North American midstream energy infrastructure has been a standout in the energy sector, generating strong free cash flow and returning capital to investors via growing dividends and buybacks. These companies, which transport, process, and store hydrocarbons, benefit from fee-based revenue under long-term contracts, supporting stable, predictable cash flows.
Midstream energy infrastructure is especially well-positioned to benefit from rising demand for natural gas, particularly through liquefied natural gas (LNG) exports. North American LNG-export capacity is expected to more than double by 2030. Meanwhile, America’s demand for electricity is climbing for the first time in nearly 20 years (driven by electrification and data centres), boosting natural gas-fired power generation.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Profits in the energy infrastructure pipeline
Among natural gas-infrastructure companies, Williams Companies (NYSE: WMB) has a unique advantage with its Transco pipeline, the largest natural-gas pipeline in the US. It extends from Texas to New York City. Transco has several attractive expansion projects set to come online between the second half of 2025 and 2030.
Williams is also pursuing natural gas power projects to support data centres. Scheduled to start up in 2026, its Socrates project in Ohio for a data centre belonging to Meta is backed by a long-term, fixed-price power purchase agreement. Williams has two similar power projects under development. Williams recently raised its forecast for this year’s adjusted EBITDA by $50 million. The company expects adjusted EBITDA growth of 9% in 2025 and raised its dividend by 5.3% earlier this year.
Canada’s TC Energy (Toronto: TRP) handles approximately 30% of the natural gas consumed daily across North America. It spun off its liquids pipeline business last year, and now natural gas pipelines represent 90% of the company’s expected 2025 EBITDA. With robust growth opportunities, TC Energy expects to notch up C$6 billion-C$7 billion annually in capital expenditure. For instance, the company recently announced the Northwoods pipeline project to support power generation in the US Midwest, including for data centres. It is expected to come online in 2029.
TC Energy expects comparable yearly EBITDA growth of 5%-7% from 2024 through 2027. The company expects C$10.8 billion in comparable EBITDA for 2025, which implies 8% growth. TC Energy boasts a 25-year record of dividend increases and anticipates 3%-5% annual dividend growth over the next few years.
Also worth researching is Cheniere Energy (NYSE: LNG). It liquefies natural gas for export. The company is expanding its export capacity at Corpus Christi, a key gas port, and expects to sanction an additional expansion project this year. EBITDA is expected to expand by 9% growth in 2025.
Cheniere has been the clear leader in terms of buyback activity in the midstream sector, repurchasing $5.5 billion of equity since 2022. Cheniere had $3.5 billion remaining on its repurchase authorisation at the end of March. The company has also prioritised dividend growth, committing to raising its payout by about 10% each year through to the end of this decade.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
What is the 25x retirement rule and does it work?The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
Europe’s forgotten equities offer value, growth and strong cash flowsOpinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
-
How retail investors can gain exposure to Lloyd’s of LondonIt’s hard for retail investors to get in on the action at Lloyd’s of London. Here are some of the ways to gain exposure
-
Picton Property: a deep-value property playPicton Property has all the qualities of a future takeover target
-
How to invest in the travel industry's boom as tourists get back on the roadThe travel industry is in rude health despite uncertainty about the global economy, Trump’s policies and geopolitical concerns. Investors should buy in now
-
First Solar is set to shine – should you invest?Solar-power specialist First Solar will benefit from Donald Trump’s policies, says Matthew Partridge
-
Profit from the potential in funds focusing on private assetsOpinion Charlotte Cuthbertson and Tom Treanor of the Migo Opportunities Trust highlight three funds where they'd put their money
-
Camellia: an unusual tea producer that rewards patient investorsCamellia is shedding its eclectically diverse portfolio of assets to concentrate on its strengths. For investors, it's a rare opportunity
