- Kinder Morgan is a high-yield midstream asset whose stock price surges on demand growth expectations.
- Williams Companies' business is growing due to the unprecedented pace of demand growth fueled by AI data centers.
- TC Energy is divesting its non-natural gas assets to focus on the long-term growth market of natural gas.
The price of natural gas is expected to remain low for the foreseeable future because of the ramping production. A lot of it is available, and the infrastructure is improving rapidly. Natural gas production is driven by the need to decarbonize and a need to power AI, which also drives demand.
Demand for natural gas is the salient point because it has to be gathered, processed, stored, and transported, which is where the profits are. Mid-stream operators are insulated from natural gas price swings. They make their money from demand and volume, with demand growing steadily—good news for their revenue, cash flow, and capital returns.
The latest estimates show that natural gas demand growth will run at a 3.5% CAGR over the next 10 years, producing a 35% net increase before the end of this decade and driving business for midstream companies like Kinder Morgan (NYSE:KMI), Williams Companies (NYSE:WMB), and others.
The critical detail is that these companies produce robust cash flow and pay it to their investors. The takeaway is that their high yields are safe and reliable, distribution growth supports the price action, and the market for their stock is on fire.
1. Kinder Morgan Reports Tepid Q3: Stock Price Breaks Out to Multi-Year High
Kinder Morgan reported a tepid Q3, with revenue and profits missing the consensus estimates, but the outlook overshadowed the bad news. The company’s comments echo those of others in the industry, citing robust demand from the data center industry that is expected to drive significant and sustained volume growth over the next few years. About 300 data centers are under construction in the U.S., all located within easy reach of natural gas infrastructure and all in need of reliable power with the lowest carbon impact.
Kinder Morgan's stock price surged following the Q3 release, breaking out to a multi-year high that puts it on track to rise by at least another 20% over the next 12 to 24 months. The move is aided by analysts raising their price targets, lifting the consensus by 10% since summer. Consensus implies fair value near $24.50, but revisions suggest a move to the high-end range is likely, which is another 10% higher.
Analysts will likely continue raising targets because of pipeline asset growth, cash flow growth, free cash flow, and capital return growth, including share repurchases. Kinder Morgan share repurchases benefit shareholders, reducing the average count by 1.7% in the year's first nine months. Regarding the dividend, it yields more than 4.5%. 
2. The Williams Companies Says Demand Grows at Unprecedented Pace
Williams Companies operates a diverse pipeline and gathering and processing portfolio. The highlights from its F2 report include better-than-expected profitability, accelerated debt reduction, and a 6% increase in the dividend. The dividend is worth about 3.6%, with the stock trading near a 10-year high and expected to continue growing along with the business. Business growth is supported by demand growth and company expansion.
Williams Companies, like Kinder Morgan, is expanding via acquisitions and new projects, many of which are already under construction.
Analysts rate this stock as a Moderate Buy and are raising their price targets, lifting the consensus by more than 1300 basis points since the FQ2 release. 
3. TC Energy Corporation Is a High-Yield Value
TC Energy Corp (NYSE:TRP) pipeline assets span North America from Mexico and the Gulf region throughout the U.S. and Canada. Highlights from its FQ2 report include sustained growth, outperformance on top and bottom lines, and robust cash flow.
The story in 2025 will be about organic growth due to expected divestitures. The company is selling off its non-LNG assets to reposition for the future. Regarding the dividend, TRP is the highest-yielding stock on the list, with a payout of nearly 5.8% and shares trading at a 2-year high.
The recent price action is suggestive. The market for TRP stock is in rally mode, advancing by 35% since spring 2024. The move is driven by results and analysts raising their price targets. Activity since summer includes several upgrades to Buy or higher equivalents with price targets indicating a new all-time high is likely.