Better Buy: Devon Energy vs. Kinder Morgan Stock
The volatility in oil prices this year has gotten investors thinking about which oil and gas stocks should they buy now, and whether they should at all. Devon Energy (NYSE: DVN) and Kinder Morgan (NYSE: KMI) are two popular names on energy investors' lists, with both stocks also offering big dividends to investors. Yet while Devon Energy stock is deep in the red this year after a solid performance in 2022, Kinder Morgan stock has been pretty resilient in recent months. Between the two stocks, though, one appears to be a better bet today.
Neha Chamaria (Kinder Morgan): Unlike Devon Energy, Kinder Morgan has little direct exposure to oil and natural gas prices since it's a midstream company that primarily transports natural gas and refined products for a fee. That also means Devon Energy stock can prove to be more profitable for investors when oil prices are rising. The reverse, though, is also true when oil prices fall, which is why Kinder Morgan makes for a much more compelling stock to own right now.
Kinder Morgan has the largest natural gas transmission network in the U.S., and almost all of its cash flows are hedged or come from long-term take-or-pay and fee-based contracts. So regardless of where oil prices head, Kinder Morgan continues to provide services under its contracts and generate stable cash flows, which it then uses to spend on growth and dividends.
Source Fool.com
