4 Promising Stocks From The Prospering Oil Pipeline Industry

Midstream energy players have significantly lower exposure to oil and gas price volatility, thereby brightening the Zacks Oil and Gas - Production & Pipelines industry outlook amid the coronavirus pandemic. Importantly, with stable fee-based revenues and secured dividend payments, backed by long-term pipeline contracts, the companies are safe bets for investors.

The stocks that are well placed to deliver solid cash flow are Enbridge Inc (ENB Quick Quote ENB - Free Report), Kinder Morgan, Inc (KMI Quick Quote KMI - Free Report), The Williams Companies, Inc (WMB Quick Quote WMB - Free Report), and DCP Midstream, LP (DCP Quick Quote DCP - Free Report).

About the Industry

The Zacks Oil and Gas - Production & Pipelines industry comprises companies that own and operate midstream energy infrastructure assets. The properties consist of extensive pipeline networks that transport crude oil, liquids, and natural gas. The midstream energy players are also involved in processing and storing natural gas. Moreover, the companies have interests in natural gas distribution utilities and thereby serve millions of retail customers across North America.

What’s Shaping the Future of Oil & Gas - Production and Pipelines Industry?

Stable Fee-Based Revenues: With most pipeline and storage assets being contracted by the shippers for a long term, midstream energy players’ business model has lower exposure to coronavirus-induced commodity price volatility. With long-term contracts in place, the pipeline players are also exposed to low volume risks.

Huge Project Backlog: Midstream energy companies have billions of dollars worth project backlogs that promise additional fee-based revenues once the projects become operational in the coming two to three years.

Dividend Growth: The companies are well placed to increase cashflow and dividend payments in the coming years, backed by huge networks of pipeline and storage assets, and strong project backlogs. The resilience of the companies’ operations to the coronavirus pandemic recently led some midstream energy players’ board of directors to approve dividend hikes. Enbridge Inc. recently announced that its board of directors has approved an increase in quarterly dividend payment. Moreover, Kinder Morgan has revealed the board of directors’ intention to increase annual dividend for 2021 to $1.08 per share. This will mark a hike of 3% from 2020 dividend.

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