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5 Best Pipeline Stocks | Invest in Oil and Gas

5 Best Pipeline Stocks | Invest in Oil and Gas
Bogdan Stojkov

Summary: In this guide, we’ve highlighted the five best pipeline stocks, which offer stable cash flows, attractive dividends, and growth potential. You can purchase these stocks through an online broker like eToro for convenient access to these promising investments.

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eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

What are pipeline stocks?

Pipeline stocks represent companies engaged in the transportation of oil, natural gas, and other petroleum products through pipelines. These companies typically own and operate vast networks of pipelines that transport these commodities from production sites to refineries, distribution centers, and ultimately to consumers.

Investing in pipeline stocks can provide investors with exposure to the energy sector while offering relatively stable returns through dividends and consistent cash flows.

If you’re interested in the best pipeline stocks that pay dividends, feel free to check out our Build Passive Income: 3 Highest Dividend Pipeline Stocks Revealed guide.

5 best pipeline stocks

After thorough research, we’ve concluded that these five pipeline stocks are worth your time due to their strong performance, reliable dividends, and promising growth prospects:

Each of these five pipeline stocks is available on eToro.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Enterprise Products Partners (EPD)

Enterprise Products Partners is one of the largest pipeline companies in the United States, with an extensive network of pipelines spanning across key shale plays and major production areas. EPD is known for its stable cash flows, strong management, and consistent dividend payouts, making it a favorite among income-oriented investors.

Kinder Morgan (KMI)

Kinder Morgan operates one of the largest natural gas pipeline networks in North America, along with significant crude oil and refined products pipelines. With a focus on fee-based contracts and strategic asset positioning, KMI offers investors reliable income streams and the potential for long-term growth.

Williams Companies (WMB)

Williams Companies is a leading energy infrastructure company with operations across the United States. The company’s extensive network of pipelines transports natural gas, natural gas liquids, and oil, serving key production areas and demand centers. WMB’s strong asset base and commitment to shareholder value make it an attractive investment option in the pipeline sector.

Energy Transfer (ET)

Energy Transfer is a diversified energy company with a focus on natural gas, crude oil, and refined products transportation and storage. The company’s pipeline network spans across multiple regions in the United States, offering critical infrastructure for energy supply chains. ET’s strategic acquisitions and expansion projects position it for growth in the evolving energy landscape.

Oneok (OKE)

Oneok is a leading midstream service provider operating in the United States. The company’s integrated network of pipelines and processing facilities transports natural gas liquids (NGLs) and natural gas from production areas to end markets. OKE’s stable cash flows, strong asset base, and focus on fee-based contracts make it a compelling investment opportunity in the pipeline sector.

Where to buy pipeline stocks

To buy pipeline stocks, you can register an online brokerage account. Keep in mind that choosing the right broker is a key decision that affects your overall investment experience. As such, in this case, our go-to broker is eToro—a popular and fully licensed platform that offers numerous robust investment features, including:

  • Commission-free stock trading;
  • Access to over 2,000 stocks from 17 different exchanges;
  • The option to purchase fractional shares;
  • Charting tools;
  • A user-friendly platform that simplifies the trading experience. 

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Pros and cons of buying pipeline stocks

Pros

Pros

  • Stable cash flows: Pipeline companies often operate under long-term contracts, providing predictable revenue streams and steady cash flows;
  • Dividend income: Many pipeline stocks offer attractive dividend yields, making them appealing to income-oriented investors seeking regular payouts;
  • Essential infrastructure: Pipelines play a critical role in the transportation of energy products, making pipeline stocks relatively resilient to economic downturns and fluctuations in commodity prices;
  • Growth potential: As energy demand continues to rise, pipeline companies may benefit from expansion opportunities and infrastructure development projects.
Cons

Cons

  • Regulatory risks: Pipeline projects are subject to regulatory approvals and environmental regulations, which can impact construction timelines and profitability;
  • Commodity price volatility: Changes in oil and gas prices can affect demand for pipeline transportation services and impact the financial performance of pipeline companies;
  • Capital-intensive nature: Building and maintaining pipelines require significant capital investment, which can strain balance sheets and limit financial flexibility;
  • Environmental concerns: Pipeline spills and accidents can have adverse environmental consequences and lead to reputational damage for companies in the sector.

Common investing mistakes to avoid when buying pipeline stocks

Failing to research companies thoroughly before investing can lead to poor investment decisions and potential losses, and it’s one of the most common investing mistakes that you can make when buying stocks. Still, it’s not the only one. You should also be wary of:

  • Chasing high yields: While dividend yields can be attractive, investors should assess the sustainability of dividend payments and consider other factors such as earnings growth and cash flow generation;
  • Ignoring regulatory risks: Regulatory approvals and environmental regulations can have a significant impact on pipeline projects and operations, so investors should stay informed about regulatory developments;
  • Overlooking competition: Pipeline companies operate in a competitive landscape, and investors should assess the competitive positioning and market dynamics of each company before investing;
  • Failing to diversify: Concentrating investments in a single pipeline stock or sector increases portfolio risk, so investors should diversify their holdings across different industries and asset classes.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about investing in the best pipeline stocks

Are pipeline stocks a good investment for income?

Yes, many pipeline stocks offer attractive dividend yields and stable cash flows, making them popular choices for income-oriented investors.

What are the best pipeline stocks right now?

The best pipeline stocks currently include Enterprise Products Partners, Kinder Morgan, Williams Companies, Energy Transfer, and Oneok Inc. These companies offer stable cash flows, attractive dividends, and growth potential in the energy sector.

How do pipeline stocks perform during economic downturns?

Pipeline stocks tend to be relatively resilient during economic downturns due to their essential role in energy transportation. However, they can still be affected by factors such as changes in commodity prices and regulatory developments.

What are the tax advantages of investing in pipeline stocks?

Pipeline stocks, particularly MLPs, may have unique tax considerations, such as pass-through taxation and the potential for tax-deferred distributions.

How can I assess the financial health of a pipeline company?

Investors can evaluate factors such as revenue growth, cash flow generation, debt levels, and dividend sustainability to assess the financial health of a pipeline company. Additionally, reviewing regulatory filings, earnings reports, and management commentary can provide valuable insights into a company’s financial performance and outlook.

Are there any environmental concerns associated with investing in pipeline stocks?

Pipeline spills and accidents can have environmental consequences, leading to regulatory scrutiny and potential liabilities for pipeline companies. Investors should consider environmental risks when evaluating pipeline stocks and monitor companies’ environmental policies and risk management practices.

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