Megacap technology companies contributed most of the gains. S&P 500(SNPINDEX: ^GSPC) Index is shown in 2024. After all, when the biggest growth stocks return impressive double-digit (and sometimes triple-digit) percentages, how much can a payout of percentage points be split? Still a lot Divided shares And exchange-traded funds (ETFs) outperformed the benchmark index last year. Some of these stocks are expected to continue their strong performance through 2025.
Here’s why three Motley Fool contributors feel that way. Sons Morgan(NYSE: KMI ), Delta Air Lines(NYSE:DAL)And Global X MLP and Energy Infrastructure ETF(NYSEMKT:MLPX) After strong performance last year, stay strong buys in 2025.
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Scott Levine (Kinder Morgan): In the year In the first half of 2024, Kinder Morgan shares didn’t perform particularly well — they were basically on par with the S&P 500. In the second half, however, it was a very different story as midstream stocks surged 38%. As a result, Kinder Morgan stock ended the year with a 55% gain. Despite this impressive growth, the shares — and their 4.1% dividend yield — are still attractively priced.
Kinder Morgan is one of the major natural gas intermediate companies in the United States. It operates about 66,000 miles of natural gas pipelines that transport 40% of the nation’s natural gas. That’s because the company often enters into long-term contracts with its customers — agreements that include provisions for price gouging — management benefits from foresight into future cash flows. This makes it easier to plan for capital expenditures such as acquisitions and dividends. In addition, it helps the company to strengthen its financial position through the systematic payment of debt, this effort helped the company to reduce the amount by 26% from 2016 to 2024. Further demonstrating the company’s strong financial health, management projects that by 2025, the company’s net-debt-to-adjusted-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio will be 3.8.
Over the past seven years, Kinder Morgan has grown its dividend at a compound annual rate of 12.6%. A look at the company’s project backlog reveals plenty of growth opportunities in the coming years, which should have the potential to further increase payouts to investors. Of the $5.1 billion in projects in the company’s backlog, $3.6 billion are natural gas projects, with an average EBITDA multiple of 5.4. For investors looking to revitalize their income stream now, Kinder Morgan represents a great option.
Daniel Folber (Delta Airlines) 2024 Delta Air Lines stock is showing higher growth in airline stocks.
The airline industry was one of the sectors hit hardest by the Covid-19 pandemic. Then came the supply chain challenges and high inflation. Navigating those hurdles was difficult, but Delta did just that, and eventually returned to its pre-pandemic levels, paving the way for its share price to peak last year.
Delta is well positioned to continue its momentum in the new year. His Partnership with American Express It is helping to increase revenue beyond passenger ticketing, increasing loyalty and engagement. These efforts should partially insulate Delta’s performance from the ebb and flow of the broader economy.
The airline’s debt burden has risen to nearly $33 billion in total debt by the end of 2022, clearly increasing in the early stages of the pandemic. In the year By the third quarter of 2024, Delta reduced its total debt load to $17.7 billion and plans to reduce it by an additional $1.6 billion by the end of the year. Delta’s balance sheet remains underutilized, but the situation is improving.
Even in good economic times, airline stocks play at dirt-cheap valuations due to the cyclical nature of the industry and poor long-term return track record. In the year Even after its monster performance in 2024, Delta still has a price-to-earnings (P/E) ratio of just 8.5 and a P/E ratio of just 8.2 — a reflection of how battered the stock is. 2024.
With a modest 1% dividend yield at the current share price, Delta is not a passive income powerhouse. But it stands out as a good buy for investors who expect consumer travel demand to remain strong and Delta to continue diversifying its business.
Lee Samaha (Global X MLP and Energy Infrastructure ETF) In the year With stock price gains of nearly 36 percent through 2024, this ETF easily beat the S&P 500’s 23.3 percent gain. Performance will be better with total return (including reinvestment dividends). At that point, it returned about 43 percent, compared to 25 percent for the S&P.
With returns like these in the near term, it’s understandable that some investors may be skeptical that the Global X MLP & Energy Infrastructure ETF has the potential to deliver another market-busting year in 2025. I think it is completely possible and the current dividend rate of 4.3% does not hurt the chances.
As the name suggests, this ETF invests in master limited partnerships (MLPs) and other players in the midstream energy infrastructure space, such as pipeline and storage companies. The five largest holdings in the current portfolio of 25 stocks are high-yielding energy infrastructure companies such as oil and natural gas pipelines and renewable energy companies. EnbridgeGas processing and transportation company Williams CompaniesOil and gas intermediate company OnekGas pipeline and terminal operator Sons Morganand LNG supplier Cheniere Energy.
In short, it is a play on the long-term growth of the US oil and natural gas industry and the ability of producers to export liquefied natural gas through US terminals. For the White House, progress on that front seems more likely. Additionally, there has been a shift in how the market views fossil fuels over the past year.
Investors are not denying that the energy transition is happening, but many are realizing that the costs and complexities of transitioning to renewable energy sources may have been underestimated in the rush to move to net zero. This is leading the market to conclude that the pace of the transition may be slower than many previously expected, and in this context the role of natural gas, especially as a transition fuel, is being positively evaluated. This should mean higher profits for natural gas companies, and especially for the MLPs that store and transport them.
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American Express is an advertising partner of Motley Fool Money. Daniel Folber It has no place in the said shares. Lee Samaha It has no place in the said shares. Scott Levine It has no place in the said shares. He has a spot in the Motley Fool and recommends Cheniere Energy, Enbridge and Kinder Morgan. The Motley Fool recommends Delta Air Lines and Onek. The Motley Fool has Disclosure Policy.
