Finder makes money from featured partners, but editorial opinions are our own.
Investing in pipeline stocks
Dividends are common perks, but protests can sideline projects and hurt profits.
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.
Low margin rates
- Access to international stock exchanges
- Low margin rates
- Powerful research tools
CA & US trading
- 6% cash rebate plus $2,200 in trading perks
- Low transaction fees
- Easy-to-use app
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. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
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…
How to read stock charts
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.
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…
How to analyze a stock
Learn how to research stocks and find the right investment opportunities in 4 steps.
Read more…
3 strategies for investing in volatile markets
Market volatility can be nerve-wracking. Discover 3 trading strategies plus the pros, cons and risks of investing in volatile markets.
Read more…
Dow Jones vs S&P 500
Find out the key differences between the Dow Jones and S&P 500 plus key points to consider before investing.
Read more…
More resources on Finder
More guides on Finder
-
Chase Canada alternatives
Compare these alternatives to Chase Bank in Canada to find the right account to manage your money.
-
Monzo Canada alternatives
A detailed look at seven Monzo app alternatives in Canada, including their pros and cons.
-
N26 Canada alternatives
N26 isn’t available in Canada, so check out these six alternatives.
-
Roof financing costs and options
Compare financing options for roof repair or roof replacement.
-
Investment calculator
Use this calculator to find out how much you can grow your money.
-
2 cash advance apps with no direct deposit required in Canada
Compare cash advance apps that don’t require direct deposit to be eligible for funding.
-
Lenditt review
Your guide to eligibility requirements, rates and fees of Lenditt payday loans.
-
3 cash advance apps with no credit check
Compare Canadian cash advance apps and payday loans that don’t require a credit check to qualify.
-
Top 10 cryptocurrencies of 2024 and how to buy
Learn which cryptos make up the top 10 and what each one is used for.
-
Alternatives to TorFX
Looking for alternatives to TorFX for sending money abroad? Check out these reputable money transfer services.