Midstream master limited partnerships (MLPs) are arguably some of the best values in the market right now. These predominantly pipeline companies are trading at historically attractive valuations and have solid growth prospects ahead. So if you have $1,000 available to invest that isn't needed for monthly bills, to pay off short-term debt, or to bolster an emergency fund, this is a great sector to look for some solid investments.
Let's look at three pipeline MLPs to start buying with $1,000.
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Energy Transfer
Energy Transfer (ET 1.01%) offers investors a nice combination of growth and yield. The company has one of the best growth opportunities in the midstream space, coming from the artificial intelligence (AI) infrastructure boom. This stems from its assets in the Permian Basin, which is one of the cheapest sources of natural gas in the U.S.
The company already has several large pipeline projects to transport natural gas out of the Permian, with the Desert Southwest Pipeline set to serve Arizona and New Mexico, and the Hugh Brinson Pipeline serving Texas. It also has direct deals with data center operators and builders, including Oracle, Fermi, and Cloud Burst, to provide them with natural gas. In total, the company plans to spend $5 billion in growth capital expenditures (capex) next year.
NYSE: ET
Key Data Points
The stock currently sports an 8.2% yield and is projected to grow its distribution at a 3% to 5% yearly pace moving forward. Trading at an enterprise value (EV)-to-EBITDA multiple of 7.5 times based on 2026 EBITDA estimates of $17.2 billion, the stock is cheap at current levels.
Western Midstream
For investors looking for high yield, Western Midstream Partners (WES +0.20%) is a top option. The stock carries a 9.2% yield and is targeting mid- to low-single-digit annual increases moving forward. This is also not a distressed stock, as it had one of the best balance sheets in the space, with a leverage ratio of just 2.8 times at quarter's end.
NYSE: WES
Key Data Points
The company just closed its acquisition of produced water solutions company Aris Water Solutions, as it steps up its efforts in the produced water infrastructure business. It is also building a produced water pipeline that will connect to its North Loving natural gas facilities, which it is currently expanding. These projects are scheduled to begin operations in the first half of 2027, which should help drive growth in the coming years.
Trading at a forward EV/EBITDA multiple of 8.1 times based on 2026 analyst EBITDA estimates of $2.79 billion, the stock is attractively valued.
Genesis Energy
While it currently yields only 4.2%, Genesis Energy (GEL 0.11%) is one of the most intriguing turnaround stories in the midstream space. The company took a big step in its turnaround earlier in the year when it sold its soda ash business for $1.4 billion, and then used the proceeds to retire its expensive preferred units and to pay down debt. That helped improve its balance sheet and significantly reduce its interest expense. The company generated excess cash flow in Q3, which it utilized to further pay down debt, and it expects to continue reducing debt in Q4.
NYSE: GEL
Key Data Points
Meanwhile, Genesis Energy has a big growth opportunity as the Shenandoah and Salamanca Gulf of Mexico oil projects linked to its offshore pipeline system begin to ramp up. On its Q3 earnings call at the end of October, the company said the operator of Shenandoah had completed four Phase 1 development wells to hit its aggregate target of 100,000 barrels a day. It thinks it can hit 120,000 barrels a day by the end of 2026 or early 2027, with the potential to be 10,000 to 20,000 barrels a day more. Meanwhile, the initial three wells at Salamanca were approaching 40,000 barrels a day and could potentially reach 60,000 barrels a day.
Genesis management said that if the producers come close to hitting their targets, it could add an incremental $160 million in segment operating profits, above the $90 million take-or-pay level it will receive. Given that it was at about a $586 million annual run rate in Q3, that's some strong growth. The throughput is also on a largely underutilized pipeline, so it should also largely become incremental free cash flow, helping it deleverage.
With 5.4 times leverage, Genesis is a riskier stock, but the upside could still be high as it continues to deleverage.
