The midstream sector is benefiting from increased natural gas demand.
There are several strong stocks in the space with yields between 4% and 10%.
Not only do these stocks have high yields, but their distributions are also well covered and rising.
10 stocks we like better than Energy Transfer ›
Midstream operators aren’t flashy, but they crank out dependable cash flow, fund generous distribution payouts, and are set to benefit from surging demand for natural gas tied to artificial intelligence (AI), data centers, and liquid natural gas (LNG) exports.
Here are five high-yield stocks with growing distributions that also have solid upside potential.
Energy Transfer (NYSE: ET) has a hefty 7.4% yield that’s well covered by its distributable cash flow — operating cash flow minus maintenance capital expenditures (capex) — thanks to about 90% of earnings before interest, taxes, depreciation, and amortization (EBITDA) coming from fee-based contracts. Many of those contracts are take-or-pay, locking in revenue regardless of volumes.
Energy Transfer’s footprint in the Permian Basin in Texas positions it to benefit directly from growing power demand and LNG exports. As such, the company is shifting into growth mode, bumping its capex from $3 billion in 2024 to $5 billion this year.
It’s seeing strong requests related to the data center boom and recently signed a supply agreement with developer Cloudburst for one of the data center projects it is developing in Texas. Also, the long-stalled Lake Charles LNG project looks like it may finally move forward, adding a growth driver.
All in all, Energy Transfer is a high-yield name with strong tailwinds.
Enterprise Products Partners (NYSE: EPD) has hiked its payout for 26 straight years. Its robust distribution and high yield aren’t just safe; they are anchored by one of the steadiest business models and best balance sheets in the space. Roughly 85% of its cash flow comes from fee-based contracts, and many of those include take-or-pay terms with inflation escalators.
Enterprise is run…
..
