The war-fueled rise in oil prices has been a major story in energy markets this year. However, most forecasters expect the reopening of the Strait of Hormuz to lower crude oil prices.
While oil is the story right now, energy is the real boom in the market natural gas. Cleaner-burning fuels are important to support the expected increase in power demand by AI data centers, advanced manufacturing facilities, and electric vehicles. Here are three smart ones To buy energy stocks To cash in on the gas-fueled power boom.
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Energy transfer(NYSE: ET ) Natural gas is a leader in infrastructure. It owns more than 105,000 miles of pipelines that connect gas wells to AI data centers, power plants and Liquefied Natural Gas (LNG) Export terminals.
Master Limited Partnership (MLP) — an organization that files a Schedule K-1 federal tax form — is investing heavily in expanding its gas infrastructure to support growing demand. It has two major gas pipeline projects underway ($2.7 billion Hugh Brinson Pipeline and the $5.6 billion Desert Southwest Expansion Project). It is also building several new gas processing plants, expanding gas storage facilities, and connecting existing pipelines to new data centers and power plants.
Energy transfers have secured development projects should do Come online by 2030. These extensions will increase its earnings, enabling the MLP to continue its high-yield distribution (7% yield), which it aims to increase by 3% to 5% each year. This growth and income combo could fuel Energy Transfer to generate strong total returns for years to come.
Children Morgan(NYSE: KMI ) Operates the nation’s largest natural gas transmission network, transporting 40% of the nation’s production over its more than 65,000 miles of gas pipeline system. It also operates other natural gas infrastructure, including gathering and processing assets, gas storage facilities, and LNG export terminals.
The gas infrastructure giant has committed to investing $10 billion in new development capital projects entering commercial service by 2030 (90% of which is related to gas infrastructure). Notable projects include three major gas pipelines (South System Extension 4, Trident, and Mississippi Crossing). The company is also pursuing more than $10 billion worth of expansion projects to support growing gas demand.
Kinder Morgan’s expansion projects should spur steady growth in the coming years, with its three major gas pipeline projects entering commercial service providing meaningful uplift in the 2027 to 2029 time frame. These projects will increase Kinder Morgan’s cash flow, giving it more fuel to raise its dividend (currently yielding 3.5%). The gas pipeline giant has increased its payout for nine consecutive years.
Williams(NYSE: WMB) It is also a leading gas infrastructure company. It handles a third of the country’s gas volume on its more than 33,000-mile pipeline network.
The pipeline company has significantly expanded its platform over the past year by adding new infrastructure investments. has signed a strategic partnership with Woodside Energy to invest in its Louisiana LNG project. Williams will acquire a 10% stake in that terminal and an 80% interest in the Driftwood Pipeline, which will supply gas to the facility. It expects to invest $1.9 billion in both projects. Additionally, Williams is investing more than $7 billion in four natural gas power innovation projects.
Williams is also investing heavily in expanding its gas pipeline infrastructure. The company now expects to grow its earnings at a compound annual rate of more than 10% through 2030, a meaningful acceleration of its 5% to 7% historical growth target range. Williams’ rapidly growing earnings should continue to support him Its 2.8%-yielding dividend grows.
Demand for natural gas will increase in the coming years as it becomes an important fuel for power generation. This trend will fuel strong earnings growth for major gas infrastructure companies, including Energy Transfer, Kinder Morgan, and Williams. That makes them three smart energy stocks to buy to capitalize on the energy boom.
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Matt DiLallo has positions at Energy Transfer and Kinder Morgan. The Motley Fool has positions and recommends Kinder Morgan. Motley Fool has a disclosure policy.
The energy boom is real. These 3 stocks are the smartest long-term buys. Originally published by Motley Fool
