Energy stocks have been the hot trade this year. Oil prices soared more than 75% in the first quarter due to the war with Iran, fueling a more than 35% surge in the average energy stock in the S&P 500. That significantly outperformed the nearly 5% decline in that broad market index.
Oil prices could continue rallying in April if the war rages on or decline sharply if there's peace in the Middle East. Given that uncertainty, I'd focus on investing in energy stocks that are relatively immune to changes in crude prices until there's more clarity on the war. Two that stand out this April are Energy Transfer (ET 0.57%) and Oneok (OKE 0.55%).
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Built-in growth
Units of Energy Transfer are up by more than 15% so far this year. However, the master limited partnership (MLP), which sends a Schedule K-1 Federal tax form each year, has only gained about 3% over the past 12 months. As a result, they still trade at an attractive level, including offering a nearly 7% distribution yield.
Energy Transfer has limited direct exposure to oil prices. The MLP gets about 90% of its earnings from stable fee-based sources. As a result, its earnings won't decline much if crude prices cool off, should the U.S. and Iran broker a peace deal.
NYSE: ET
Key Data Points
Meanwhile, most of the company's growth is already locked in. Energy Transfer has secured a long list of growth capital projects that it expects to complete through the end of the decade. These expansions support its expectation of increasing its high-yielding distribution by 3% to 5% each year.
A long record of delivering stable growth
Oneok has gained more than 20% this year. However, the pipeline stock is still down nearly 10% over the last 12 months. As a result, it trades at an enticing dividend yield (4.7%).
The pipeline giant also has minimal direct exposure to commodity prices (85% to 90% of its earnings in 2026 will come from fee-based sources). As a result, it produces relatively stable cash flow with some upside to higher energy prices.
NYSE: OKE
Key Data Points
Meanwhile, Oneok also has significant growth already lined up. It completed several acquisitions in recent years that will continue to benefit its bottom line as it captures additional merger synergies. Oneok also has several expansion projects under construction that it expects to complete by the middle of 2028. These growth catalysts support Oneok's plans to increase its dividend by 3% to 4% annually. The pipeline giant has delivered over a quarter-century of dividend growth and stability.
Low-risk energy stocks
Energy Transfer and Oneok have risen with the energy sector this year. However, they look like compelling investment opportunities this April. They generate stable cash flows, which support their high-yielding dividends and growth strategies. That positions them to thrive even if oil prices dive following an end to the war with Iran.
