One of the best places to find attractive high-yield stocks is in the midstream space. Midstream master limited partnerships (MLPs) are currently trading at historically attractive valuations with some of the best growth opportunities in the space in a long time due to the increasing energy needs stemming from artificial intelligence (AI) and overseas natural gas exports.
Let's look at three high-yield pipeline stocks to buy now and hold for the long term.
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1. Energy Transfer (8.1% yield)
With a yield of more than 8%, Energy Transfer (ET +0.98%) is an ideal stock for income-oriented investors looking for some solid upside potential. The company's distribution is well covered by its distributable cash flow (operating cash flow minus maintenance capital expenditures), and the company's balance sheet is in the best shape it's ever been. On top of that, it also has the highest percentage of contracts with take-or-pay provisions in its history, which means it gets paid whether customers use its services or not.
NYSE: ET
Key Data Points
With one of the largest integrated midstream systems in the U.S. and a huge presence in the Permian Basin, which is one of the cheapest sources of natural gas in the U.S., Energy Transfer is also one of the best-positioned midstream companies to benefit from the growing natural gas demand coming from AI. It already has a number of growth projects set to capture this opportunity, including direct deals with data center operators and builders.
2. Enterprise Products Partners (6.7% yield)
Enterprise Products Partners (EPD +0.03%) has arguably been the best-run and most consistent MLP this century. The company has always operated conservatively and has been able to increase its distribution for 27 straight years, including during both tough economic and energy market conditions.
The company's balance sheet is a huge asset, with only 3.3 times leverage and debt locked up for more than 17 years on average at the low weighted average interest rate of just 4.7%. Meanwhile, typically more than 80% of its gross operating income comes from fee-based activities, and most of its assets are tied to market-driven demand (demand pull), which is much more reliable and predictable.
NYSE: EPD
Key Data Points
While the company has seen some pressure this year due to the roll off of a favorable contract and the return to normal in some commodity differentials, it has a large backlog of growth projects set to come online this year and into 2026 that should help drive growth. It will then lower its capex budget in 2026, giving it opportunities to raise its distribution even more, pay down debt, and buy back stock.
3. Western Midstream (9.3% yield)
If you're looking for a stock with a sustainable high yield, Western Midstream Partners (WES +0.00%) is a great option. It also has one of the best balance sheets in the midstream space, with leverage of just 2.8 times, and its distribution is also well covered, with the company generating $397.4 million in free cash flow and paying $355.3 million in distributions.
NYSE: WES
Key Data Points
Western's 9.3% yield also isn't a sign that the company isn't growing or performing well. Last quarter, it recorded record EBITDA and guided for it to be at the high end of $2.35 billion to $2.55 billion forecasted range for the year. It also has two growth projects set to come on in the first half of 2027: the North Loving II processing plant and the produced water Pathfinder Pipeline. In addition, it recently completed the acquisition of Arris Water Solutions, as the company looks toward water solutions to be a growth driver for it moving forward.
Western is looking to grow its distribution around the mid-single digits, but thinks it could have opportunities to increase it at an even higher rate when major projects come online. However, given its already-high yield, it may increase buybacks instead.
