Three Natural Gas Stocks Poised for Growth Amid Winter's Chill

Traders and investors alike know that adapting to market conditions is crucial. Energy stocks often follow regular seasonal patterns—when it's hot, demand for power surges; when winter arrives, so does the need for heating. This winter, the United States is experiencing particularly frigid temperatures, which signals a prime opportunity to invest in natural gas.

The last five years have posed challenges for natural gas investments, with notable fluctuations. However, following a significant spike in 2022 sparked by the geopolitical tensions from the Russia-Ukraine conflict, the market is starting to show signs of stability.

Looking ahead to January 9, 2025, natural gas futures indicate a 12% increase from the previous year. The U.S. Energy Information Administration (EIA) anticipates that the average price of liquefied natural gas (LNG) will reach $3.00 in 2025. Furthermore, recent EIA data shows a decrease in natural gas inventory by 40 billion cubic feet for the start of the year. Although current inventories are still 6.5% above the five-year average, adjustments are likely, particularly as some European countries may need to ramp up their natural gas reserves. With this in mind, let’s explore three natural gas stocks that are worth considering for your portfolio.

Kinder Morgan: A High-Yield Dividend with Growth Potential

Kinder Morgan (NYSE: KMI) is a significant player in the North American energy sector, owning and managing extensive natural gas transportation networks that span 79,000 miles. The company is responsible for about 40% of the natural gas transportation in the U.S., making its revenue growth dependent more on the amount of gas transported than the commodity’s market price.

As analysts predict, Kinder Morgan is expected to see growth in earnings—projected at high single digits for 2025. Importantly, this projection may not fully account for the increasing demand for natural gas, especially with the rise of data centers that require extensive energy to support artificial intelligence applications.

Current data shows KMI stock priced at $28.20, with a dividend yield of 4.08%. CEO Kim Dang has indicated that the dividend may grow by 1.7% this year, marking the company's eighth consecutive year of dividend increases.

ONEOK: An Opportunity to Buy Amid Recent Market Shifts

ONEOK Inc. (NYSE: OKE) is another prominent energy infrastructure firm with over 50,000 miles of pipelines dedicated to transporting natural gas and natural gas liquids (NGL). In the last three years, ONEOK has achieved a remarkable 14% growth in earnings per share annually, while its stock has seen an average rise of 18% during the same period.

Recent analysis suggests that ONEOK’s earnings are expected to grow by 17% in the coming year, which could indicate that the stock might continue to perform well as demand for natural gas rises.

Currently, ONEOK stock trades at $101.84 with a dividend yield of 3.89% and a P/E ratio of 21.31. Evaluating these factors, investors may find ONEOK an attractive prospect as the market evolves throughout this winter.

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