Top Pipeline Stocks to Watch Now

Pipeline stocks own or operate the arteries that move oil, natural gas and other liquid fuels around. They are vital to moving the liquids quickly and efficiently around a country. In addition, utility companies use pipelines to get fuel like natural gas to customers’ homes.

The companies behind each pipeline stock send the liquids from the wells where they’re pumped to different locations. Those locations include:

• Refineries that take the liquids and change them into usable fuels. For instance, many refineries change oil into the gas we use in cars. They also use it to make diesel fuel.
• Some pipelines send liquids to terminals where they are packed and sent to overseas countries. Terminals don’t typically change the liquids at all. Instead, terminal operators sell it to countries that need it.
• Some fuel pumped by a pipeline is not used right away. Sometimes a pipeline will send liquids to storage, which will be used later.

Since pipeline stocks are well-established, it is hard for pipeline companies to build new pipelines. The largest cost to the companies is the upkeep of current pipelines. Therefore, pipeline stocks usually use company net income to pay dividends to shareholders.

For that reason, dividend and income investors like pipeline stocks. Here are a few of the best pipeline stocks to consider if you fall in that camp.

Best Pipeline Stocks

With their steady dividends, Pipeline stocks are a favorite sector for investors. Regardless of the ups and downs in the stock market, pipeline stocks pay reliable income to shareholders. Pipeline stock investors are especially pleased this year. Not only are they getting dividends, but pipeline stocks are up.

That’s more than we can say for the rest of the stock market. The broader S&P 500 stock index is down about 25% for the year.

No. 4 Energy Transfer (NYSE: ET)

ET is a limited partnership (or LP). The company moves both oil and natural gas liquids around the U.S. After moving the liquids to refineries, it also sends them from the refineries to terminals. Energy Transfer also stores liquid fuels for customers. This top pipeline stock has shot up over 30% this year and still pays a dividend yield of 8%.

No. 3 Kinder Morgan (NYSE: KMI)

KMI is the largest pipeline stock in the U.S. The company has a market cap of almost $40 billion. Kinder Morgan has the largest network of natural gas pipelines in the U.S. Beyond that, the company is the biggest terminal operator in North America. In addition, it is one of the biggest shippers of refined fuel. The dividend yield on the stock is 6.4%.

No. 2 Enterprise Products Partners (NYSE: EPD)

EPD is a Master Limited Partnership (or MLP). The company has made many smart buyouts over the last few years and has grown into one of the largest natural gas pipelines in the U.S. Enterprise Product Partners has a huge market cap of over $54 billion. On top of that, the stock pays a whopping 7.6% dividend yield. All of that combined makes this one of the best pipeline stocks on the market.

No. 1 Enbridge (NYSE: ENB)

ENB is a giant oil and gas pipeline stock. Enbridge’s pipeline has many terminals to move oil to overseas customers. The distance of its pipeline network is the longest in North America and goes to Canada, the U.S. and Mexico. The company is based in Canada and has investments in renewable power sources like wind and solar. Enbridge’s giant market cap exceeds $70 billion, and the stock pays a nice dividend yield of 7.5%.

Pipeline Stocks to Buy

The conflict between Russia and Ukraine is causing major problems in the world’s oil and natural gas supply. As countries increase sanctions against Russia, the world’s largest exporter of oil and natural gas, the prices of those commodities have shot up.

When the price of oil or natural gas goes up, companies typically pump more to make a higher profit. Those companies need to use pipeline stocks to sell their oil and gas. Due to the extreme situation, many pipeline stocks have moved up this year along with oil and gas prices.

No. 3 The Williams Companies (NYSE: WMB)

WMB has a few segments. Its Gulf of Mexico segment has natural gas pipelines, storage and processing. The segment also handles oil within the Gulf of Mexico region. The company’s Northeast gathering and processing segment pump oil from the Marcellus region and Utica shale region of Ohio. Similarly, its West segment pumps oil in the Rocky Mountain region of Colorado and Wyoming and the Eagle Ford region of Texas. The Williams Companies gas and natural gas service segment provided marketing for its customers. The stock pays a dividend yield of 5.8% even after jumping 11% this year.