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Tech's rough stretch dragged plenty of income stocks down with it, including a natural gas pipeline operator that has raised its dividend every year since it went public. Its backlog of committed projects just got bigger, and insiders bought shares this summer at prices well above where it trades now
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Meet the Pipeline Operator Powering Your Next Energy Cycle
DT Midstream (NYSE: DTM) is a natural gas pipeline and storage company worth roughly $11 billion, spun out of DTE Energy in 2021. It owns interstate and intrastate pipelines, gathering systems, and storage assets tied mostly to the Haynesville Shale and the Appalachian Basin.
Plain English: they move gas from the wellhead to wherever it's going. And they clip a toll on every molecule.
Most of its revenue comes from fees under long-term contracts, so its direct exposure to gas prices is limited. That's boring plumbing, and the demand for what flows through it keeps climbing.
Why Gas Pipes Matter More in the AI Era
Forecasts from groups like the International Energy Agency call for data center power demand to roughly double by the end of the decade. Natural gas is the fuel best able to add steady, around-the-clock power quickly, which is why utilities keep signing up for more pipeline capacity.
Look at DTM's footprint. The Haynesville feeds LNG export terminals on the Gulf Coast, while Appalachian gas serves the Midwest and Mid-Atlantic, home to some of the largest data center clusters in the country.
New interstate pipelines take years to permit and build. That makes existing networks with room to expand more valuable every year.
Own DTM, and you own the toll road. More traffic is heading its way.
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The Fundamentals Back Up the Story
The latest quarter shows a business that is executing.
- Third-quarter net income was $118 million, or $1.16 per share, ahead of the $1.13 consensus, with adjusted EBITDA of $301 million.
- Management raised its full-year adjusted EBITDA guidance.
- The company reached final investment decisions on three new pipeline projects, lifting committed growth capital to about $2.4 billion, up 50% in nine months.
- New work includes the MIST S1 storage expansion, a power plant lateral in the Midwest, and the Guardian Phase II modernization.
- CFO Jeffrey Jewell and director Elaine Pickle bought shares in August at prices above $130.
That last point is worth sitting with. Insiders paid well above recent prices, and the company has added committed projects since then.
Action: Build a starter position and add on weakness. The dividend pays you to wait. |
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Committed Projects Are the Spark
What catalyst do you watch for? More contracted capacity tied to power demand. Management says the utilities it works with are taking a long-term approach to data center growth, and committed capital has already grown 50% in nine months.
Much of that growth comes from expanding existing systems rather than building brand-new lines. Brownfield work is usually cheaper and faster than greenfield projects, and it uses rights-of-way the company already holds.
Your next check-in is the fourth-quarter report in February. Management has already warned that fourth-quarter EBITDA will come in below the third quarter because of producer curtailments in the Northeast, downtime on its Stonewall system, and downstream outages, so expect a soft quarter.
What a Growing Backlog Means for the Cash Line
The real beauty here is predictability. Once a pipeline is under long-term contract, cash flow is largely locked in no matter where gas prices go, which is why fee-based pipelines hold up better than producers when gas prices fall.
Growth comes from three places. The base business keeps expanding, new projects like the MIST storage expansion and Guardian Phase II come online over the next few years, and rising power demand adds more opportunities on top.
The market is pricing this like a mature pipeline company stuck near its lows. A bigger backlog and a rising dividend say otherwise.
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The Dividend Story Is the Hook That Keeps You Paid
Hunting for yield? DTM pays $0.88 per quarter, or $3.52 a year, a yield of about 3%. It is not a sky-high payout, but it is steady and growing.
Since the 2021 spinoff, management has raised the payout every year, from $0.60 per quarter to the current $0.88, an increase of almost 47%. If raises keep coming at anything like that pace, your yield on cost climbs steadily over a five-year hold.
Action: If you want yield plus growth, this is the profile. The 3% starting yield is backed by fee-based cash flow, and the record of annual raises is intact. |
The Risks You Need to Know Before You Click Buy
Let's be honest about what could go wrong.
First, if gas prices crater and producer activity slows in the Haynesville or Marcellus, throughput drops and gathering revenue takes a hit. Not catastrophic, given the fee-based mix. But it pressures growth.
Second, a prolonged market correction could leave this stock stuck in the penalty box no matter how clean the fundamentals look. If you buy here and the market has another leg down, you need the stomach to average down, not panic out.
Third, regulatory risk. FERC or state-level pushback on a major expansion project could kick the data center catalyst out by 12 to 18 months. Thesis still works. Timeline stretches.
Fourth, rates. Midstream trades partly as a yield proxy. If the 10-year keeps grinding higher, multiples compress.
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Action Recap
✅ Buy Zone: $110 to $116 (accumulate on weakness near the 52-week low)
✅ Catalysts to Watch: Q4 2026 earnings in February 2027, new contracted pipeline and storage projects, and progress on MIST S1 and Guardian Phase II
✅ Medium-Term Target: $140 to $150 over 12 to 18 months as the backlog turns into cash flow
✅ Risk Management Tip: Reassess if the stock closes meaningfully below $100, or if management guides down on the 2027 capex plan
Setup Scorecard
Entry Zone: $110 to $116
Target: $140 to $150 over 12 to 18 months
Stop Loss: Reassess below $100
Catalyst Timeline: Q4 earnings in February 2027, new project announcements over the next 6 to 12 months, and MIST S1 and Guardian Phase II updates
Confidence Level: High. Fee-based cash flows, a dividend raised every year since 2021, a bigger project backlog, and insider buying at higher prices.
Setup Scorecard
Entry Zone: $113–$122
Target: $135 over 12 months, plus $6.12 in dividends collected along the way
Stop Loss: Reassess if same-store NOI turns negative or if AFFO coverage of the dividend slips below 1.1x
Catalyst Timeline: October 15 record date, October 30 payment, Q3 earnings late October, plus continued declines in Sun Belt housing starts
Confidence Level: Medium-high. Dividend and balance sheet are proven. The variable is timing on rent growth reacceleration, not whether it happens.
That’s all for today’s edition of the Dividend Brief.
Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!
—Noah Zelvis
DividendBrief.com
