The One Big Beautiful Bill Act (BBB) is now law—and there’s one contrarian move we can make now to profit from it.
I’m not talking about shorting 10-year Treasuries (though that might work, given the inflationary policies “baked in” here!).
Instead we’re going long—on American oil and gas. But we’re not looking at producers. We’re going with pipeline operators like Kinder Morgan (KMI), a holding in our Hidden Yields dividend-growth service, to ride the $3 trillion in stimulus the BBB is about to set loose.
Why? Two reasons:
- Strong dividends: KMI pays a 4.2% dividend that grows every year, and …
- We get a hedge on oil and gas prices: Most of KMI’s contracts are either “take-or-pay,” under which users are on the hook for the full fee no matter how much product they pump, or “fee-based,” with rates that are fixed no matter what oil and gas prices do.
Now before we go further, you might hear “pipeline” and think “master limited partnership,” or MLP. It’s true that MLPs mainly run pipelines and energy-storage facilities.
That MLP structure can result in higher dividends than you’d get from pipeline operators that operate as regular corporations. But it also means a tax-season headache: MLPs send you a complex K-1 instead of a simple 1099.
KMI, however, operates as a corporation, so we don’t have the K-1 headache here. And as we’ll see in a second, even though KMI’s current payout is below that of the typical MLP, it more than makes up for it in share-price growth.
DC, Not the Oil Patch, Makes Our Pipeline Case
The state of play in DC fills in a lot of our buy case here. Let’s start with the BBB, which offers a grab bag of breaks for oil and gas producers. Now, for example, they can write off capital expenses—think equipment and facilities—all at once instead of over a period of years. The law also delays fees on methane emissions to 2035 and allows more access to federal lands for drilling.
All of this sets the table for higher oil and gas production. But that’s not much help to pipeline operators unless demand picks up, too. Let’s talk about that next.
A $3-Trillion Tailwind
Also thanks to the BBB, Washington’s $3+ trillion fiscal “open bar” is officially flowing. (That’s roughly how much the bill would add to federal deficits in the next decade.)
Policymakers saw a negative GDP print in Q1 and have revved up the stimulus spigots to avoid a technical recession. Rest assured, Treasury Secretary Scott Bessent and Trump do not want that scarlet letter headed into the midterms, so more moves are likely on the way here.
More stimulus = stronger growth and higher demand.
But wait, you might be thinking, isn’t all that stimulus going to be inflationary? Absolutely! Which is why the administration needs higher oil and gas production—and the lower prices it would bring.
KMI a Surprise Winner in Fed Drama
Then there’s the Fed, which is also under pressure. Will Chair Jay Powell last his final 10 months? I wouldn’t bet on it—not when Bessent stands ready to step in and potentially lower the Fed funds rate by 300 basis points almost overnight. Talk about bullish fuel!
Which brings us back to KMI, which runs 79,000 miles of pipelines throughout North America, moving crude oil, carbon dioxide and most notably natural gas.
A huge 40% of “natty” produced in the US flows through Kinder’s systems—to 139 company-owned terminals storing petroleum products, chemicals and renewables. KMI has been shifting toward natural gas over the years, which is smart, as it’s the least offensive of the fossil fuels.
That puts it on the right side of regulators, no matter who’s in control in DC. It’s also helped KMI benefit as renewables have grown, as gas is a reliable backup when the sun isn’t shining and the winds are calm.
Beyond all that, Kinder’s gas focus has put it at the crossroads of other growing trends, like the reshoring of industrial production to America (which has been rolling along since well before tariffs were in vogue) and, of course, AI’s ravenous energy demand.
“Take-or-Pay,” Fee-Based Deals Add Stability
But what if oil and gas demand, and prices, take an unexpected dip? KMI has us covered there, too, with 64% of its revenue signed under “take-or-pay” deals and 26% fee-based.
Now, remember when I said it often makes sense to buy a “corporate” pipeline operator like KMI over an MLP?
KMI is the poster child as to why: Over the last three years, the stock has outrun the biggest MLP out there, Enterprise Products Partners (EPD), on a total return basis (including price gains and reinvested payouts):
We’ll Happily Take This “Low” Yield
That’s despite the fact that EPD’s yield is almost 60% higher—6.7% as I write this!
Kinder is still down about 5% since Inauguration Day and well behind the S&P 500, but I do expect it to bounce. As a “toll taker” rather than a producer, it generates enough cash flow to support its current dividend and fund future raises.
KMI’s “Trump Tumble” Is Our In
Management expects $5.2 billion of distributable cash flow for 2025, according to its fiscal second quarter earnings report, against only $2.6 billion in dividend obligations. That leaves Kinder with an additional $2.6 billion to invest in growth projects, repay debt and fund its ongoing buyback program.
Finally, KMI has something else we love: a lot of insider ownership—a combined 13% stake in the company. That nicely aligns management’s interests with ours.
KMI is set to report earnings on the evening of July 16, and the stock is below the $30 at which we recommend buying in Hidden Yields. Shares are a buy now, but would be even sweeter on a dip, given the trends—from DC and beyond—they’re riding.
The Silent Force That Can Send Your Income—and Net Worth—Soaring
Kinder Morgan’s 4.2% payout is just one example of the kind of dividend that can steadily grow your income—and your wealth—in the years ahead.
But it’s far from the only one.
In fact, there’s a simple pattern that helps explain why stocks like KMI often outperform—even with a “lower” yield. I call it the Dividend Magnet. Once you understand how it works, you’ll never look at dividend stocks the same way again.