Better Buy: Kinder Morgan, Inc. vs. ONEOK, Inc.

Better Buy: Kinder Morgan, Inc. vs. ONEOK, Inc.

Pipeline companies can be excellent options for income-seeking investors. These entities typically generate steady cash flow, the bulk of which they send back to investors via generous dividends. That's certainly the case with natural gas pipeline giants Kinder Morgan (NYSE: KMI) and ONEOK (NYSE: OKE): Their current dividend yields -- 2.6% and 5.3%, respectively -- are well above the 1.9% average yield of the S&P 500.

While income-seeking investors might be drawn to ONEOK's higher current yield -- and for a good reason, because the stock could be a gold mine for dividend lovers -- they shouldn't dismiss Kinder Morgan just because it has a lower payout at the moment. That's because its dividend is set to skyrocket in the coming years, which, when combined with its more visible growth prospects and much cheaper valuation, gives it an edge over ONEOK as the better buy right now.

Image source: Getty Images.

Continue reading

Source: Fool.com