Williams Outperforms Occidental Petroleum in Midstream Pipeline Sector

Oil prices have surged this year, making upstream companies like Occidental Petroleum (OXY) attractive investments. However, their stock performance can be volatile due to fluctuations in oil prices. In contrast, midstream pipeline stocks tend to be more stable and offer a steady income stream.

The Williams Companies (WMB) is one such midstream company that operates as a conventional C corporation, making its dividends reportable on standard 1099-DIV forms. This sets it apart from master limited partnerships (MLPs), which can require additional tax paperwork for investors.

Williams pays a forward dividend yield of 2.8%, higher than Oxy's 1.9% but lower than some other midstream companies. Its growth rate is also impressive, with analysts expecting its adjusted EBITDA to grow at a 7% CAGR from 2025 to 2028.

September is typically a challenging month for stocks due to institutional investors rebalancing their portfolios. However, Williams' stock still offers value, trading at less than 13 times next year's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). With its strong fundamentals and growing exposure to the cloud and AI markets, Williams is an attractive choice for conservative income investors.