3 Pipeline Stocks to Buy in May

The article is constructive on pipeline operators Enbridge, Energy Transfer, and Kinder Morgan, highlighting extensive existing networks and more than $10 billion of backlog/growth projects at Kinder Morgan, over $5 billion of annual capex at Energy Transfer, and CA$39 billion of secured Enbridge expansion projects. It argues that rising energy demand and geopolitical disruption in the Strait of Hormuz reinforce the need for additional pipeline capacity. The piece is bullish on dividend growth prospects, but it is largely a valuation/strategy commentary rather than new company-specific news.

Analysis

The investable signal here is not “pipelines are good,” but that midstream is becoming a constrained toll road for three different demand vectors: crude export optionality, power/load growth, and data-center gas burn. That combination matters because it lifts utilization and bargaining power at the same time, letting large incumbents compound FCF without needing heroic commodity prices. The second-order winner is not just the names highlighted, but any supplier of compressors, valves, SCADA, and integrity services that benefits from a multi-year backlog of brownfield expansions.

The market is still underpricing the duration of this capex cycle. These projects have long lead times, but once sanctioned they create a visible ladder of earnings and distribution growth that can re-rate the stocks before first gas flows; that is especially true for the names with the cleanest funding visibility and biggest backlog coverage. The risk is less about demand and more about execution: permitting delays, labor inflation, and rate-base/ROE politics can push cash yields out several quarters, which matters if investors are paying up for visible dividend growth today.

Contrarianly, the consensus may be too complacent about the “defensive yield” framing. If rates back up, high-yield midstream can de-rate even while fundamentals improve, because the equity acts like a duration asset with a commodity/industrial overlay. Also, the AI/data-center catalyst is real, but it is concentrated in regions where power interconnects and local gas infrastructure are already constrained, so the upside accrues unevenly to assets with path-to-market, not just the biggest pipe footprints. In other words, selectivity should beat beta here.

Key Decisions for Investors

• Long KMI vs short a basket of high-yield utilities for 3-6 months: KMI has the cleanest gas-demand growth linkage and the most visible backlog-to-cash conversion; the short offsets rate sensitivity while keeping exposure to infrastructure demand.
• Add ENB on pullbacks over the next 1-3 months, but size modestly: the risk/reward is best for investors seeking defensive compounding, with downside mainly from rate-driven multiple compression rather than fundamentals.
• Trade ET only as a catalyst-driven position, not a core hold: buy on weakness into project-update or earnings windows, because the upside is tied to backlog conversion and project execution, while headline risk from megaproject slippage can create sharp drawdowns.
• Pair long midstream gas names vs short crude-sensitive transport/storage proxies: the market is underestimating multi-year gas demand from power and data centers relative to more cyclical hydrocarbon throughput.
• Use options selectively: buy 6-12 month call spreads in KMI or ENB rather than stock if you want convexity to a re-rating from backlog visibility, while capping downside from rate volatility.