Pipeline Stocks Poised for Growth as Data Centers Drive Demand

The natural gas pipeline industry is poised for growth as data centers increasingly rely on power. Three companies, Energy Transfer (ET), Williams Companies (WMB), and Kinder Morgan (KMI), are well-positioned to benefit from this trend without taking on excessive risk.

Kinder Morgan operates the largest natural gas pipeline network in the U.S., spanning over 58,600 miles, with a backlog of $9.6 billion in growth projects. The company's financial health is solid, with leverage reduced to 3.8 times (net debt/adjusted EBITDA) and 65% of its cash flows covered by contracts with take-or-pay provisions.

Williams Companies has arguably the most valuable natural gas pipeline system in the U.S., with Transco being a prized asset. The company is involved in six data center projects totaling $9.6 billion, with plans to spend up to $7.9 billion in growth capital expenditures this year.

Energy Transfer's position in the Permian Basin gives it access to some of the lowest-priced natural gas in the country. With a strong backlog of natural gas projects and a well-covered distribution, Energy Transfer is an attractive option for investors seeking a high-yield dividend stock.