3 Ways to Play the Shale Boom: Kinder Morgan Energy Partners LP (KMP), Southwestern Energy Company (SWN), Hi-Crush Partners LP (HCLP)

The most intriguing part of this stock is their 10.3% dividend. The dividend was doubled in January from $0.2375 per share to $0.475 and should continue rise since the company is a master limited partnership. Master limited partnerships, like real estate investment trusts, must pass on 90% of their income to investors.
I like where this company is heading and am looking to add a position if the stock falls another point or two.

The Transporter

Kinder Morgan Energy Partners LP (NYSE:KMP) Partners is the largest natural gas pipeline and storage operator in the United States. The make money by charging companies to use their pipelines and are usually contracts over several years, meaning the constant fluctuation in commodity prices have no effect.

Kinder Morgan Energy Partners LP (NYSE:KMP) has beaten earnings consistently over the years. Here are highlights from their fourth quarter 2012 report on Jan. 16:

Earnings per share came in at $0.75 versus estimates of $0.68
Revenues increased 59% year-over-year to $3.079 billion
Total revenues for the year rose to $9.973 billion compared to $7.943 billion in 2011

Kinder Morgan’s earnings are expected to rise consistently over the next 3 years. In 2013, analysts expect them to earn $2.57 per share, an 11.3% growth from 2012. Estimates for this company are often much too low, so do not be surprised when they beat these earnings by a large percent.

Kinder Morgan has a high dividend and strong track record of raising it. They currently yield 6% and have raised the dividend for 17 straight years. They are an MLP, like Hi-Crush Partners LP (NYSE:HCLP), so the continued growth in earnings will make this yield rise higher. Kinder Morgan is one of the best stocks you could ever buy for your portfolio.

The Foolish Bottom Line

The natural gas industry in the United States is raging on and owning shares in it would be a smart move for any investor. Kinder Morgan Energy Partners LP (NYSE:KMP) is my favorite play because of their consistent growth and management’s strong track record of returning value to investors. All three of these companies have the potential to be long-term investments, so take a closer look and see if one of them fits your investment style.

The article 3 Ways to Play the Shale Boom originally appeared on Fool.com and is written by Joseph Solitro.

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