While the world is transitioning to cleaner energy sources, we'll still need fossil fuels for quite some time. Most energy market forecasters expect demand for these to continue growing through at least the end of the decade, especially for lower-carbon fossil fuels.
Companies focused on operating and developing lower-carbon energy infrastructure should thrive in this environment. They should have plenty of opportunities to continue expanding, giving them the fuel to grow their dividends.
Given their lower-carbon focus, Enbridge (ENB -1.21%), EnLink (ENLC 0.80%), and Kinder Morgan (KMI -0.64%) look like great energy dividend stocks to buy and hold through at least 2030.
1. Enbridge: Growth lined up through the end of the decade
Canadian energy infrastructure behemoth Enbridge has one of the industry's largest backlogs of expansion projects. The company currently has 17 billion Canadian dollars ($12.9 billion) of commercially secured capital projects under construction that will come online through 2028. Most of its projects are lower-carbon investments, including natural gas pipeline expansions, a liquified natural gas (LNG) export terminal project, renewable natural gas projects, and offshore wind energy developments in Europe.
The company also has a growing list of lower-carbon energy projects under development. For example, it's working to jointly develop a low-carbon blue ammonia project in the U.S. that could start up in the 2027-2028 time frame. It also won the right to build another offshore wind farm in Europe that could start up around 2030. The company is also working to jointly develop a carbon capture and storage hub that would help capture and sequester carbon dioxide from its proposed blue ammonia project, among other sources.
Enbridge's growing list of lower-carbon energy projects should supply it with steadily climbing cash flow. It expects its cash flow per share to rise by 3% annually through 2025 and then by a 5% annual rate post-2025. That should enable the company to continue increasing its dividend, which currently yields 7%. Enbridge has given its investors a raise for 28 straight years.
2. EnLink: Tapping into a potentially massive opportunity
EnLink Midstream has an extensive energy infrastructure position in the U.S. Gulf Coast region. That positions it to capitalize on two major long-term growth trends: LNG and carbon capture and sequestration.
North American LNG volumes could triple over the next 10 years as more countries import the lower-carbon fuel to power their economies. Those growing gas export volumes should provide EnLink with additional opportunities to expand its gas pipeline capacity.
In addition, the company is an early mover in carbon capture solutions. It signed a long-term contract with oil giant ExxonMobil to build a dedicated carbon dioxide pipeline in Louisiana. The company sees enormous potential to capture a larger slice of the potentially massive carbon capture opportunity over the coming years:
Data source: EnLink.
Those dual growth drivers should supply EnLink with more fuel to increase its dividend. The company boosted its payout by 11% earlier this year. It now yields 4.9%.
3. Kinder Morgan: A leader in lower-carbon energy infrastructure
Kinder Morgan is a leading operator of natural gas infrastructure. Like EnLink, it has a strong strategic position in the U.S. Gulf Coast, positioning it to capitalize on growing LNG demand.
Data source: Kinder Morgan.
As that slide showcases, Kinder Morgan has already secured contracts to transport 10 billion cubic feet of natural gas per day to support LNG exports. It's evaluating opportunities that could double that capacity in the future. Those growing gas volumes would supply the company with more cash flow to support its dividend, which currently yields 6.6%.
Kinder Morgan is investing in other lower-carbon infrastructure, including renewable natural gas (RNG) production, renewable fuels hubs, and carbon capture and sequestration. The company expects to more than double its RNG production capacity this year. It has more projects in the pipeline to grow that capacity in the future.
Kinder Morgan's growing lower-carbon businesses should supply it with more fuel to increase the dividend. The company delivered its sixth consecutive annual dividend increase earlier this year.
The fuel to continue growing
The world economy needs a growing supply of energy to continue expanding. While the long-term plan is to transition to renewables, it will need a lot of fossil fuels in the interim.
That should drive growth for companies focused on supporting lower-carbon fossil fuels, like Enbridge, EnLink, and Kinder Morgan. It should give these energy infrastructure companies the fuel to sustain and grow their high-yielding dividends. This makes them great options for income-seeking investors to buy and hold through at least 2030.
