Original source text
We're seven months into 2026, and it's fair to say investors have faced more headline risk and volatility in oil stocks than they bargained for this year.The on-again/off-again nature of the war in Iran is creating wide swings in oil prices, reminding investors that this corner of financial markets is fraught with headline risk. Yet even with all the turbulence, wholesale West Texas Intermediate (WTI) prices are up 49% year to date. In comparison, the S&P Energy Sector Index is up 31.4%, confirming energy's status as the best-performing group in the S&P 500.
This energy stock could be durable even if crude prices slump. Image source: Getty Images.
Of course, the bumps associated with energy investing aren't for everyone, underscoring why some investors opt for pipeline stocks like Plains All American Pipeline (PAA +0.66%). Up 36% this year, Plains All American is clearly participating in the broader energy rally, but it's not necessarily a "sell" if crude prices pull back in a big way.
All good on the Plains Like its midstream brethren, Plains All American operates a toll-road business model. That means it collects steady fees on the transportation and storage of natural gas and oil. One of the benefits of that model is reduced sensitivity to the price gyrations of those commodities. Yes, Plains All American and plenty of other pipeline equities are soaring this year, but over longer holding periods, these stocks aren't as sensitive to crude and natural gas prices as exploration and production stocks are.
The long and the short of it is that with WTI prices below $90 on Tuesday, July 21, shares of Plains All American could prove somewhat durable even if the U.S. and Iran reach a lasting peace deal that sends oil prices lower.
Investors should also consider that this pipeline operator isn't letting headlines dictate its day-to-day operations. Last week, Plains All American, citing strength in its Canadian and Permian Basin operations, told investors it will spend $400 million to $450 million this year, up from a prior forecast of $350 million.
Today's Change
(
0.66
%) $
0.16
Current Price
$
24.45
Even if the war in Iran isn't resolved in the near term, Plains All American has avenues to benefit, as CEO Willie Chiang points out that global crude supplies are tight, which is driving more demand for North American oil. In turn, that drives more demand for the services offered by midstream companies such as Plains All American.
An all-American dividend In addition to reduced sensitivity to energy commodity prices, one of the big reasons so many investors flock to the midstream is the segment's reputation for attractive dividends. With a yield of 6.8%, Plains All American certainly embodies the midstream spirit of large payouts.
More importantly, the company's trailing-12-month dividend payout has more than doubled over the past five years, confirming that Plains All American has delivered payout growth across a variety of oil price environments.
There's support for that dividend. The company raised $3.3 billion from the May sale of its Canadian midstream business, enabling it to reduce leverage. Declining leverage and cost efficiencies from previous acquisitions could improve dividend coverage, suggesting Plains All American may be a dependable income idea regardless of what's happening in the oil market.