Finder Award
Interactive Brokers
- Access to international stock exchanges
- Low margin rates
- Powerful research tools
Investing in pipeline stocks is a unique opportunity to buy into the profitability of the oil and gas sector. But public opposition to pipeline infrastructure has the potential to interrupt projects and halt construction efforts.
What are pipelines?
Pipelines are the physical structures responsible for transporting natural gas, crude oil, natural gas liquids, petroleum and petrochemicals from production centers to refineries, docks, terminals, power plants and consumers. They are a core component of the oil and gas industry and without their infrastructure, the system would grind to a halt.
Pipelines can be divided into 4 subcategories:
- Gathering. These lines gather products from wells and transport them to processing plants.
- Feeder. These lines transport oil, gas and liquids from storage tanks and processing plants to transmission pipelines.
- Transmission. These large pipelines can span more than three feet wide and are responsible for carrying oil, gas and natural gas liquids across state lines and country borders for processing or storage.
- Distribution. These pipelines are responsible for distributing natural gas to homes and businesses.
Pipeline stocks are stocks from companies that build, operate or maintain energy pipelines.
How do I buy pipeline stocks?
- Choose a stock trading platform. If you’re a beginner, our table below can help you choose.
- Open your account. You’ll need to provide your ID, bank account information and Social Insurance Number (SIN).
- Fund your account. Before you can start trading, you’ll need to fund your account with a bank transfer.
- Search for stocks. Use a stock screener to sort and filter stocks.
- Submit your order. Once you’ve found a security you’d like to buy, indicate how many you’d like to purchase and submit your order.
- Monitor your investments. Log in to your brokerage account to track the performance of your portfolio.
Finder Award
Scotia iTRADE
- Earn between $50 - $2,000 cashback
- Active trader discount
- Access to advanced trading tools
Pipeline stocks
There are many stock options for investors ready to buy into the pipeline category.
- Energy Transfer LP (NYSE: ET)
- TC Energy Corporation (TSX: TRP)
- Kinder Morgan, Inc. (NYSE: KMI)
- The Williams Companies, Inc. (NYSE: WMB)
- MPLX LP (NYSE: MPLX)
- ONEOK, Inc. (NYSE: OKE)
- Plains All American Pipeline, L.P. (NasdaqGS: PAA)
What ETFs track the pipeline category?
These are some of the ETFs that track key players in the pipeline industry:
- Horizons Pipelines & Energy Services Index ETF (TSX: HOG)
- Alerian MLP ETF (NYSEArca: AMLP)
- Energy Select Sector SPDR Fund (NYSEArca: XLE)
- ETRACS Alerian MLP Infrastructure Index ETN (NYSEArca: MLPB)
- Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX)
- iShares Global Energy ETF (NYSEArca: IXC)
- UBS E-TRACS Alerian MLP Infrastructure ETN (NYSEArca: MLPI)
A beginner’s guide to exchange traded funds (ETFs)
Why invest in pipelines?
The pipeline industry in Canada accounts for around 8% of the country’s gross domestic product. More than 840,000 kilometres of pipeline have been laid out across Canada, and the sector employs between 100,000 and 200,000 people.
The US is home to the largest pipeline network in the world. And that network is poised for growth. From 2019 to 2025, US oil production is projected to grow by 46%. And this growth will require more pipeline infrastructure.
While it’s true that we’ve begun to experience a global shift towards green energy, we’re far from eliminating our reliance on gas and oil. Plus, many pipeline companies pay dividends, making pipeline stocks a practical portfolio addition for buy and hold investors.
Risks of investing in pipeline stocks
The profitability of pipeline companies depends on the price of oil and gas. And oil and gas prices can be unstable.
Pipeline companies get paid based on the amount of gas and oil they move. When the price of these commodities falls, drilling companies cut back their activity, well output declines and less oil and gas flows through pipeline infrastructures.
Another risk for investors to consider before buying into pipeline stocks is the rising opposition to new infrastructure. Investors should be aware of the environmental risk it poses.
Namely, pipeline leaks have the potential to contaminate water supplies. Pipeline protests can sideline construction efforts and delay projects, effectively reducing productivity and decreasing profits for companies and shareholders alike.
Compare trading platforms
Before you can invest in pipeline stocks, you’ll need a brokerage account. Review your options below.
1 - 6 of 6
Bottom line
Investors seeking a dividend-paying, long-term investment may find value in pipeline stocks. But profits in this category depend on the price of oil and gas and may be impacted by public opposition.
Before you invest, find the right brokerage account that fits your investment goals.
Frequently asked questions
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
More on investing
How do ETFs work?
Your guide to how ETFs work and whether this type of investment is right for you.
Read more…
Best stock app for beginners
The best stock trading app for beginners is easy to use and offers free trades.
Read more…
How to read stock charts
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.
Read more…
3 upcoming IPOs to watch in February 2023
An AI business, healthcare company and solar energy company are among the IPOs expected to take place this month.
Read more…
What are stocks?
Owning a stock means you own part of a company and can potentially grow your wealth. But there is a risk of loss.
Read more…
Best time to buy stocks
The best time to buy stocks could be right after an IPO, during expansion periods or when other investors are buying or selling.
Read more…More guides on Finder
-
Ledger Nano S Plus vs Ledger Nano X
Learn about the similarities and differences between Ledger’s two crypto hardware wallets.
-
Best bad credit loans in Newfoundland
Compare some of the best options for bad credit loans in Newfoundland.
-
How to buy Neuraxis (NRXS) stock in Canada when it goes public
Everything we know about the Neuraxis IPO plus information on how to buy in.
-
EQ Bank Card review
Earn interest on your savings, avoid ATM and foreign transaction fees and get cashback on every purchase.
-
How to buy Brera (BREA) stock in Canada
Everything we know about the Brera IPO plus information on how to buy in.
-
How to buy TXO Energy (TXO) stock in Canada
Everything we know about the TXO Energy IPO plus information on how to buy in.
-
5 ways to get MacBook financing in Canada
Get the MacBook you want at a price you can afford.
-
Best high interest savings accounts of February 2023
Take a look at several of the best high-interest savings accounts to grow your funds with no risk. You’ll discover fee structures and what it takes to open an account.
-
Compare personal loans in Winnipeg
Learn about different personal loan types in Winnipeg and find out where to apply online or in person.
-
Debt consolidation loans in Ottawa
Follow this guide to discover your options to consolidate debt in Ottawa.