1 High-Yield Pipeline Stock Investors Keep Underestimating

There's no shortage of pipeline stocks delivering the goods for investors this year, including an array of familiar, high-yield, large-cap names.

Up 30.6% this year, Oneok (NYSE: OKE) is performing more like a traditional oil stock (or even a high-growth tech stock) than a sleepy natural gas transportation outfit. In fact, Oneok is beating the Alerian Midstream Energy Select Index, a gauge in which the stock is the fifth-largest component, by 68 basis points year to date.

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In other words, investors shouldn't need any convincing that Oneok is a strong pipeline stock in a strong place. The other side of the Oneok coin is that the intensity of the stock's 2026 run, coupled with an extended run of largely positive news flow, may be surprising even its biggest fans.

Oneok is proving why it shouldn't be doubted

Some investors may be apt to nitpick with Oneok. The stock offers a dividend yield of 4.5%, which is great relative to the S&P 500 but mostly just OK compared to many peers in the midstream space. Second, some market participants may hold biases and preconceived notions about how stocks should perform over different time horizons. Oneok's stock price jumping nearly 31% in seven-and-a-half months may be a case of a stock punching above its weight in the eyes of some investors.

Let's address these issues. Undoubtedly, there are higher-yielding midstream stocks out there. Plenty of them, but Oneok's yield is low by comparison because its share price is rapidly rising (stock prices and yields move inversely). Plus, the 4% payout increase announced by the company earlier this year aligns with the 3% to 4% annual bump the firm is targeting.

Given the breakneck pace at which Oneok stock has risen this year, investors shouldn't be running for the exits or doubting the potential for further upside. After all, when it delivered second-quarter results earlier this month, the energy company lifted its 2026 earnings per share (EPS) and net income outlooks.

That implies that Oneok's 2026 performance is rooted in solid fundamentals. On a related note, some investors may be underestimating the effects of surging demand for natural gas liquids (NGLs) and the potential for new investments in the Permian Basin to pay off over the long term.

Don't forget the data center angle

The ability to move natural gas efficiently is increasingly in demand due to data center demand. Having recently notched a deal to deliver gas to a 1-gigawatt power plant with data center inroads, it's clear Oneok is a beneficiary of the artificial intelligence (AI) trade.

What's interesting is that while Oneok's proximity to AI data centers is a known factor, investors may be underestimating how the company's metamorphosis could improve cash flow and earnings in the future.

It's not every day that a stock yielding 4.5%, up nearly 31% in barely more than seven months, is underestimated. Still, based on its upped 2026 guidance and longer-ranging data center opportunity set, Oneok may be an underrated energy name.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool recommends Oneok. The Motley Fool has a disclosure policy.