Energy Transfer or Kinder Morgan? What Retirees Should Know Before Buying Either
Both midstream giants raised their 2026 outlooks and delivered nearly identical stock returns this year, yet one of them could quietly trigger a tax bill inside your IRA that eats into those retirement savings.
Energy Transfer (NYSE:ET | ET Price Prediction) and Kinder Morgan (NYSE:KMI) have both raised their 2026 outlooks as power plants, LNG terminals, and data centers burn more natural gas. Kinder Morgan reported third-quarter results on October 21. Energy Transfer’s latest report covers the second quarter. If you’re retired, two things matter most: how safe each payout is and which tax form lands in your mailbox.
Volatility Lifted Energy Transfer While Contracts Carried Kinder Morgan
Energy Transfer’s second-quarter adjusted EBITDA came in at $5.07B, up 31%, and management raised full-year guidance to $18.8B-$19.1B. NGL exports set a record, rising 25%. Part of the jump came from market swings, including $113 million from wider basis differentials. Those profits could fade if markets calm down.
Kinder Morgan posted adjusted EPS of $0.35 in the third quarter on adjusted EBITDA of $2.18 billion. Management was upfront that one-time items, such as Winter Storm Fern, added about $225 million to 2026 results. The project backlog rose from $9.6 billion to $14.4 billion. Two new pipelines drove the increase. Permian Link has an A-rated hyperscaler as its anchor customer, and Southeast Connector serves investment-grade utilities. Both rest on contracts that run at least 20 years.
| Retirement Lens | Energy Transfer | Kinder Morgan |
|---|---|---|
| Annual payout | $1.36 | $1.19 |
| Forward yield | 6.8% | 3.6% |
| Leverage | 4 to 4.5x target | 3.5x |
| Tax form | Schedule K-1 | Form 1099 |
Higher Checks or a Stronger Balance Sheet
Energy Transfer pays the higher check. Its distribution has now risen for 19 consecutive quarters, and the partnership targets 3% to 5% growth each year. It also owes more. Long-term debt was at $68.3B, and growth spending runs $5.6B-$5.9B a year.
Kinder Morgan raised its dividend just 2%. In return, it has a cleaner balance sheet: Moody’s upgraded it to Baa1, and it generates about $3 billion in annual cash flow to fund expansion. The stocks have moved almost in step this year, up 28.66% and 27.13%, so the market isn’t clearly favoring either one.
What a K-1 Means Inside an IRA
Energy Transfer is a partnership. Each year you receive a Schedule K-1 showing your share of its income. Inside an IRA, that share can count as unrelated business income whether or not distributed (26 U.S.C. § 512(c)(1)). If that income reaches $1,000 or more, the IRA must file Form 990-T, and you pay any tax owed from your retirement savings. Kinder Morgan is a regular corporation, so you get a standard 1099.
What I’m Watching Next
When Energy Transfer reports third-quarter results, I want to see whether the Hugh Brinson pipeline reached its full 1.5 Bcf per day on schedule. For Kinder Morgan, watch Trident. Only 30% of that project’s signed EBITDA arrives in 2027, so growth will be uneven next year.
Why Kinder Morgan Fits Retirement Accounts Better
For retirement-focused investors, Kinder Morgan’s profile stands out. The yield is smaller, but it matches lower leverage, a credit upgrade, decades of demand-side contracts, and a simple 1099. Energy Transfer’s higher payout may appeal to income seekers in taxable accounts. Inside an IRA, the K-1 paperwork and extra leverage add friction worth exploring.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
