Passive Income? Let’s Be Real.

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Right, so you want passive income. Decades of it. Like clockwork. Honestly, it sounds…optimistic. But fine, let’s play along. The energy midstream space, apparently, is where the sensible money goes to quietly accumulate. Pipelines, basically. Not exactly glamorous, but then, neither am I after a transatlantic flight. They’re these pass-through entities – clever things, really – that avoid corporate taxes by, well, passing everything onto us, the stockholders. A bit circular, isn’t it? But hey, tax-deferred until you sell? I’ll take it. I’m already bracing for the capital gains tax bill on everything else.

Let’s look at three stocks. Three. Don’t get your hopes up too much.

Energy Transfer

Energy Transfer (ET 0.80%). A 7.1% yield. Sounds good on paper. They promise to increase that at a 3-5% pace. Honestly, promises are cheap. But they do have a massive footprint in the US, which is… reassuring, I suppose. A lot of their business is fee-based, which means they get paid regardless of, you know, everything going sideways. Smart. Very smart.

They had a bit of a wobble during the pandemic – slashed their distribution, the whole shebang. A bit dramatic, if you ask me. But they quickly fixed things, got their balance sheet sorted, and now the distribution is higher than it was before. They’re back in growth mode, apparently, fueled by AI data center demand. Which is…a sentence. I’m just picturing rows and rows of servers, guzzling energy. It’s terrifying. But lucrative, apparently. Cheap valuation, solid coverage, growth pipeline… it’s almost…tempting. Almost. You could buy this and hold it. For decades. It’s a thought.

Enterprise Products Partners

Enterprise Products Partners (EPD 1.28%). The king of consistency, they say. Twenty-seven years of increasing distributions. That’s… dedication. Or stubbornness. Possibly both. They’ve survived energy market crashes, tough economic times… the sheer resilience is almost unsettling. A 5.9% yield. It’s…stable. Boringly stable. But maybe that’s the point? They’ve got a rock-solid balance sheet and a coverage ratio of 1.8. They’re reducing capital expenditure, which means more cash. And they’re predicting double-digit growth in 2027. It’s all very…competent. It’s the kind of stock your accountant would approve of. Which, let’s be honest, is a backhanded compliment.

Western Midstream

Western Midstream (WES 0.91%). An 8.6% yield. Now that gets my attention. They’re aiming for 3% growth in 2026. It’s a bold claim. Things are a bit… complicated, though. They had a strong 2025, but they’re expecting lower throughput. They’ve restructured their deal with Occidental. Fixed fees instead of cost-of-service. It’s all very technical. Honestly, it makes my head hurt. Occidental is returning shares worth around $610 million. Compensation for reduced cash flow. It’s a lot of moving parts. But Western management thinks they can reduce costs. Which is always the plan, isn’t it? They’re also diversifying into produced water and expanding their agreement with ConocoPhillips. It’s a lot of effort. But they’re still predicting growth. One of the best balance sheets in the sector, and they’re lowering the bar. It’s a good time to add this to your portfolio, apparently. Or at least, that’s what they want you to think.

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2026-03-10 05:12