The Best Natural Gas Stocks to Watch
Natural gas is one of the most important energy sources on our planet and it will continue to play an important role in the coming years during the global energy transition. In this article, we will look at investing in natural gas companies, highlight 2 of the best natural gas stocks to watch in 2024 and demonstrate how to buy natural gas stocks.
Table of Contents
Should I Buy Natural Gas Stocks?
Before we look at some examples of natural gas stocks to invest in, let’s briefly look at why investors might consider investing in natural gas stocks in the first place.
Despite the global transition from fossil fuels to greener energy solutions being underway, both crude oil and natural gas still account for a large part of the world’s energy consumption. In 2022, natural gas accounted for 20% of global electricity production.
Although natural gas is a fossil fuel, and its use has a negative impact on the environment, it is actually the cleanest-burning fossil fuel, meaning that it has a key role to play on the road to net zero as a “bridge-fuel” whilst we wean ourselves of the more harmful alternatives.
If all goes to plan, then natural gas will be more or less redundant by 2050. However, that is quite far in the future. Furthermore, even in this best case scenario, until the end of this decade at least, natural gas stocks still have the potential to benefit, and perhaps even thrive, as coal use is phased out.
The Best Natural Gas Stocks to Watch
So, for those who think that natural gas stocks could have a place in their portfolio, what are the options when it comes to natural gas companies to invest in? In the following sections, we will examine the prospects of 2 top natural gas dividend stocks to watch in 2024.
Cheniere Energy
Cheniere Energy is one of the largest Liquified Natural Gas (LNG) companies in the world. It buys natural gas from the US market, before processing it into LNG in order to be delivered to customers who cannot take delivery of the commodity in its gas form.
As Europe has looked to end their reliance on Russian gas following the invasion of Ukraine, LNG companies in the US, such as Cheniere, quickly moved in to fill the void. This led to US LNG exports surging in the first half of 2022.
Cheniere sells much of its LNG under long-term contracts, such as the recent 17 year deal it struck with German company BASF. This allows the liquified natural gas stock to generate relatively reliable revenue and, as of 2021, the company has begun allocating some of this cash for dividend payments.
In 2022, Cheniere reported operating income of $4.6 billion and followed this up with an impressive $10.3 billion in the first half of 2023. As for the stock market, the LNG company has performed exceedingly well over the last few years, with its share price gaining more than 250% in the three years ended 30 September 2023.
Kinder Morgan
Kinder Morgan is one of the largest natural gas pipeline companies in the US, operating or owning an interest in around 70,000 miles of natural gas pipelines, which transport around 40% of the natural gas consumed in the US.
Like Cheniere, Kinder Morgan mainly provides its service to clients under long-term fee-based contracts, allowing the company to generate a reliable and stable income. As well as steady revenue, this approach also means the company is fairly well insulated from volatility in the price of natural gas.
Whilst this means that, unlike some other top natural gas stocks, Kinder Morgan missed out on record breaking revenue whilst gas prices were at multi-year highs, it also means their downside is limited when prices are low.
In the economic uncertainty which we find ourselves currently, companies which can generate reliable income are a big plus for investors. Furthermore, in this case, part of that reliable income is used for dividend distributions, with Kinder Morgan’s dividend yield currently sitting at an attractive 6.7%.
How to Buy Natural Gas Stocks
With an Invest.MT5 account from Admirals, you can buy shares in both the natural gas dividend paying stocks examined in this article! For those interested, keep reading to find out how to buy natural gas stocks:
- Open an Invest.MT5 account with Admirals and log in to the Dashboard
- Find your account details and click ‘Invest’ to open the MetaTrader Web Terminal
- Search for natural gas stocks to buy and click on the stock symbol to open a price chart
- Press new order, enter the number of natural gas shares you want to purchase and click ‘Buy’ to send your order to the market!
Investing with Admirals
With an Invest.MT5 account from Admirals, you can buy both natural gas stocks examined in this article, as well as shares in over 4,500 other companies and over 200 Exchange-Traded Funds (ETFs). To start enjoying all these benefits and others, open an account by clicking the banner below:
Natural Gas Shares - FAQ
Who Is Largest Producer of Natural Gas?
In 2022, the US was the world’s largest producer of natural gas.
What Companies Produce Most Natural Gas?
Russia’s Gazprom produced the most natural gas in the world in 2021.
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