The energy industry has had its ups and downs in recent years. Because of that, it hasn't always been the best place to go for those looking for a sustainable passive income stream.

However, the midstream segment of the energy market has done a much better job of delivering steady dividends. Because of that, investors seeking income should take a closer look at this part of the oil patch. Three midstream companies that stand out as excellent options are Enterprise Products Partners (EPD -0.80%), Enbridge (ENB -0.32%), and Kinder Morgan (KMI -0.12%).

A small chalk board with passive income written out near a stack of $100 bills.

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Paying you well while delivering power to the world

Reuben Gregg Brewer (Enterprise Products Partners): Master limited partnership (MLP) Enterprise Products Partners is one of the largest owners of energy infrastructure in North America. Its pipelines, storage, processing, and transportation assets help to move oil and natural gas around the country and the world. It is a vital cog in the energy industry machine.

What's notable here is that most of Enterprise's assets are fee based. That means the MLP gets paid based on the use of its assets. Often volatile commodity prices aren't that big a deal here, so more conservative types looking at the energy space can sleep a bit easier at night. As for the environmental, social, and governance (ESG) zeitgeist that is pushing the world to limit the use of carbon fuels, well, it's a great idea but one that will take decades to implement, not days, months, or even years.

Meanwhile, income-focused investors can collect Enterprise's fat 7.1% distribution yield. And that payment has been increased annually for 23 consecutive years. It was covered by distributable cash flow by a huge 1.7 times in the fourth quarter of 2021 and is backed by an investment grade rated balance sheet. That should be enough to entice even the most conservative income investors aboard.

More than two decades of dividend increases and counting

Neha Chamaria (Enbridge): Enbridge is one of the top energy dividend stocks you can rely on for some passive income flow year after year. The stock doesn't just yield a hefty 6.2% but supports it with dividend growth.

Enbridge has increased dividends every year for the past 27 consecutive years, and its dividend per share has grown at an impressive compound annual growth rate of 13% since 2008. You'd be stunned to see how much that dividend growth has contributed to the total returns shareholders in Enbridge have earned over the years.

ENB Chart

ENB data by YCharts

So what is it that makes Enbridge's dividends so reliable? The answer: a large energy infrastructure business, a strong balance sheet, and commitment to shareholders. Enbridge transports nearly 30% of all crude oil produced in North America and 20% of all natural gas consumed in the U.S., and it does so primarily under long-term, fee-based contracts, which is why Enbridge's cash flows are sustainable even in a low oil and gas-price environment. That also explains why the company can pay steady and higher dividends year after year.

Enbridge has a project pipeline worth nearly 10 billion Canadian dollars through 2025 which should boost its distributable cash flows and support higher dividends. With the company prioritizing financial fortitude and shareholder returns, investors in Enbridge can simply sit back and expect to earn solid passive income for years to come.

A gas-powered passive income stream

Matt DiLallo (Kinder Morgan): Kinder Morgan has worked hard over the years to put its high-yield dividend on a more sustainable foundation. One of the biggest changes has been to live within its cash flow.

The natural gas pipeline company expects to generate $4.7 billion in cash this year. That's enough to cover its $2.4 billion dividend outlay and $1.3 billion expansion budget, with nearly $900 million to spare. This excess cash will give it the financial flexibility to further shore up its solid balance sheet, pursue additional growth opportunities, and opportunistically repurchase shares.   

Kinder Morgan is starting to see new expansion opportunities emerge, fueled by higher oil and gas prices and the impact Russia's invasion of Ukraine is having on the global gas market. The company is currently evaluating market demand for a potential expansion of one of its natural gas pipelines in the Permian Basin. If there's enough demand, it could finish that project by the end of next year. The incremental cash flow from the expansion would provide further support for the dividend. 

Meanwhile, Kinder Morgan launched a new energy venture unit last year to pursue low-carbon investment opportunities. It's currently building several renewable natural gas plants. The company is looking for other investment opportunities that could fuel future growth.

The company also has a strong balance sheet, giving it the additional financial flexibility to make acquisitions as the right opportunities emerge. It could enhance its natural gas infrastructure operations or make further inroads into lower carbon fuels.

Kinder Morgan's legacy pipeline operations should continue to generate steady cash flow in the coming years. Add in the growth from expansion projects and investments, and the company should have the fuel to steadily increase its high-yield dividend. That makes it an excellent option for investors seeking a sustainable passive income stream.