Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) - 2025 Letter

From the Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) - 2025 Letter:

We have made this point consistently in our stockholder letters, but it bears repeating – energy infrastructure plays an essential role in the global economy. These “must run” assets enable society’s modern way of life. These businesses generate material (and growing) levels of free cash flow and are an attractive way for investors to gain exposure to listed real assets. Further, equity investments in energy infrastructure companies provide holders exposure to some of the most consequential (and durable) trends in the global economy, pay attractive dividends and provide an important hedge against higher-than-expected levels of inflation. Putsimply, the case for owning listed energy infrastructure is robust. One of the most important points we want to convey in this letter: We believe KYN has the potential to generate low-to-mid-teens annual returns over the next five years. Given recent developments in the energy infrastructure sector, our confidence in this scenario has increased over the last year. Our expectations are underpinned by improving demand growth trends, increased project backlogs and growing earnings and free cash flows for the Company’s portfolio investments.

[While subject to numerous assumptions, the primary considerations incorporated into these target returns are estimated dividend yields from portfolio holdings of 4% to 6%, estimated annual growth in dividends and cash flows of 5% to 7%, and estimated annual “excess” free cash flow of 0% to 3% for KYN’s portfolio investments. After incorporating the impacts of fees, expenses and leverage, Kayne Anderson views KYN as having the potential to generate 10% to 15% annual returns on a net basis for investors.]