One way to target both growing income and capital gains is investing in U.S. energy midstream companies. With U.S. energy production surging, midstream services look like they will see growing demand for years come to come. 

Growing on all fronts
With its unit price rising more than 20% in the past year and its distribution growing by 6%, Enterprise Products Partners (NYSE:EPD) offers investors growth, income, and security. Particularly for those planning ahead to enjoy income in their retirement, Enterprise looks appealing.

Enterprise operates energy transportation services for crude oil, natural gas, natural gas liquids (or NGLs), and refined products. The bulk of its business centers on NGL transportation and services or onshore pipeline services. In fact, Enterprise claims to own the world's largest NGL storage complex in its Mont Belvieu, Texas facility. Not surprisingly, Enterprise also claims the world's largest NGL fractionator complex in that same facility.

During its most recent analyst's day presentation, Enterprise talked about exports: exports of ethane, particularly since there is a domestic oversupply; exports of natural gas, NGLs, and liquid petroleum gas such as propane and butane since there is growing demand abroad; and even exports of the fuel additive MTBE, destined for Mexico and other Latin American countries. In all these commodities, Enterprise is actively building the plants, pipelines, and docks to capitalize on these growing export opportunities. These should translate into growing distributions and capital gains for investors.

A smaller version
While big is beautiful, good things do come in small packages. Genesis Energy (NYSE:GEL) operates a much smaller portfolio of midstream assets than Enterprise but operates them well. Investors seem to agree, as the stock has risen from $48 per unit to slightly more than $56 per unit over the past year. Perhaps the 10% growth in distributions had something to do with it. For the record, Genesis pays a 4% yield, a smidgen better than Enterprise's 3.6%.

Genesis operates a network of pipelines and other transportation services in and around the Gulf Coast. Last summer, the company acquired Hornbeck, which added barge services not only along the Gulf and Atlantic coasts but up the Mississippi and Great Lakes as well. Lastly, Genesis offers the service of removing sulfur from crude oil at refineries and then sells the resulting sodium hydrosulfide to a variety of customers in the mining, pulp, and paper and chemical industries.

Genesis just reported a roughly 20% increase in earnings compared to the same quarter a year before. Distributions increased, again, and this distribution enjoys a coverage ratio of 1.1. These results came in despite declines in the heavy fuel oil business. The future looks promising, as multiple expansion projects have or will come online this calendar year and next. These include an offshore oil pipeline and two different rail unloading facilities. Lastly, Genesis believes it has reworked the heavy fuel oil segment to be more profitable going forward.

Income now, with capital gains potential
When viewed from a five-year perspective, Energy Transfer Partners (NYSE: ETP) hasn't performed well compared to Enterprise and Genesis. However, if the past year is any indication, Energy Transfer Partners may well outdo its competitors.

The fundamental problem that had stymied Energy Transfer was its emphasis on natural gas and its practice of buying natural gas in the field and selling it to customers at the other end of the pipe. The former kept Energy out of the more lucrative crude oil business, and the latter left it exposed to declining natural gas prices. This has changed over the past year or so.

Today, Energy Transfer Partners has a greater exposure to crude oil thanks to its Sunoco acquisition. Its pipeline business has shifted to a fee-based model similar to that used by Enterprise or Genesis. The change has paid off. The stock rose from $48 a share to more than $56 over the past year, driven no doubt by more consistent earnings. The most recent quarterly earnings report beat expectations by $0.10 a share ($0.76 vs. $0.66). For income investors, current yield is around 6.6% and the distribution ratio is a healthy 1.4.

The future holds more retail operations. In April, Energy Transfer Partners closed a deal to acquire Susser Holdings, an operator of retail vehicle fuel and convenience stores in Texas, Oklahoma, and New Mexico. More importantly, Susser has consistently grown its revenue over the years. With its business centered in one of the fastest growing states in the country, Susser looks like a shrewd acquisition to complement Sunoco's retail operations.

Final Foolish thoughts
The boom in U.S. energy production offers investors income and capital gains potential. Of the three, Energy Transfer Partners looks like the most promising for total returns. The company changed its business model, expanding into a promising retail market and even increasing its dividend, all of which portend growth. Not that Enterprise and Genesis aren't good investments themselves, but for initial yield, future distribution growth, and capital gains, Energy Transfer Partners may give investors the most total return.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.