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Advancing a World-class Silver Resource in Mexico amongst a $80+ / oz Ag Market
Driven by heightened geopolitical tensions in the Middle East, the U.S. WTI crude oil benchmark has surged 60% to break above $90 per barrel. Oil producers are certainly enjoying windfall profits in the short term. However, a growing number of market watchers expect crude prices to cool later this year as shipping through the Strait of Hormuz gradually normalizes. That suggests the current gusher of profits for oil and gas producers is likely temporary.
In stark contrast, pipeline and energy infrastructure companies operate primarily under long-term, fixed-rate contracts. Their earnings remain highly predictable long after the Iran conflict ends. Add in their large project backlogs, and these stocks become core assets truly worth holding long term to ride out market cycles. The following three TSX energy stocks, each with a “contract moat,” deserve investors’ close attention.
Enbridge is one of the largest energy infrastructure companies in North America, moving 30% of the region’s oil production and 20% of U.S. natural gas consumption. It also operates the largest natural gas utility in North America by volume and continues to expand its footprint in renewable energy.
More than 98% of the company’s earnings come from government-regulated rate structures or take-or-pay long-term contracts. This means that regardless of commodity price fluctuations, Enbridge’s cash flow remains extremely stable. In fact, the company has achieved its annual financial guidance for 20 consecutive years.
In terms of financial returns, Enbridge pays out 60% to 70% of its stable cash flow in dividends, with a current yield of approximately 5.4%. It reinvests the remaining capital into expansion projects. The company currently has CA$28.3 billion of commercially secured expansion projects in its backlog, expected to enter service through the early 2030s. Management expects cash flow per share to grow by about 3% this year and roughly 5% annually thereafter, providing solid fuel for continued dividend increases. Enbridge has raised its dividend for 31 consecutive years (in Canadian dollars) , making it a true “dividend aristocrat” in the Canadian market.
Kinder Morgan is a leading U.S. natural gas infrastructure company, transporting 40% of all U.S. natural gas production. It also holds leading positions in refined products pipelines, terminal operations, and carbon dioxide transportation.
The company’s standout feature is that 96% of its cash flow comes from take-or-pay agreements, fee-based contracts, or hedges. This structure gives its earnings exceptional durability and predictability.
The company plans to pay out about 40% of its cash flow in dividends this year (current yield of 3.7%), reinvesting the rest in expansion. Kinder Morgan currently has US$10 billion of commercially secured expansions in its backlog, about 90% of which are new natural gas pipelines and related infrastructure expected to enter commercial service by mid-2030. Additionally, Kinder Morgan is pursuing another US$10 billion in primarily natural gas infrastructure projects. These projects will drive earnings growth in the coming years and support its nine consecutive years of dividend increases.
Oneok is a diversified energy midstream company. Its operations span the gathering, processing, transportation, and storage of natural gas, as well as natural gas liquids (NGLs), crude oil, and refined products.
The company’s core moat is that most of its business segments expect about 90% of their earnings this year to come from fee-based sources (85% for the NGL segment). This highly stable cash flow structure allows it to both pay consistent dividends (current yield of approximately 5%) and invest in expansion projects.
Oneok currently has several expansions in its backlog, including joint ventures building a new export terminal and a gas pipeline, expected to enter commercial service by mid-2028. The company plans to increase its dividend by 3% to 4% annually.
The Iran war will eventually subside, and the windfall profits from surging oil prices will be hard to sustain. But for these three “contract-rich” energy stocks – Enbridge, Kinder Morgan, and Oneok – no matter how geopolitics evolve, their long-term fixed-rate contracts and massive project backlogs ensure a “resilience” in cash flow.
For investors seeking stable dividend income and predictable growth, these energy infrastructure stocks offer a rare “certainty premium” in today’s volatile market environment. They may not deliver explosive overnight gains, but they are poised to become the “steady rent-collecting” ballast in your portfolio.
