. Thus, the company should benefit from the growth of LNG exports.

Overall, Kinder Morgan’s large and strategically located assets should help it reap significant benefits from expected natural gas growth.

Improved balance sheet

Despite the positive outlook for natural gas, investors might wonder if Kinder Morgan can sustain its dividend, which yields 5.5% at recent prices. The company had to reduce its dividend in 2015 between a sharp drop in energy commodity prices and an overloaded balance sheet. But Kinder Morgan is in much better shape today.

Kinder Morgan’s annual operating cash flow was more than double the dividends paid over the past six years. Additionally, the company has reduced debt by more than $11 billion since 2015. Its debt-to-EBITDA ratio has improved significantly over that time.

KMI Total Long-Term Net Debt Chart (Annual)

KMI total net long-term debt (annual) given by Y-Charts

As a result, the company’s balance sheet is much stronger and its dividend payments are well covered by operating cash flow. Overall, the company’s dividend payouts look secure for the next few years.

All of the above factors make Kinder Morgan shares attractive to long-term dividend investors.

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