Your analysis assumes a buy and sell. However, there are significant tax differences between KMP and KMR on sales.
My orientation (I am retired) is to buy and hold MLP's to avoid the tax consequences of sales. Therefore, assuming that the yield is acceptable to me I would buy KMR over KMP because I will get a greater income stream. Further, should my plans change and I decide to sell (say an unfavorable company development or a change in tax laws) the tax result for KMR will be capital gains. Alternatively, the tax result for KMP would include ordinary income.
The concept of my analysis doesn't involve selling at all. Both of my hypothetical investors are buying, reinvesting, and holding. My results are nothing more than "checking in" on where the alternative investments stand "today" (actually 12/2/2010), and seeing whether KMR or KMP, with total reinvestment, would have come out ahead..
This analysis does not consider income stream...just total returns. This type primarily appropriate for investors with a long term investment horizon. Those can include LT situations such as: a) IRA, 401k, 403c, etc. investors. Their tax situation upon eventual withdrawal will have nothing at all to do with the tax details of their individual investments, but will exclusively deal with their total return that they withdraw. In a conventional IRA and 401k they will be paying income tax on the full amount withdrawn. A Roth IRA investor won't pay any tax at all (if they are old enough to avoid the early withdrawal penalty). b) estate planning. Assuming that full basis step-up is the law when the estate passes hands some day in the (hopefully distant) future, again the tax details of the investment are irrelevant...only total return.
Someone looking at income flow which is used to live on (a darn reasonable thing to do with your investments!!), or the potential of selling KM* held in a conventional (taxable) account, must consider the tax consequences of the alternative investments. That takes a very different sort of analysis than I have done here.
Here is what I think you might be looking for (tell me if this is it or not...I'm uncertain about what you mean by the 'annualized yield for KMP'...the one I'm proposing is an indicated yield approach):
For each month KMP paid a quarterly distribution, Calculate the KMP yield (calc'ed using payment date? day before x-div? some average over a few days?) Provide KMP yield to 10 yr T-note yield (using the Feds "Market yield on U.S. Treasury securities at 10-year constant maturity, quoted on investment basis" series.
I can think of a few other rather radically different metrics for measuring 'annualized yield for KMP'
If you want to we can discuss this a bit offline via email before I crank my spreadsheet up. My email address is Abter1 at Yahoo dot com (I hate writing out an email explicitly in a public board...guaranteed way to get even more spam and related junk sent to an email address...robo-searches are very good at harvesting email addresses to mis-use).