If I were looking to double my positions in two dividend stocks, my choices would be an easy decision: Energy Transfer (ET 0.92%) and Enterprise Products Partners (EPD 1.02%). These companies have two of the largest midstream and pipeline networks in the U.S., which provide steady streams of cash flow to pay out robust distributions. And the master limited partnerships (MLPs) are both trading at historically attractive valuations.
If you are looking for stocks with high yields that are poised to continue to grow their payouts, these are the dividend stocks for you.
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Energy Transfer: A high-yield growth story
Energy Transfer is one of the largest positions in my personal portfolio. The stock offers a great combination of a high yield, currently sitting at 7%, and solid growth prospects. The company has cleaned up its balance sheet over the years and has a robust distribution coverage ratio.
NYSE: ET
Key Data Points
Meanwhile, its natural gas assets in the Permian Basin position it well to be one of the biggest beneficiaries of rising natural gas demand. The Permian has some of the country's lowest natural gas prices (currently negative), and Energy Transfer has two major projects to take natural gas from the region to high-demand areas.
Enterprise Products Partners: A steady payer
Enterprise Products Partners is my longest-held position; I've owned it since 2008 and have no plans to ever sell it. The company has increased its distribution for 27 consecutive years, and it currently sports a 5.8% yield. It tends to grow its distribution by 3% to 4% a year.
Enterprise has one of the smartest management teams in the midstream space, and it's conservative by nature. It has one of the best balance sheets in the pipeline space, with a leverage ratio of just 3.3, a strong distribution coverage ratio, and a largely fee-based business.
NYSE: EPD
Key Data Points
This is just a stock you can buy and then sleep well at night, knowing it's going to provide you with robust distributions year in and year out.
Great high-yield stocks
You aren't going to get rich overnight investing in midstream MLPs, but that's not the point. Both Energy Transfer and Enterprise have strong, mainly fee-based businesses that produce highly visible cash-flow streams. This allows them to pay out their robust distributions and to continue to increase them.
This industry is much more investor-friendly than it was two decades ago. And thanks to surging power demand coming from artificial intelligence (AI) data centers, it has some of the best growth opportunities in years. This makes it a great area to invest in right now, and Energy Transfer and Enterprise Products Partners are two of the top names in the space. I'd gladly double my positions in both stocks.
