Not every investor’s top priority is looking for growth. In fact, finding a steady stream of dividend income becomes more important the closer you get to retirement. One of the best places to find high-yield stocks with growing distributions is the midstream energy space with master limited partnerships (MLPs).
MLPs come with a little extra paperwork at tax time, but they have the added benefit that much of their distributions are classified as return of capital. Thus, they are tax-deferred until investors sell their shares. Let’s look at three high-yield MLPs to buy right now and hold forever.
Energy Transfer
With its valuation, yield, and growth opportunities, Energy Transfer (ET +1.49%) is one of the most attractive stocks in the energy patch. The stock currently carries a well-supported 6.9% yield, with plans to grow its distribution by 3% to 5%. Meanwhile, its multiple of enterprise value to earnings before interest, taxes, depreciation, and amortization (EBITDA) — the most common way to value MLPs — is 8.5 times 2026 analyst estimates, which is one of the cheapest valuations in the space.
Today’s Change
(1.49%) $0.30
Current Price
$20.40
Key Data Points
Market Cap
$69B
Day’s Range
$20.06 – $20.46
52wk Range
$16.18 – $20.66
Volume
242K
Avg Vol
16M
Gross Margin
11.57%
Dividend Yield
6.64%
The company operates one of the largest integrated midstream systems in the U.S., and its strong position in the Permian Basin has given it one of the most robust growth pipelines of any company in the space. The reason is that the Permian is one of the cheapest sources of natural gas in the U.S., and utilities and data center operators are clamoring for low-cost energy to power artificial intelligence.
Energy Transfer is building several large, important pipeline projects and has a plethora of high-return projects set to come on line over the next few years that will help drive growth. The stock is a favorite of mine and one of my largest positions.
Enterprise Products Partners
For income-focused investors who value consistency above all else, Enterprise Products Partners (EPD +1.85%) is the stock for them. The company has increased its distribution for 27 straight years throughout various business and energy cycles.
It is conservative in nature, with low leverage (3.2x) for the space, and low-interest debt that doesn’t mature for an average of 17 years. It currently has a 5.8% yield and grew its payout by 2.8% in the first quarter.
Enterprise Products Partners
Today’s Change
(1.85%) $0.71
Current Price
$39.00
Key Data Points
Market Cap
$83B
Day’s Range
$38.40 – $39.01
52wk Range
$30.01 – $39.73
Volume
133K
Avg Vol
4.4M
Gross Margin
13.45%
Dividend Yield
5.72%
Enterprise has several growth projects expected to come on line later this year that are expected to help generate strong double-digit growth in EBITDA next year. However, it has cut back on its capital expenditures, which will give it plenty of flexibility to buy back stock, reduce debt, or make acquisitions.
Overall, Enterprise is a great stock if you like to sleep well at night, and it should be a strong consideration for any income investor.
Image source: Getty Images.
Western Midstream
Western Midstream Partners (WES +1.23%) has an 8.5% yield, the highest of this bunch. And its high yield isn’t a sign that the company is distressed or not growing its distribution.
It just put up strong first-quarter results and said it now expects its adjusted EBITDA to come in toward the high end of its prior $2.6 billion to $2.7 billion guidance. Meanwhile, it has very low leverage at a multiple of 3, and it plans to increase its distribution by the mid to low single digits.
The company is also very bullish about 2027, noting that one of the largest producers on its Powder River Basin system is increasing drilling, which should boost volumes on the system next year. At the same time, better natural gas spreads are expected to improve volumes in the Permian as more takeaway capacity comes on line later this year.
Western Midstream Partners
Today’s Change
(1.23%) $0.56
Current Price
$45.95
Key Data Points
Market Cap
$18B
Day’s Range
$45.01 – $46.12
52wk Range
$36.90 – $46.12
Volume
564K
Avg Vol
1.6M
Gross Margin
51.54%
Dividend Yield
8.06%
The company just made an accretive acquisition, buying Permian-based Brazos for $1.6 billion. The purchase brings with it a set of assets in natural gas, natural gas liquids, and crude oil, and should add $200 million in EBITDA in 2027. The deal will not impact Western’s current leverage multiple of 3 and continues to build the company’s presence in the Permian.
For investors looking for a high yield, this is a solid stock.
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