3 Contract‑Rich Energy Stocks With the Backlogs to Outlast Today's Iran Conflict

Oil prices have gone on a hyperbolic run this year due to the war with Iran. WTI, the primary U.S. oil price benchmark, has jumped 60% to more than $90 a barrel. Surging crude prices are a near-term boon for oil producers as they're on track to reap windfall profits.

However, many oil market watchers expect crude prices to cool off later this year as shipping through the Strait of Hormuz normalizes. As a result, the profit gusher oil stocks are currently enjoying will likely be temporary.

Many pipeline stocks, on the other hand, primarily operate under long-term, fixed-rate contracts, ensuring stable earnings long after the Iran conflict ends. Add in their large project backlogs, and they're ideal energy stocks to buy and hold long term. Here are three contract-rich pipeline stocks to buy right now.

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Enbridge

Enbridge (NYSE: ENB) is one of the largest energy infrastructure companies in North America. The Canadian company transports 30% of the oil produced in North America, 20% of U.S. gas consumption, operates the largest natural gas utility in North America by volume, and is a leading investor in renewable energy.

Government-regulated rate structures and take-or-pay contracts underpin more than 98% of Enbridge's earnings. As a result, it produces very resilient earnings. Enbridge's profits are so predictable that it has achieved its annual financial guidance for 20 consecutive years.

Enbridge pays out 60% to 70% of its stable cash flows in dividends (a current yield of 5.4%). It reinvests the remainder into growing its operations. Enbridge currently has about 39 billion Canadian dollars ($28.3 billion) of commercially secured expansion projects in its backlog, which should enter service through the early 2030s. That supports Enbridge's expectation that it can grow its cash flow per share by around 3% this year and by roughly 5% annually thereafter, giving it the fuel to continue increasing its dividend. Enbridge has raised its dividend for 31 consecutive years (in Canadian dollars).

Kinder Morgan

Kinder Morgan (NYSE: KMI) is a leading natural gas infrastructure company that transports 40% of all U.S. natural gas production. The pipeline giant is also a leading U.S. refined products and terminal operator and one of the largest carbon dioxide transporters in the country.

Take-or-pay agreements, fee-based contracts, or hedges back 96% of Kinder Morgan's cash flows. That provides it with very durable and predictable earnings. The company plans to pay out about 40% of its cash flow in dividends this year (a current yield of 3.7%), retaining the rest to reinvest in expansion projects.

Kinder Morgan currently has $10 billion of commercially secured expansions in its backlog. About 90% of its backlog is new natural gas pipelines and related infrastructure that should enter commercial service by the middle of 2030. Additionally, Kinder Morgan is pursuing another $10 billion of primarily natural gas infrastructure projects. These projects will grow the company's earnings in the coming years, giving it more fuel to increase its dividend, which it has done for nine years in a row.

Oneok

Oneok (NYSE: OKE) is a diversified energy midstream company. It gathers, processes, transports, and stores natural gas, natural gas liquids (NGLs), crude oil, and refined products.

Most of its business segments expect to get about 90% of their earnings from fee-based sources this year (the NGL segment is 85%). That provides the company with very stable cash flows to pay dividends (a 5% current yield) and to invest in expansion projects.

Oneok currently has several expansions in the backlog, including joint ventures building a new export terminal and a gas pipeline. These projects should enter commercial service by mid-2028. They will grow the company's earnings, supporting its plans to increase its dividend by 3% to 4% per year.

Durable earnings and growth long after the Iran conflict ends

There's growing optimism that the current ceasefire will hold, and that the sides are nearing a peace deal that will reopen the Strait of Hormuz. That would likely mean oil prices will head lower, along with oil company windfall profits.

However, it won't have much impact on the earnings and growth profiles of contract-rich pipeline stocks. That makes them ideal energy stocks to buy and hold for dividend income and steady growth.

Matt DiLallo has positions in Enbridge and Kinder Morgan. The Motley Fool has positions in and recommends Enbridge and Kinder Morgan. The Motley Fool recommends Oneok. The Motley Fool has a disclosure policy.