Kinder Morgan Energy Partners LP (KMP): Who Will Deal with All of This Fracking Natural Gas?

Union Pacific currently has operating margins of 32.5% and has some high growth potential. One cause of growth is increased agricultural shipping; a study by the US Department of Agriculture in 2008 stated that the largest increase in agricultural output in America would be from the northwest due to several factors, the largest of which is land prices increase in southeast as urban sprawl claims land that was once used for crops. In addition to this, growth will be motivated by the fact that Union Pacific Corporation (NYSE:UNP) also owns 25% of Ferromex, the larger of two Class 1 railroads in Mexico.

Foolish bottom line

Both railroads and midstream pipelines are a great way to play the natural gas boom. A key difference between Kinder Morgan Energy Partners LP (NYSE:KMP) and Union Pacific is their yield and flexibility. Currently Kinder Morgan has a yield of 5.8%, while Union Pacific yields only 1.8%. Both companies can benefit tremendously from the natural gas boom.

Kinder Morgan Energy Partners LP (NYSE:KMP) benefits more directly from the natural gas boom, but Union Pacific Corporation (NYSE:UNP) has the added benefit of being able to shift its cargo away from natural gas if hydraulic fracking falls out of favor. Both companies would help to boost your portfolio as we enter an age of natural gas.

The article Who Will Deal with All of This Fracking Natural Gas? originally appeared on Fool.com.

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