Pipeline stocks delivered decent performances overall in 2019. The average one in the Alerian Energy Infrastructure ETF -- an exchange-traded fund that holds 36 of North America's largest pipeline companies -- generated a 22% total return. While that fell a bit short of the S&P 500's more than 30% total return, it was a solid showing for the yield-focused sector. 

Several top pipeline stocks, however, underperformed last year even though they delivered strong results. Among those notable underachievers were master limited partnerships Energy Transfer (NYSE:ET)Plains All American Pipeline (NASDAQ:PAA), and MPLX (NYSE:MPLX). They stand out as the most compelling pipeline stocks to buy this January because of their appealing combination of yield and growth at bottom-of-the-barrel valuations.

Pipelines heading towards the bright sun.

Image source: Getty Images.

A big-time yield and growth prospects for a rock bottom price

Units of Energy Transfer declined by about 3% last year. Though on a more positive note, the midstream giant generated a positive 6% total return after adding in its distribution, which currently yields an eye-popping 9.4%. That payout's on solid ground, since Energy Transfer generates enough cash to cover it by a comfortable 1.98 times.

Last year's slump in the company's unit price doesn't make much sense, given that it was on track to grow its earnings by 16%. It now trades at a rock-bottom valuation of around 8 times earnings. For comparison's sake, most pipeline stocks sell for more than 10 times earnings.

With more growth coming down the pipeline in 2020, Energy Transfer looks as attractive as ever since it could use its rising cash flow to boost its big-time payout or repurchase its deeply discounted units. That upside potential makes it one of the best energy stocks to buy these days.

The performance didn't match the underlying results

Plains All American's unit price slumped about 8% last year. Even after adding in its distribution, which currently yields 7.8%, the total return was a negative-2% on the year.

That lackluster return came even though Plains All American is on track to grow its earnings by 15% this year, thanks to recently completed pipeline projects and the strength of its supply and logistics business. The company expects to cover its high-yielding distribution with cash by a comfortable 2.06 times, and it now trades at less than 8 times its earnings. 

While Plains All American expects to grow at a much slower rate in 2020, the company sees a reacceleration ahead in 2021 due to the upcoming completion of several more pipeline projects. That should enable the oil-focused pipeline company to continue increasing its high-yielding payout, making it a great income stock to buy for the long haul this month.

No reward for a monster year

MPLX was the worst performer in this group, as its units tumbled 16% last year. While the addition of its high-yielding distribution -- which is currently up to an eye-popping 10.6% -- helped cushion the blow, the MLP's total return was still a negative-8% on the year.

Again, that lackluster performance didn't match the company's results. Its cash flow rocketed nearly 50% through the third quarter because of the success of its expansion program and the acquisition of an affiliated MLP. Because of that, MPLX was able to generate enough cash to cover its big-time payout by a comfortable 1.54 times.

While MPLX won't grow quite as fast in 2020 as it shifts gears to focus on its highest return expansion opportunities, it has enough fuel to grow at a healthy rate over the next few years. It should be able to continue increasing its high-yielding payout, making it an excellent income-stock to buy this month.

High yields for lower prices

All three of these pipeline stocks unperformed in 2019, even though they delivered strong earnings growth. Now they enter 2020 with dirt cheap valuations and higher yields. That makes them the top options for investors seeking to pipe some income into their portfolio this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.