The pipeline sector offers investors a nice mix of high yields, predictable cash flows, and solid growth. And with natural gas demand set to climb thanks to liquefied natural gas (LNG) exports and energy-hungry AI data centers, the midstream sector looks well positioned to deliver strong returns from here. My five favorite stocks in the pipeline space are: Energy Transfer (ET -1.38%), Enterprise Products Partners (EPD -0.26%), Western Midstream (WES -0.59%), The Williams Companies (WMB -6.03%), and Genesis Energy (GEL -2.38%).
Each brings something different to the table for investors.
1. Energy Transfer: A high yield and big upside
Energy Transfer operates one of the largest midstream networks in the United States, and it's entering a clear growth phase. The company boosted its growth capital expenditure budget from $3 billion last year to $5 billion this year, with a focus on natural gas infrastructure tied to the Permian Basin.
This puts it in a strong position as power demand spikes from AI data centers and LNG exports ramp up. The company already signed a deal with Cloudburst to directly supply natural gas to a prospective Texas data center, and it continues to get inbound interest for similar projects. Meanwhile, its long-delayed Lake Charles LNG export terminal looks increasingly likely to get the green light.
About 90% of Energy Transfer's EBITDA is tied to fee-based contracts, with many having take-or-pay provisions, giving it steady and predictable cash flow. That supports a generous and well-covered distribution yielding 7.2%, with management targeting 3% to 5% annual growth.
2. Enterprise Products Partners: A model of consistency
If you want bulletproof reliability, Enterprise Products Partners is about as steady as it gets. It has raised its distribution for 26 consecutive years through downturns, oil price crashes, and recessions. The reason? About 85% of its revenue is fee-based with inflation-linked escalators built into its contracts. Furthermore, many of its contracts are backed by take-or-pay terms, meaning it gets paid whether customers use its services or not. In addition, it has always maintained a conservative balance sheet. The result is steady, visible cash flow, quarter after quarter, and no stress from being over-leveraged with debt.
Enterprise also has $7.6 billion in projects under construction, including $6 billion scheduled to come online this year. These are high-return expansions, much of them in the NGL value chain where the company is a dominant player. Despite its conservative approach, Enterprise isn't afraid to lean into growth opportunities, and it's doing exactly that right now.
Enterprise is a solid option for investors who want dependable income and steady, long-term growth.
Image source: Getty Images.
3. Western Midstream: A high yield with a disciplined approach
If you like high yields, Western Midstream offers one of the highest in the space at 9.5%. But what makes it especially attractive is the quality of its cash flow. Most of its contracts include either cost-of-service protections or minimum volume commitments, which provide strong revenue visibility regardless of commodity prices.
It's also one of the more conservatively run midstream names, with leverage below 3x and a distribution that's well covered. The company isn't chasing every growth project, but it's still investing where it sees solid returns. Its biggest project right now is the Pathfinder produced-water pipeline, an up to $450 million project that should be a solid EBITDA contributor when it ramps up.
Western combines a high, sustainable payout with a measured growth strategy. That makes it a compelling stock to own over the long run.
4. Williams Companies: A growth story hiding in plain sight
The Williams Companies may not yield as much as the other pipeline companies (its yield is currently around 3.2%) but it's got one of the best growth runways in the sector. Its crown jewel is its Transco pipeline system, which connects Appalachia's natural gas fields to the fast-growing Southeast and Gulf Coast.
Transco continues to generate organic expansion projects, driven by coal-to-gas power plant conversions, rising LNG exports, and more recently, data center demand. The company has eight major expansions in its backlog that are scheduled to enter service between now and Q3 2030.
Outside of its Transco expansion, Williams is moving into power generation with its Socrates project, a $1.6 billion investment to directly serve growing data center demand in Ohio. It's also taken a 10% stake in Cogentrix Energy, which will give it valuable power market insights to help optimize natural gas supply for next-gen power plants
For investors focused more on growth than chasing the highest yield, Williams is an attractive option.
5. Genesis Energy: A high-risk, high-reward turnaround
Genesis Energy is different from the other stocks on this list. It doesn't have the consistent track record of Enterprise, the massive scale of Energy Transfer, the high yield of Western Midstream, or the growth of Williams. Instead, it's a turnaround story.
The company recently sold its soda ash business for $1.4 billion and quickly used the proceeds to aggressively reduce debt and clean up its balance sheet. UBS estimates the move will help Genesis save $84 million a year in interest and preferred dividend payouts, which will boost future cash flow.
Genesis is now turning its focus to growing its offshore pipeline system. When the Shenandoah and Salamanca deepwater projects, which will connect to Genesis' pipeline system, come online later this year it will add significant growth. In addition, the company's marine segment is on pace for record earnings this year, as volumes begin to normalize. Taken altogether, Genesis is laying the groundwork to see a significant turnaround in its business.
While its yield is more modest at 3.8%, given the change in its cash-flow profile following the sale of its soda ash business and the growth set to come from its offshore pipeline business, it will have an opportunity to significantly ramp up its distribution in the future.
Genesis is a higher-risk name, but the stock has strong upside potential if the company can continue to execute.
