Williams Companies: Why I’m Continuing to Add This Midstream Giant to My Portfolio

Key Points

As a longtime investor in Williams Companies (NYSE: WMB), I have acquired shares on three separate occasions since 2019. Headquartered in Tulsa, the company stands as one of the largest midstream energy firms, managing approximately one-third of all natural gas produced across the United States.

Williams manages critical interstate transmission pipelines, most notably Transco—the largest natural gas pipeline system in the nation by volume—alongside extensive gathering networks, processing plants, and storage facilities.

The stock remains a core holding in my portfolio due to its robust performance. Shares have appreciated by over 130% in the past decade, excluding dividends. An initial $10,000 investment made when I first purchased the stock, with dividends reinvested, would now be worth $42,166.12.

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It has a dependable dividend

While the current dividend yield of 3% trails that of competitors like Kinder Morgan and Enbridge, Williams benefits from a more insulated cash-flow structure. This advantage allowed the company to increase its dividend by over 162% over the past decade, significantly outpacing those peers.

This year, the company raised its quarterly dividend by 5% to $0.525, marking the tenth consecutive year of dividend increases.

As of the second quarter, the dividend is covered 2.26 times based on available funds from operations (AFFO).

Its business is stable yet positioned for growth

Williams’ extensive pipeline footprint—specifically its Haynesville gathering assets and Transco Gulf Coast connections—directly links major gas basins to Gulf Coast export terminals. This infrastructure makes the company an essential beneficiary of the expanding U.S. energy export market.

Global liquefied natural gas (LNG) volumes rose 5.4% to a record 56.3 billion cubic feet per day in 2025.

Williams operates on a take-or-pay contract model, ensuring that power plants, utilities, and gas producers either take delivery of a minimum amount of a commodity—such as natural gas or pipeline capacity—or pay a penalty.

In the second quarter, the company reported earnings per share (EPS) of $0.68, a 51% year-over-year increase, alongside AFFO of $1.45 billion, up 10% year-over-year. Revenue grew 9.7% year-over-year to $3.05 billion.

Data center power needs are driving orders

As of the second quarter, Williams maintained a $15.5 billion backlog of orders scheduled to come online between 2027 and 2033. U.S. electricity demand is accelerating rapidly, driven by data center expansions, artificial intelligence (AI) infrastructure, and industrial electrification.

The company is expanding its power generation and corridor pipeline projects, carrying a six-gigawatt backlog of potential ventures, to deliver a reliable, natural gas-backed electricity supply directly to utilities and high-demand energy consumers.

Williams has ten project expansions along its Transco pipeline currently under construction or backed by signed customer agreements.

Looking past the concerns

The stock has climbed more than 15% year-to-date, pushing its valuation to over 28 times forward earnings—a premium for a pipeline operator and well above the energy midstream sector median. However, its enterprise value-to-earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio sits below 17 times, which remains higher than peers but is justified by its growth trajectory.

The company recently elevated its long-term adjusted EBITDA target to a compound annual growth rate (CAGR) exceeding 11% through 2030, propelled by power expansion projects and significant bolt-on acquisitions.

Despite its currently elevated price tag, the company is well-positioned to justify its premium valuation, particularly for long-term investors.

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